Tens of thousands of people likely to be out of work after Hurricane Ian, economists say

$17 billion cost of uninsured losses after Hurricane Ian 0:58 (CNN) — Hurricane Ian’s devastating impact will be felt for weeks and months, especially in the state of Florida, where much of the cyclone damage. Economists say tens of thousands of people are likely to apply for unemployment benefits after the hurricane, but if those workers – many of them in low-paying service sectors like tourism – don’t return, local economies in some hard-hit areas they might have a hard time recovering. Although damage is still being tallied, early estimates indicate Ian could be the costliest hurricane to ever make landfall in Florida. According to RMS, a catastrophe modeling firm of Moody’s Analytics, the economic cost of the storm in terms of insured losses could be between $53 billion and $74 billion. In the short term, a spike in jobless claims is all but inevitable, according to economists: “Hurricane Harvey in Texas generated an increase of about 50,000 in August 2017,” said Mike Englund, chief economist at Action Economics. “Certainly there is going to be some near-term displacement … but it’s hard to predict exactly what it’s going to be like in the context of Florida or the Southeast in general,” said Lynn Karoly, senior economist at the RAND Corporation. The biggest threat is to tourism. “Especially in coastal communities, and within tourism… the duration of these effects depends on the capacity of the sector to rebuild,” Karoly said. Low-income workers face potential cash crunch While large companies can at least resort to insurance, free cash flow, or debt issuance to repair or replace damaged buildings and equipment, that workers have a steeper climb to regain financial stability. “The drag factor might be lower among the lower-paid workforce, and even their employers might also be rethinking how to staff the positions they need to fill,” Karoly said. In a job market that was historically tight before the storm, there could be a greater push to replace displaced workers with machines, self-service features for customers or other technology. An image of the destroyed road between Matlacha and Pine Island, Florida, after Hurricane Ian. (Photo: Marco Bello/Reuters) Dave Gilbertson, vice president of human resources technology company UKG, which tracks real-time labor market metrics such as time controls, said in devastated Florida counties Like Lee and Hillsborough, labor activity has already fallen by almost half, suggesting a tremendous loss of economic activity and income. “It’s pretty rare to see a decline of almost 50%,” Gilbertson said. “This is a deeper disaster than we’ve seen in the last two years.” For the growing number of households whose pay isn’t keeping up with rising prices, losing a source of income can quickly turn into a crisis. “They’re losing a lot personally, but they’re also losing the ability to work and provide for their family,” Gilbertson said. “Many hourly workers live paycheck to paycheck [y] they deal with rising inflation by dipping into their savings and using more credit cards… The ability to withstand any kind of mishap is minimal.” Hurricane Katrina showed what worked and what didn’t Although parallels are often drawn, economists They said comparisons to 2005’s Hurricane Katrina can only go so far in helping to predict what Ian’s aftermath will mean for the Florida job market in the long run. the state, [pero] it’s a very strong economy and hurricanes are not new to them,” said Sinem Buber, chief economist at ZipRecruiter. Florida absorbed nearly 221,000 new residents between July 2020 and July 2021 alone, according to Census Bureau data. The city Hard-hit Fort Myers had the sixth-fastest growth of any U.S. city in that period, with the state’s unemployment rate at 2.7%, one percentage point below the national average. it was a much more damaging hurricane, and it hit Louisiana, which is much less prosperous than Florida,” Zandi said. Stay or go? Workers are vulnerable either way. As climate change increases the intensity and frequency of extreme weather events, the move itself can create a vicious cycle for the financial stability of lower-income households, said Adam Rose, a senior fellow at the American Center for Risk and Economic Analysis. nasties 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-lying land that was inundated more than a decade later by Hurricane Harvey in 2017. A motorized boat lies on a pile of debris two days after Hurricane Ian, in Fort Myers, Florida. (Photo: Rebecca Blackwell/AP) Even if low-income residents are able to rebuild their finances, they remain on figuratively – if not literally – shaky ground, suggesting that an economy growing at their expense isn’t as strong as a rock. “These low-wage jobs in tourism are not a solid economic foundation,” Rose said, adding that part of the blame for New Orleans’ slow recovery from Katrina was its reliance on a sector that left residents with few resources. for reconstruction. “The fact that much of the employment base in New Orleans is tourism has reached its limit in that regard, and that’s one of the reasons population growth has leveled off.” And those who manage to hold out will be no better protected from the next big storm. “Without due attention to climate preservation, hurricanes can pose significant challenges to labor markets in America’s coastal regions,” Rushaine Goulbourne, a former research associate at the Brookings Institution, wrote in a study this year. past. In this context, Florida’s population boom – a frequent boast of state lawmakers – could be helping to increase the scope of the crisis, as demand grows for housing that people with low-paying jobs in the sector can afford. services, said Jim Blackburn, a professor of environmental law and co-director of the Center for Severe Storm Prediction, Education and Disaster Evacuation at Rice University. “There is no replacement housing. If there is no alternative … of safe housing for people with less income, we are going to continue to have this same problem over and over again,” he said. “It’s not reasonable to develop barrier islands and not expect them to be destroyed.”