Using Wage Records to Study the Impact of Hurricane Katrina Richard L. Clayton James R. Spletzer Bureau of Labor Statistics May 24, 2006 LMI Conference, St. Louis

Outline of Today’s Presentation  Brief overview of Hurricane Katrina  Our data and methodology  The effects of Hurricane Katrina using Louisiana and Texas wage records

Hurricane Katrina: Tuesday 8/23/05

Hurricane Katrina: Wednesday 8/24/05

Hurricane Katrina: Thursday 8/25/05

Hurricane Katrina: Friday 8/26/05

Hurricane Katrina: Saturday 8/27/05

Hurricane Katrina: Sunday 8/28/05

Hurricane Katrina New Orleans Times Picayune August 29, 30, & 31

Hurricane Katrina  The States and the BLS have done a lot to measure the impact of Hurricane Katrina on labor market outcomes  Today’s presentation – what can wage records tell us about the labor market impacts of Hurricane Katrina?

Data and Methodology We obtained wage records from:  Louisiana, 2004:Q1 – 2005:Q3 (2005:Q4 forthcoming)  Texas, 2004:Q1 – 2005:Q4 We enhanced the wage records by merging in Quarterly Census of Employment and Wages (QCEW) data

Data and Methodology  Our methodology: > Look at quarterly transitions, within and across states > Compare 2005 transitions to 2004 transitions  For example: look at number of persons who move from New Orleans to Texas in both 2004 and 2005

Data and Methodology Issues when using WRs for analysis:  Transitions can not be timed within quarters  Wage records only record employment, not unemployment or out of the labor force  Wage records are filed for the UI account, not for the specific establishment

Data and Methodology For Louisiana (using WR & QCEW data) 62% of employment is in single establishments 11% of employment is in multi-establishment employers with all establishments in the same MSA (8 MSAs + BoS in Louisiana) 27% of employment is in multi-establishment employers with establishments in multiple counties

Number of Wage Records Texas New Orleans MSA

Number of UI Accounts with WRs Texas New Orleans MSA

The Effects of Hurricane Katrina # Wage Records and # UI Accounts  Substantial decline in # wage records and # UI accounts in Louisiana in 2005:Q3  Percentage decline is 2½ times larger in New Orleans MSA than in Louisiana  No similar decline in Louisiana in 2004:Q3  No similar decline in Texas in 2005:Q3

The Effects of Hurricane Katrina # Wage Records and # UI Accounts  Need to ask: Is the substantial decline an economic effect, or is it due to administrative data reporting?  Updated 2005:Q3 Louisiana wage records will incorporate data for late reporters, and thus mitigate administrative reporting issues

Cross-State Mobility Texas to Louisiana New Orleans to Texas

The Effects of Hurricane Katrina Cross-State Mobility  Substantial increase in number of persons newly employed in Texas in 2005:Q3 > conditional on working in Louisiana in 2005:Q2 > conditional on not working in Texas in 2005:Q2  Even larger increase in number of persons newly employed in Texas in 2005:Q4  No similar increases in 2004, nor in cross-state mobility the other direction

The Effects of Hurricane Katrina Focus on 2 samples of cross-state mobility:  N=1,608 persons moving from New Orleans MSA to Texas in 2004:Q3 (voluntary movers)  N=5,648 persons moving from New Orleans MSA to Texas in 2005:Q3 (voluntary movers + displaced movers) Are these 2 samples different? > A rough estimate of displacement effects

Cross State Mobility New Orleans MSA to Texas 2004 Q2-Q3 2005 Q2-Q3 Stay within same EIN 15% 12% Stay within same Industry 38% 39%   Q2 Earnings (all jobs) 6,664 5,859 Q3 Earnings (all jobs) 8,414 5,305 Q2-Q3 Earnings Gain 1,750 -553

The Effects of Hurricane Katrina Cross-State Mobility: Pre and Post Katrina  Persons who moved from New Orleans MSA to Texas in 2004:Q3 (all pre-Katrina) gained, on average, $1750 in quarterly earnings  Persons who moved from New Orleans MSA to Texas in 2005:Q3 (some post-Katrina) lost, on average, $553 in quarterly earnings  Results consistent with “Displacement”

Summary: specific findings  We have used 2004 & 2005 wage records (enhanced with QCEW) from LA & TX to study the effects of Hurricane Katrina > Many striking employment and wage effects > Much more empirical work to do  We regard our results as preliminary until the 2005:Q4 and the updated 2005:Q3 Louisiana wage records become available

Summary: general findings  The methodology we have used could be applied to analyzing any large displacement > Plant closing > Other natural disasters