The latest Regional Economic Analysis of Louisiana (REAL) Report offers insight into recent economic developments in Louisiana, with focuses on the impact of COVID-19 on air travel, how hurricanes have affected the oil industry, and graduation rates compared to funding.
Produced by the Center for Economic Research in collaboration with faculty and students in Louisiana Tech University’s College of Business, the report is a quarterly publication designed to provide insight into recent economic developments in Louisiana.
Team members contributing to this issue include Assistant Professor of Economics Dr. Patrick Scott, who serves as Center director, senior economics major Paycen Brouillette, junior economics major Patrick Miller, senior economics major Adam Quebedeaux, junior economics major Colyn Sevario, and junior accounting major Amanda Wilder.
According to the report, the unemployment rate for Louisiana has largely recovered to what economists would call full employment levels.
“This is a false comfort since the rate is low due to reduced labor force participation and not be increased economic activity,” said Dr. Scott. “The continuing decline we have experienced over the past few months is expected to correct upward, reflecting stalled hiring and more workers cautiously re-entering the workforce.”
Brouillette analyzed the state’s employment changes in the COVID-19 era. His research found that employment among all workforce sectors has declined nearly nine percent from pre-pandemic levels, though there have been considerable improvements in economic conditions since the beginning of the pandemic.
“Employment has increased across the state by 6.3 percent since April 2020, when unemployment was at its peak,” said Brouillette. “Both lifting of stay-at-home and mask mandates along with increased vaccination participation have paved the way for many across the state to return to the workforce.”
Brouillette noted that despite these improvements and policy changes, many workers have left the workforce altogether and their return to labor force participation is uncertain.
While the pandemic certainly affected employment across Louisiana, hurricanes over the past three decades have also caused devastating effects for MSAs in the paths of destruction. Quebedeaux’s research studied the impact of South Louisiana’s hurricanes on employment rates.
“Notably, there was an employment increase in the months following some storms,” said Quebedeaux. “This increase may be attributable to evacuees returning home and increased workforce engagement during recovery efforts. The report also found that hurricane wind damage caused less significant declines in employment than flood damages.”
The remaining sections of the report focused on key industries across the state, including education, oil, and air travel.
Wilder’s research examined the relationship between high school graduation rates and funding.
“While funding may signal better resources, community engagement, and higher socioeconomic status in the surrounding area, the correlation between school funding and graduation rates at the parish level is not statistically significant,” she concluded. “While good indicators, funding and graduation rates themselves should not be held as the sole decision criteria when looking at the success and achievement of a school.”
Sevario chose to examine Hurricane Ida’s impact on the oil industry. Data shows that 96 percent of off-shore oil production and 94 percent of off-shore gas production were shut in following Hurricanes Ida and Nicholas.
“These breaks in production caused a direct impact to the refining and extraction industries, but also led to indirect and induced impacts in adjacent industries,” said Sevario. “Hurricane Ida created tremendous impacts on Louisiana in a variety of ways totaling at $2.1 billion in lost economic output. Employment losses led to lost income of $59.1 million in industries that Hurricane Ida impacted. These losses in income translated to $3.6 million in lost income tax dollars on the state level. Although these measures depict a specific picture of the impacts of Hurricane Ida, the real impacts will be seen for years to come.”
To conclude this report, Miller focused on the impact COVID-19 had on air travel. According to his research, air travel in Louisiana decreased by 59.9 percent from 8.2 million passengers in 2019 to 3.3 million in 2020.
“Passenger demand benefits sectors across Louisiana by contributing valuable income for business owners across the state,” said Miller. “The air transportation industry had a direct loss of approximately $570 million in 2020. Supporting services like sightseeing and tourism services lost approximately $67 million dollars in revenue due to the decrease in passenger numbers. As a result of the decline in air travel during the pandemic, Louisiana’s economy lost a total of over $1 billion.”
Miller predicts that with the increase in vaccination rates and the return of major events like Mardi Gras and professional sporting events, passenger demand will trend upward and Louisiana will recover in this industry.
To read this edition of the REAL Report, visit business.latech.edu/realreport.
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