Hurricane Sandy’s Impact on Layoffs

On Friday the BLS reported the highest number of mass layoffs (seasonally adjusted) in over three years.  In November the number of workers filing first time unemployment claims because of a mass layoff was about 33% higher than the average number of new claims per month over the previous year.  The BLS reported seasonally unadjusted data by state which indicated that half of the 122,000 increase in new claims from November 2011 to November 2012 occurred in New York, New Jersey and Pennsylvania.  In year-over-year comparisons new jobless claims in November 2012 were:

• 156% higher in Pennsylvania than one year ago
• 345% higher in New York than one year ago
• 710% higher in New Jersey than one year ago

Hurricane Sandy Likely to Increase Unemployment Rate to 8.0% or 8.1%

The November jobs report (released on December 7^th) will be the first one to include household and payroll survey data gathered after Hurricane Sandy.  It is likely that November’s unemployment rate will jump from its current level of 7.9% to 8.0% or 8.1% due to Hurricane Sandy.  Sandy had a devastating impact on the tri-state area of New York, New Jersey and Connecticut where about one eighth of U.S. output is produced.  A leading indicator of the unemployment rate is the weekly report of new unemployment insurance claims.  A spike in new jobless claims means that a large number of workers were displaced from their jobs.  As I explain below, Hurricane Sandy displaced 145,000 workers as measured by new jobless claims in the first full week after the storm hit.

During the week of November 10^th (the most recent week for which detailed state data are available) over 63,000 jobless workers in New York filed for first-time unemployment insurance benefits, compared to about 21,400 new claims one year ago.  Similarly, over 46,000 jobless workers in New Jersey filed for first-time unemployment insurance benefits during the week of November 10^th, compared to just over 12,000 new claims one year ago.  The rate at which workers lost their jobs nearly quadrupled in New Jersey and nearly tripled in New York compared to November 2011.

The following charts compare the year-to-year change in new unemployment insurance claims the week of November 10^th, the first report to reflect Hurricane Sandy effects, and four-week moving averages of year-to-year changes in new claims over the previous 20 weeks.  For example, the annual percentage change in new claims for November 3^rd is based on a comparison of data for the week of November 3^rd and the three previous weeks to the corresponding weeks in 2011.  The charts indicate that, for New York and New Jersey, new jobless claims were consistently below 2011 levels until Hurricane Sandy hit.

Hurricane Sandy caused about 80,000 people to lose their jobs and file for first-time unemployment insurance benefits in one week in New York and New Jersey alone.  Although the effect of Hurricane Sandy on the rest of the country is smaller, it isn’t negligible.  The following chart compares the year-to-year change in new jobless claims the week of November 10^th to four-week moving averages of year-to-year changes in new claims for the rest of the United States (excluding New York and New Jersey).  The chart indicates that new jobless claims were up about 12% in the first full week after Hurricane Sandy, or an increase of 65,000 claims.

Hurricane Sandy’s displacement of 145,000 workers in one week is enough to increase the U.S. unemployment rate by 0.1 percentage point, from 7.9% to 8.0%.  The November unemployment rate is based on worker’s labor force status for the week ending November 17^th.  That means that one more week of new jobless claims data will factor into November’s unemployment rate.  The preliminary new claims data for the week of November 17^th shows a smaller increase in displaced workers, probably half as many as the 145,000 displaced in the prior week.  We will know more on November 29^th when more detailed and complete data for the week of November 17^th are released.  At this point it is most likely that the November unemployment rate will jump to 8.0% or 8.1%.

Hurricane Sandy and Public Transportation in New York City

Residents of New York City are more dependent on their mass transit system than residents of any other city in the United States.  Hurricane Sandy has caused the subway and other forms of public transportation in New York to come to  a grinding halt.  To understand how much of an impact this has on New York City residents one need only examine data from the American Community Survey (ACS).  According to the ACS the fraction of households that do not have access to a vehicle are:

• 7.6% of households outside of New York City
• 77.9% of households in Manhattan
• 59.1% of households in the Bronx
• 56.8% of households in Brooklyn
• 36.8% of households in Queens
• 15.7% of households in Staten Island

Manhattan residents are ten times more dependent on public transportation than are people who live elsewhere in the U.S.  Residents of the Bronx and Brooklyn are eight times more dependent on mass transit than the typical American.  Until the MTA, bus and subway systems are up and running, residents of New York will be stranded.  Those of us who live elsewhere can only imagine what a huge challenge this presents for people who live and work in New York City.

Note: The ACS considers a household to have access to a vehicle if a passenger car, van and panel or pick-up truck is kept at home and available for members of the household.