Assessing the Economic Toll of Hurricane Ian

Data from Gusto, the people platform providing payroll and HR services for over 200,000 small- and medium-sized businesses across the country, provides real-time insights into the state of the economy nationally and locally. In this post, we use this data to estimate the direct economic impact of Hurricane Ian on affected workers in Florida. We find that, in the week after Hurricane Ian hit Florida, hourly workers in Leisure and Hospitality experienced significant drops in hours worked and weekly earnings – with aggregate wage losses that could exceed $20 million. 

Key findings

• Hourly workers saw an 18% drop in hours worked the week after Hurricane Ian Hit: in the first full week after the Hurricane made landfall in Florida, average hours worked among employees in Leisure & Hospitality jobs fell from 27 to 22 hours – a drop of 18%. This drop in hours worked is even larger than the 15% drop seen at the peak of the COVID pandemic in March 2020.¹
• This cut in hours translated into a 14% reduction in weekly earnings: As employees saw fewer hours, they saw their paycheck shrink as well. Average weekly earnings the first week of October fell to $344, from $400 the week before – a drop of 14%. In previous years, earnings had grown by an average of 4% across those two weeks.
• Aggregate losses in earnings reached $23 million just in that first week: Using government statistics to extend our estimated loss in earnings to the total number of all affected workers in the area yields an aggregate loss in wages of $23 million dollars among these workers in the first week after Ian made landfall.

Methodology

This analysis uses Gusto’s platform data from companies located in 15 Florida counties along the path of Hurricane Ian. We examine changes in hours worked and earnings in the first full week after Ian made landfall (the week beginning October 2) among hourly employees in the Leisure & Hospitality sector². This data is restricted to companies that have adopted a weekly pay schedule in order to pinpoint the effect of Hurricane Ian week by week.

Hurricane Ian resulted in an 18% drop in hours worked

First, we examine the change in hours worked among workers in these Florida counties. Panel A in Figure 1 presents average hours each employee worked per week throughout the year for 2022 and then for those same weeks from 2019 to 2021. In previous years, average hours worked stayed relatively constant from the end of September to October, increasing slightly from 27 hours per week to 28. In 2022, on the other hand, from the week of September 25 to October 2, average hours fell from 27 to 22 hours. Just as Hurricane Ian hit on September 28, we see workers’ hours fall by the single largest amount going back to 2019. The week after, starting October 9, we see hours rebound to levels consistent with previous years.    

Panel B presents the same data in percentage terms, plotting the percent change in average weekly hours compared to the week of September 25. Indeed, while in previous years, workers’ hours stayed relatively constant across the end of September and start of October, we see in 2022 that hours dropped by 18% in the first week of October, just after Ian made landfall.

Figure 1: Average Hours Worked Per Week Among Workers in Affected Florida Counties

Florida workers saw largest drop in earnings since the pandemic started

A reduction in hours worked during the week translates directly into a smaller paycheck for that week, which we take a look at next. Panel A of Figure 2 displays average weekly earnings across the year in these affected counties in Florida. Averaging 2019 to 2021, weekly earnings rose from $374 to $386 from the week of September 25 to October 2. In 2022, however, weekly earnings were at $400 the week of September 25, but dropped $64 to $344 the week after Hurricane Ian hit. Just as workers’ hours rebounded the next week (as shown in Figure 1), we see earnings return to previous levels the week of October 9.

Panel B presents the data as a percentage change in earnings compared to the week of September 25. On average in previous years, weekly earnings rose 4% from September 25 to October 2, but in 2022 average weekly earnings dropped by 14% across those two weeks. That reduction is the single-largest drop in earnings that workers experienced over two weeks since 2019. It only matches the 14% drop in earnings workers saw over the course of a month during the height of the COVID-19 pandemic, from February 13 to March 20, 2020.         

Figure 2: Average Earnings Per Week Among Workers in Affected Florida Counties

The direct economic toll exceeds $20 million

We can use these figures to estimate, in one specific way, the direct economic impact of Hurricane Ian: the loss in earnings among this set of workers in the first week after the hurricane hit. According to the most recent estimate in the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages, in March 2022 there were 548,652 workers in the Leisure & Hospitality sectors across the 15 Florida counties we examine. While public data is not available on the portion of these employees who work on an hourly basis, on Gusto’s platform 65% of workers in these counties and in these industries are employed as hourly workers. If each of these (548,652*0.65 = ) 356,565 workers saw on average a $64 pay cut, that would result in an aggregate earnings loss of $23 million dollars just in the first week of October.

This method is, as noted earlier, one way to calculate a very specific economic cost amid the total devastation wreaked by Hurricane Ian. This of course does not count the toll of businesses and homes destroyed, of lives upended or lost. But this work highlights the needs of a particularly vulnerable group of workers, whose livelihood has been threatened by this disaster. At any time, a sudden 14% drop in earnings is difficult to deal with – but at a time when prices are already rising at a breakneck pace and a historic natural disaster has hit, it is well-near impossible. Unfortunately, it is likely that this economic toll will only grow as families recover from the storm – and we will continue to monitor the impact as the weeks continue.

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¹Counties included in this analysis include Charlotte, Collier, DeSoto, Hardee, Lee, Polk, Sarasota, Pinellas, Highlands, Manatee, Hillsborough, Pasco, Lake, Orange, and Osceola.

²Leisure & Hospitality sectors include Tourism, Food & Beverage, Arts & Entertainment, Sports & Recreation, Salon & Spa, Retail, Other Personal Services, Accommodations.