Tens of thousands likely jobless after Hurricane Ian, economists say


The devastating effects of Hurricane Ian will be felt in the coming weeks and months, particularly in the state of Florida, where much of the storm’s damage was sustained. Economists say tens of thousands of people are likely to file for unemployment benefits after the storm, but if those workers – many in low-paying service industries like tourism – don’t come back, local economies in some hard-hit areas could struggle to recover.

Though damage is still being counted, initial estimates suggest Ian could be the costliest hurricane to make landfall in Florida. The storm’s economic toll in insured losses could range from $53 billion to $74 billion, according to RMS, a catastrophe modeling company owned by Moody’s Analytics.

In the near term, an increase in jobless claims is almost inevitable, economists say: “Hurricane Harvey in Texas in August 2017 caused a rise of about 50,000 people,” noted Mike Englund, chief economist at Action Economics.

“Certainly there will be displacement in the short term… but it’s hard to predict how that will play out in the context of Florida or the Southeast more generally,” said Lynn Karoly, senior economist at RAND Corporation.

The biggest threat is tourism. “Particularly in coastal communities and tourism… how long these impacts last will depend on the ability of the sector to rebuild,” Karoly said.

While large companies can at least resort to insurance, free cash flow, or borrowing to repair or replace damaged buildings and equipment, workers are likely to have a steeper climb back to financial stability.

“The resilience factor might be lower among the low-wage workers, and even their employers might reconsider how they fill the positions they need to fill,” Karoly said. In a job market that was historically tight before the storm, there could be greater momentum to replace laid-off workers with machines, self-service customer functions, or other technology.

A view of the destroyed road between Florida's Matlacha and Pine Island after Hurricane Ian.

Dave Gilbertson, vice president of HR technology firm UKG, which tracks real-time labor market metrics like time-card stamps, said so in devastated Florida Counties like Lee and Hillsborough already have workforce activity collapsed by almost half – indicating a huge loss in economic activity and revenue.

“A drop of nearly 50% is pretty unusual,” Gilbertson said. “This is a deeper catastrophe than we have seen in recent years.”

For the growing number of households whose wages are not keeping pace with rising prices, the loss of a source of income can quickly become a crisis.

“They lose so much personally, but they also lose the ability to work and support their families,” Gilbertson said. “Many hourly workers live paycheck to paycheck [and] Dealing with rising inflation by reducing their savings and using more credit cards… The ability to survive any kind of disruption is minimal.”

Although parallels are often drawn, economists say comparisons to Hurricane Katrina in 2005 can only go so far as to predict what the long-term aftermath of Ian will mean for Florida’s job market.

“There will be a significant slowdown in job openings in the state, [but] it’s a very strong economy and hurricanes are nothing new to them,” said Sinem Buber, Lead Economist at ZipRecruiter.

According to Census Bureau data, Florida welcomed nearly 221,000 new residents between July 2020 and July 2021 alone. The hardest-hit city, Fort Myers, had the sixth-fastest growth of any US city during that period. The state’s unemployment rate was 2.7%, a full percentage point below the national average.

“Katrina was a much more damaging storm and hit Louisiana, which is much less prosperous than Florida,” Zandi said.

Relatively wealthy places like Florida generally have more resources available for rebuilding, but even there, people living in poorer areas — who likely don’t have adequate insurance or savings to rebuild — often just move away. Many displaced people who migrated to the Houston area across the Gulf of Mexico after Katrina, for example, never returned. This exodus can permanently reshape the fabric of the local economies they are leaving behind.

“Hurricanes have different economic impacts depending on whether it’s an area that people are moving into or out of,” Englund said. “Hurricane recoveries tended to accelerate any economic changes that might have been underway when the storm hit, leaving a boom in construction in growing areas but economic damage in declining areas.”

As climate change amplifies the intensity and frequency of extreme weather events, relocation itself can set off a vicious cycle for the financial stability of low-income households, said Adam Rose, senior research fellow at the Center for Risk and Economic Analysis of Threats and Emergencies.

Many of the displaced New Orleans residents who moved to Houston after Hurricane Katrina settled in the only place they could afford — on less desirable, low-elevation land destroyed more than a decade later by Hurricane Harvey in 2017 was flooded.

A motorboat lies atop a pile of debris two days after Hurricane Ian passed through Fort Myers, Florida.

Even when low earners are able to rebuild their finances, they remain on figuratively – if not literally – unstable ground, suggesting that an economy that grows at their expense isn’t rock solid either.

“These low-wage tourism jobs aren’t a solid economic base,” Rose said, adding that part of the blame for New Orleans’ slow post-Katrina recovery is reliance on a sector that left residents few resources to rebuild. “The fact that tourism accounts for such a large portion of New Orleans’ employment base has peaked in that regard, and that’s one of the reasons population growth has flattened out.”

And those that manage to persevere may not be better off when it comes to protection from the next big storm. “Without careful attention to climate change mitigation, hurricanes are poised to pose significant challenges to labor markets in coastal regions of the United States,” Rushaine Goulbourne, a former research fellow at the Brookings Institution, wrote in a study last year.

In that regard, Florida’s population boom — a common boast by state lawmakers — could be adding to the scale of the crisis as demand grows for housing that people in low-wage service-sector jobs can afford, said Jim Blackburn, professor of environmental law and co-director of the Severe Storm Prediction, Education and Evacuation From Disasters Center at Rice University.

“There are no replacement apartments. If you don’t have alternative … safe housing for low-income people, we’re going to have the same problem over and over again,” he said. “It is unreasonable to develop barrier islands and not expect them to be destroyed.”