New Orleans experiencing economic growth despite widening wealth gap

Categories: The Guardian

Nine years after Hurricane Katrina, wealth disparity spreading at faster rate than in most US cities new data shows

Mark Guarino in Chicago, Friday 29 August 2014 14.24 EDT

On Friday, to commemorate the day nine years ago when the floodwalls broke, releasing water that would eventually kill nearly 1,000 people and submerge 80% of the city, New Orleans Mayor Mitch Landrieu helped lay wreaths at a memorial site where nearly 100 unclaimed or unidentified victims of Hurricane Katrina are interred. Then he got back to work.

Work, in this case, involves demonstrating yet again how his city is on the upswing, nine years after Katrina. Landrieu won his office promising a new New Orleans and, midway through his second term, he has plenty of evidence to back that up: a new 1,500-acre new biomedical district; thriving neighborhood corridors touting sleek new cocktail bars, boutique restaurants and upscale restaurants; an added streetcar line; a prodigious state film industry that last year produced more movies than California and a housing boom that has sent property values skyrocketing.

Yet data released this week shows that, while New Orleans is indeed in a period of economic growth – which is significant considering that for many post-Katrina years the city suffered net job losses – the divide between those who are benefiting from the spoils of the recovery and those who are not is widening.

The Data Center, a New Orleans organization that tracks post-Katrina recovery in partnership with the Brookings Institution, reports that the city’s poverty rate has inched upward to 29%, a reset to the 1999 rate following a slight decline a few years ago. Child poverty has also remained static at 28%, which is higher than the US rate of 23%.

“Like the nation, we are seeing increasing income inequality. Even though our economy is doing well, not everyone is benefiting,” says Allison Plyer, The Data Center’s executive director. “That is a big problem for us.”

Indeed, wealth disparity is spreading in New Orleans at a faster rate than most cities. Last week Bloomberg ranked 300 US cities with populations of at least 100,000 based on their level of income inequality. Even though New Orleans was the second worst below Atlanta, the city’s rate of inequality grew faster than almost every city on the list. Bloomberg reported that the bottom 40% of New Orleans’ total population only generates 7.5% of the city’s total income.

According to The Data Center, 36% of renters in New Orleans spent more than 50% of their pre-tax income on rent in 2012, more than double the percentage of New Orleans residents who did so in 2004. Plyer says, adjusted for inflation, median monthly rents were $688 before the storm. They are now $861, a 25% spike.

The combined elegance and decadence of New Orleans that has always attracted visitors has not washed away, and the city has certainly benefited from the nearly $120.5bn in federal recovery money used to strengthen its infrastructure. No one living there will argue that the city doesn’t look better, that it isn’t more secure, that quality of life hasn’t improved for most residents.

But all that has meant the rapid gentrification of some of the city, a phenomenon that real estate experts say has sharply reduced available housing stock. They say this is due to an unexpected swarm of out-of-state homebuyers, suddenly priced out of wealthier areas like Manhattan or San Francisco, who perceive New Orleans as a bargain. The newcomers have transformed neighborhoods like the Bywater, once a sleepy neighborhood of taverns and quaint shotgun houses, into a trendy enclave of gutted luxury homes, trendy eateries and minimalist coffee joints. There, prices per square foot have jumped 75% since the storm.

“We have a very poor economy and local people cannot compete with the kind of money that is flowing in from the east and west coasts,” says local realtor Debra Howell. “It’s taken a while for locals to realize this is not a passing fancy and will not get better. If they want to move up the housing food chain, they have to get as aggressive as out-of-towners who are snatching up properties.”

Some long-time residents say their city is starting to resemble a playground for the leisure class and the city is too focused on beautifying areas amenable for tourists and the professional class at the sake of those areas that remain tucked away and struggling.

Mtangulizi Sanyika, executive director of the African American Leadership Project, an 11-year-old organization that advocates for policy research that strengthens the quality of life in black neighborhoods, says he now lives in Houston because his home in New Orleans was destroyed by the flooding. He, like many who have not yet returned, says that his former neighborhood is still rebuilding and that “it will take mega bucks to reduce the economic divide.”

“The rising tide is not lifting all boats,” Sanyika says. “As the city economy grows, it is not developing the marginal population because there is not a chance of home ownership to make the difference, and there are not the kind of jobs people there can get. By the end of the day, the social disaster still exists.”


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