April 19, 2017
Big Storm, Small Businesses, Lost Jobs: Superstorm Sandy’s Lessons for Local Resiliency Planning
By Rachel Meltzer
The density and mixed-use character of many city neighborhoods make them places of great productivity and vitality. Small businesses in such neighborhoods are central to their economies, providing critical goods and services, amenities, employment and livelihood, and spaces for cultural contact. They are also, however, particularly vulnerable in the face of extreme weather events.
In October 2012, Superstorm Sandy hit the U.S. Eastern Seaboard, devastating parts of New York City. More than 50 New Yorkers perished; many others not only lost their homes, but the services and businesses that keep their communities running.
Precisely what happens to these establishments, and the services they provide, when a natural disaster like Sandy strikes? How vulnerable are they in a city like New York, at both a micro, neighborhood scale and also a broader economic one? These are some of the questions that my colleague, Ingrid Gould Ellen, and I attempt to answer in our research, Small Business Vulnerability in the Face of Natural Disasters: The Case of Hurricane Sandy and New York City.
First, we consider businesses’ exposures to risk. We use rich microdata to identify those located in parts of the city that were mandated to evacuate in advance of Superstorm Sandy. We consider these businesses to have been most vulnerable to flood-induced damage. While businesses were not disproportionately locating in these higher risk areas, their presence there is significant. Before Superstorm Sandy, more than 25,000 establishments were located in the highest risk evacuation zones and, of those, nearly half were providing critical services, like groceries and drug stores. In addition, a majority of buildings in the higher risk areas are of lower-scale construction, implying that most businesses were likely located closer to ground level. Moreover, the buildings were mostly built prior to any resilient building code standards.
Second, we consider the effect of storm-induced flooding on these businesses. We focus on one particular outcome: jobs. Specifically, we test whether or not businesses shed jobs in the aftermath of Sandy, and whether job losses were more severe in places with higher levels of flooding. More importantly, we look at job outcomes only for businesses in the evacuation zones (that is, holding pre-Sandy risk constant), and also across areas within those zones that experienced varying storm surge heights.
In brief, we have found that the impacts differed depending on the nature of the business. While overall employment did not exhibit any significant declines after Sandy, the retail sector did suffer. And the losses were most acute in areas that experienced surge levels of three feet or more – places where flooding severely disrupted business operations. Looking at data from two years after the storm, we found a 40 percent reduction in retail employment (an average decline of about 8.5 jobs) for the typical neighborhood in these high-surge areas. We do not yet know whether these job losses were driven by business closures or contractions (more research is in progress). But, it is likely that they were accompanied by interruptions in community services and in earnings for those formerly employed at the damaged establishments.
Our findings so far offer two important lessons for policy. First, there are implications for the city’s management of risk. The fact that there were significant job losses in areas designated for evacuation suggests that the actual evacuation response and storm preparation were inadequate in terms of achieving short-term resiliency. Second, communities within the same municipality can suffer very different costs from natural disasters. These findings therefore indicate a need for neighborhood-based planning and localized responses in the face of extreme events.
Here at The New School, we are hosting an event on April 26th on this very topic: How can neighborhoods plan for resiliency? The urgency of this question has increased as the Federal government’s commitment to sustainable practices seems to waver; much of the energy, innovation, and mobilization around resiliency will, as a result, need to be built from the ground up. At this event, we will hear from experts and practitioners working to understand and implement resiliency strategies in communities in the New York City area. They will describe their experiences in the wake of Superstorm Sandy, and how they have informed community-led and innovative approaches.
Hurricane Sandy was a defining moment in the city’s history. Gone are the days when we question whether or not another, similar extreme event will occur; now we ask how to best equip communities to prepare for and bounce back from natural disasters.
Rachel Meltzer is an assistant professor of urban policy at the Milano School of International Affairs, Management, and Urban Policy at The New School.
Image Source: New York City Office of Emergency Management