The damage caused by Hurricane Irene, preliminarily estimated at more than $7 billion, pales in comparison to Hurricane Katrina (about $108 billion) and Hurricane Ike ($29.5 billion). Still, the storm caused unprecedented damage to communities all along the East Coast, especially to river towns in New Jersey, New York, Connecticut, and New England.
My home in Middletown in Orange County, N.Y. was spared, although just a short ride away many homes and businesses suffered extensive damage and the loss of power. The region's infrastructure, specifically roads and bridges, also took a major hit from Irene. New York Governor Andrew Cuomo estimates the hurricane cost the state at least $1 billion.
If there's an upside, it's that destruction leads to construction -- and that means jobs. It may also mean positive things for the economy, as Peter Morici, a professor at the Smith School of Business, University of Maryland, and former Chief Economist at the US International Trade Commission, notes on RealClearPolitics:
"Rebuilding after Irene... will unleash at least $7 billion in new direct private spending -- likely more as many folks rebuild larger than before, and the capital stock that emerges will prove more economically useful and productive."
What's that mean for employment? John Ryding, chief economist at RDQ Economics in New York City, calls it positive but negligible: he said the $7 billion estimated property loss from Irene could generate around 50,000 jobs over time to nonfarm payrolls.
Of course, that's from Florida to New England. L. Todd Diorio, president of the Hudson Valley Building and Construction Trades Council in Newburgh, N.Y., will be happy to get even a fraction of those jobs.
Diorio told me local labor unions are expecting to employ many of their members who have been riding the pines in their union halls because of lack of work on both public and private construction projects. In fact, some labor unions in the Hudson Valley region have unemployment rates of 35% to 50% right now, largely because government cutbacks have killed or postponed many road and bridge projects, and the lack of private funding has stalled major mixed-use ventures.
Diorio says union leaders are awaiting word from FEMA as well as from state agencies on utility work and railroad and bridge repair. He expects the storm damage work will provide a major boost to the New York regional building trades for months to come.
The work to be done in New York State is considerable. For example, in lower New York, the Metropolitan Transportation Authority restored train service within a day of the storm. However, after conducting initial observations, the MTA reported that Hurricane Irene had caused "catastrophic damage" to its Metro North Port Jervis line and that service was suspended indefinitely. This line is used extensively by commuters on the western side of the Hudson River traveling into Manhattan.
The full extent of the damage still hasn't been determined, and much of the line remains inaccessible and under water. The MTA reports that observations from the ground and helicopter show significant washouts and fallen trees at numerous locations along the tracks. Railroad officials estimate it will take months to rebuild track, signal, and bridge infrastructure to restore train service.
Still, while the repair work will produce jobs for construction workers in the Northeast, the overall employment picture remains gruesome in some markets.
The Associated General Contractors of America reported mixed results for the industry in July, noting that "Construction employment increased in 136 out of 337 metropolitan areas between July 2010 and July 2011, declined in 148 and stayed level in 53." The Chicago-Joliet-Naperville, Ill., region added the most construction jobs during the past year with 12,900, while Atlanta-Sandy Springs-Marietta, Ga., New York City, and Los Angeles bled the most jobs at 12,900, 6,600, and 5,500, respectively.
Ken Simonson, chief economist for the AGC, noted in the press release that while the industry experienced a modest increase in private sector work, public construction budgets are contracting.
Any significant job generation for the construction industry will depend on a number of factors that will be decided in the coming months.
- Will Congress pass a new federal highway bill, which expires on Sept. 30, and at what level? Right now the odds makers are saying it looks as if the program could be cut significantly.
- Will Congress and the President propose and pass a meaningful jobs bill to revitalize the economy? Odds are long that a consensus can be reached.
- Is there any way the federal government can fix the housing market?