2 years after Katrina, city’s recovery stalls

There have been no major additions to white-collar employment since Katrina.

NEW ORLEANS (AP) — Two years after Hurricane Katrina almost nothing seems the same in New Orleans, but one thing has not changed — a cool regard by business for what was once a major Southern commercial center.

The recovery is creeping along. As population increases but employment growth slows, no one is certain where the jobs will come to sustain the city’s rebound.

It isn’t that corporate America doesn’t recognize New Orleans’ plight. A new report by The Foundation Center, which tracks hurricane recovery donations, shows 30 major companies poured more than $300,000,000 into charity in Louisiana and Mississippi after Katrina.

But permanent new investment and jobs are scarce. Companies, it appears, aren’t convinced New Orleans will be a safer, politically stable, attractive place in which to live and do business.

Mayor Ray Nagin, who’s pleaded the case with Wall Street investors, acknowledges crime and corruption have hampered the city’s ability to attract significant new business.

So an odd dichotomy has taken shape. Oil giant Royal Dutch Shell PLC, which has cut New Orleans jobs in recent years, put its money into sponsoring the New Orleans Jazz & Heritage Festival. Zurich Financial Services Group, which has no major employment here, is sponsoring the city’s professional golf tour stop.

On the other hand, two major oil employers have moved or are preparing to leave. Mining giant Freeport-McMoRan Copper & Gold Inc. moved to Phoenix after its buyout of Phelps Dodge Corp. Chevron Corp. is moving 500 jobs from downtown 40 miles north to St. Tammany Parish.

Far below

Though city officials are happy the tourism business is recovering, there have been no major additions to white-collar employment since Katrina. Even tourism employment is far below pre-storm levels.

Why are corporations hesitant to invest in a city that desperately needs long-term commitment? Some reasons, Nagin says, are rooted in pre-Katrina problems that worsened after the storm. Among them, a crime wave that has New Orleans on track to lead the nation in per-capita murders for a second year, a shortage of housing, corruption scandals and skyrocketing insurance costs.

“New Orleans has a long row to hoe,” said venture capitalist Gary Solomon, head of New Orleans-based Crescent City Bank & Trust. “We’ve got to get people’s confidence that we’re going to do it right. I don’t see that. I really don’t.”

According to state Labor Department figures, metro New Orleans area had 113,300 fewer non-farm jobs in June 2007 than in June 2005, two months before the hurricane struck on Aug. 29, 2005.

The biggest drops were in government jobs, with 29,000, and the tourism sector, down 24,500 jobs. The big gainer, not surprisingly, was construction with 2,500 jobs.

Even more disturbing is the sudden slowdown in the job recovery rate.

From November 2005 to June 2006, the area added 7,400 jobs a month, then slowed by December 2006 to 2,000 monthly. In June 2007, the gain was only 300.

“The suggestion in the data is clear,” said demographer Elliott Stonecipher. “We apparently are at a place where the post-storm employment recovery is peaking. It may have peaked.”