April 20, 2024

Reconstruction Lifts Economy After Disasters

But a new phase is slowly beginning in some hard-hit areas: reconstruction, which past disasters show is typically accompanied by a burst of new, and different, economic activity. There is no silver lining to a funnel cloud, as anyone who survived the tornadoes can attest, but reconstruction can help rebuild local economies as well as neighborhoods.

More than a tenth of the businesses in Tuscaloosa, Ala., were badly damaged or destroyed in April when a tornado swept across a 5.9-mile stretch of the city, and nearly 6,000 Alabamians have filed storm-related claims for unemployment benefits.

An even deadlier tornado laid waste to roughly a quarter of the businesses in Joplin, Mo., on May 22, wiping out some of the big-box stores the city relies on heavily for sales tax receipts. The flooding Mississippi River closed all nine riverboat casinos in Tunica, Miss., this spring, leaving 4,600 hotel rooms empty for weeks and depriving the county of so much tax revenue that it had to reduce its workers’ hours.

But there are already stirrings of economic activity. Home Depot, whose store in Joplin was destroyed, began selling lumber and other supplies from a parking lot there on Tuesday as it prepared to open a 30,000-square-foot temporary store.

Tamko Building Products was doubly hit. Its plant in Tuscaloosa had to halt production for weeks after the April 27 tornado destroyed a warehouse, blew out windows and knocked out power. Then in May disaster struck closer to home: Tamko’s headquarters are in Joplin, where the company was founded in 1944. The tornado that tore through Joplin left Tamko’s facilities undamaged, but destroyed the homes of roughly 20 of its employees.

But as much as it was buffeted by the storms, Tamko, which donated $1 million to the Greater Ozarks Chapter of the American Red Cross, is well-positioned to prosper once reconstruction fully kicks in. Its main product — roofing shingles — is always in demand after a tornado.

No one would suggest that disasters are a desirable form of economic stimulus. But economists who have studied the impact of floods, tornadoes and hurricanes have found that after the initial anguish and huge economic disruptions, periods of increased economic activity frequently follow as insurance money and disaster relief flow in to jump-start rebuilding.

But reconstruction also attracts vultures who prey on the desperate, through price-gouging or fraud. The Kentucky attorney general, Jack Conway, accused the Marathon Petroleum Company of price-gouging in April when it raised gasoline prices steeply after the flooding Ohio River led to a state of emergency. The company denied the accusation, and a judge denied Mr. Conway’s request to force the Marathon to lower its prices.

Alabama’s attorney general, Luther J. Strange, recorded a public-service announcement warning people not to be conned into paying steep “up-front” fees for construction work or to be lured by “today-only” prices.

“Let us be vigilant against unethical, unprofessional contractors who seek to take advantage of our citizens in their time of need,” Mr. Strange says in the announcement.

Even as the natural disasters eliminated thousands of jobs, the needs of recovery have created others. Companies like Unified Recovery Group, which is clearing storm wreckage in Alabama and Tennessee, are hiring workers and subcontractors to cart off debris. Construction companies are hiring, too. In Tuscaloosa, James E. Latham, chief executive officer of WAR Construction, said his firm had rehired workers who had been laid off during the downturn and had added new employees to prepare for the work ahead, like rebuilding an elementary school.

As insurance claims are paid, a further economic stimulus lies in the shopping that some people will do to replace lost goods.

Article source: http://feeds.nytimes.com/click.phdo?i=a0bc0648d61a393bfa46cfa1f4ad2d1a

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