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This morning, the Labor Department reported that the economy created 169,000 new jobs in August and that the national unemployment rate had fallen to its lowest level since before 9/11: 4.9 percent.
Under normal circumstances, this would have been welcome news. But it's likely to be short-lived, as Katrina has thrown thousands of workers in the Gulf Coast communities–and in industries affected by rising energy costs–out of work.
Even before Katrina made landfall Monday, the two states most affected by the storm were experiencing unemployment rates far in excess of the national average. In Louisiana, for instance, the unemployment rate was 6.4 percent. In Mississippi, it was 7.9 percent.
As high as those numbers are, they're likely to skyrocket now that Katrina has wiped out so many Gulf Coast communities. In the near term, "most of the people who had been working in these areas are unemployed," said John Challenger, chief executive at the outplacement firm Challenger, Gray & Christmas. "After the shock wears off and issues like food, shelter and personal safety are addressed, we will probably see a significant uptick in people filing for unemployment insurance in the region."
Making matters worse, Challenger notes that the biggest industries in that region involve transportation, leisure, and hospitality–segments of the economy that are not likely to recover soon given the devastation that has occurred in the region.
Then there are rapidly rising energy costs. High oil and gasoline prices were already rocking the transportation sector well before Katrina. According to Challenger, transportation companies announced 17,341 job cuts last month (making it the highest-ranking industry in terms of August layoffs), as high fuel costs have been blowing up budgets at airlines and municipal mass transit systems.
If there's anything that this segment of the economy has to look forward to, it's the hope that the eventual rebuilding effort in the Gulf Coast will put thousands of households in the region to work. "Every spare body will be needed to repair the damage," said Challenger. "President Bush is likely to institute a program similar to the Work Projects Administration, created 70 years ago by President Franklin Roosevelt, to give hope to the unemployed through jobs," he said.
Unfortunately, even if that occurs, it's likely to be weeks if not months away, as the focus continues to be on saving as many lives as possible, collecting the dead, and getting the water pumped out of flooded communities such as New Orleans.
