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Worker Shortages Post-Katrina Send Businesses out of Mississippi

February 7, 2007 at 12:00 AM EST
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JEFFREY KAYE, Reporter, KCET: In a triumphant and patriotic ceremony, officials recently opened up a job center in a Waveland, Miss., building that had been flooded during Hurricane Katrina. The opening was accompanied by a job fair where employers came to recruit workers.

JOB FAIR WORKER: It’s definitely a good career opportunity. We’re going to give it a shot.

JEFFREY KAYE: But after the resumes had been collected and the brief ceremony completed, there remained more employers than job-seekers. Attracting workers is a challenge for employers all along the Mississippi Gulf Coast. “Now Hiring” signs are practically everywhere.

Both unskilled and skilled employees are in demand by all kinds of businesses, among them Northrop Grumman Ship Systems in Pascagoula, Mississippi. With a workforce of over 17,000, the shipbuilder is the state’s largest private employer. But even with union benefits and wages that average more than $18 an hour, the company has had trouble filling positions.

EDMOND HUGHES, Northrop Grumman: We need 1,600 people desperately.

JEFFREY KAYE: Northrop Grumman Vice President Edmond Hughes says to find workers the company is casting a wide net.

EDMOND HUGHES: We’ve increased some of our college recruiting activities. We’re using contract labor to supplement. We’ve even gone as far as Puerto Rico to bring in some of our contract labor employees.

A lack of affordable housing

Gary Swoope
Mississippi Development Authority
Part of MDA strategy, actually, which was developed the week after the storm, was coming back and helping with the tourism. One of the things that we looked at is immediately the convention business.

JEFFREY KAYE: The labor shortage is caused, in part, by the lack of housing. Vacant lots and slabs where homes and buildings once stood extend for miles and miles along the Gulf Coast. Thousands of former residents have moved away. Many apartment buildings that before the hurricane charged rents at the half the current rate sit vacant and dilapidated, virtually untouched since Katrina's devastation.

One reason for the short supply of affordable housing is that state of Mississippi gave a higher priority to rebuilding single-family homes and casino hotels. Officials decided to get the tourism industry quickly back on its feet, hoping to stimulate the broader economy, according to Gray Swoope. Swoope heads the Mississippi Development Authority, the MDA.

GARY SWOOPE, Mississippi Development Authority: Part of MDA strategy, actually, which was developed the week after the storm, was coming back and helping with the tourism. One of the things that we looked at is immediately the convention business. You know, the convention business, that people were coming into the hotels and the gaming industry, staying here, restaurants, other small businesses benefited greatly from.

JEFFREY KAYE: Swoope says his agency is now starting to address housing for low- and moderate-income residents. But the affordable housing shortfall is part of an economic climate that one prominent business has decided is untenable.

GARY SWOOPE: Our plans now are to close this facility by October and have our operation fully in Cookeville, Tennessee.

The impact on businesses

Thomas Oreck
CEO, Oreck Corporation
After the storm, we gave significant pay raises, and even still are unable to keep up with what was a rising cost of living. For the type of work that we do here to be competitive, there is a limit to how much that we can do and stay competitive.

JEFFREY KAYE: Thomas Oreck, the CEO of the vacuum manufacturing company, the Oreck Corporation, had vowed to stick it out after Katrina. Instead, he is shutting down the firm's assembly factory in Long Beach, Mississippi. The plant employs nearly 500 people.

One reason for the decision to move, according to Oreck, is the high cost of insurance. But the firm is also having difficulty with a high turnover rate among workers. Oreck says, since Hurricane Katrina, he's raised wages 11 percent, but living costs in the area have gone up about 18 percent.

THOMAS ORECK, CEO, Oreck Corporation: After the storm, we gave significant pay raises, and even still are unable to keep up with what was a rising cost of living, and, you know, for the type of work that we do here to be competitive, there is a limit to how much that we can do and stay competitive.

JEFFREY KAYE: And when you say competitive, you're talking about globally competitive?

THOMAS ORECK: Yes, globally competitive and competitive in terms of even domestically.

JEFFREY KAYE: For many workers, the labor shortage offers opportunity, even for those in the service sector.

CANDIE KIRKLAND, Waitress: I mean, you can pretty much go anywhere you wanted to. I mean, McDonald's is paying $9.75 to high school kids right now.

JEFFREY KAYE: And what did they used to pay?

CANDIE KIRKLAND: About $5.35 to $6.

JEFFREY KAYE: At the 27th Avenue Bistro in Gulfport, owner David Vickers is at the grill, because three employees didn't show up for work, a common problem.

DAVID VICKERS, Restaurant Owner: I'm paying 20 percent, 30 percent more than I would have pre-Katrina.

JEFFREY KAYE: To attract workers?

DAVID VICKERS: To attract workers, for an hourly rate, OK? What I have difficulties dealing with is the big mom and dads, like the casinos. They come in, they came back and opened up. Well, they can offer $15, $16 an hour, plus health benefits.

Construction workers in high demand

JEFFREY KAYE: In the building business, many skilled workers are finding they can write their own tickets. The trades are in high demand.

WILLIE PARKER, Construction Worker: There's so much work here, that, I mean, this is the best time to be a -- I believe that -- to be in construction.

JEFFREY KAYE: For construction workers, such as Willie Parker, it's a boom time. Skilled workers make up to $25 an hour; unskilled helpers, up to $13.

But many of the construction workers are itinerant, here from out of state to make a quick buck and leave. Subcontractor Kevin Wallace came in from Tennessee.

KEVIN WALLACE, Construction Worker: Yes, we've had a lot of guys, you know, they get homesick, too, you know what I'm saying? They got families and everything up there. And I wish you could find more locals down here, really.

When you do hire somebody, they're from out of town, you know, so I don't know. A lot of them sleeps in their RVs. A lot of them were in tents up until, you know, the bad weather set in, and then, you know, they just evidently go home.

Importing foreign workers

Bruce Nourse
Beau Rivage Casino
We lost about 70,000 homes on the Mississippi Gulf Coast. We have never built more than 2,500 homes in one year on the Gulf Coast. So just by virtue of that fact, it'll take us years to recoup what we had prior to the storm.

JEFFREY KAYE: Some Mississippi companies are using workers from much farther away than neighboring states. They're importing hundreds of employees from abroad.

Late last year, Signal International, an oil rig construction and repair company, brought in some 300 workers from India. Working as welders and pipe fitters, they've been issued temporary visas by the federal government under a program that allows companies that can't find U.S. employees to import foreign nationals.

The Indian workers live in housing inside the shipyard. They have to pay room and board. The company wouldn't let us shoot there, nor would they provide a representative for an on-camera interview. But off-camera, a Signal vice president told us the company also uses hundreds of workers, provided by labor contractors, including many guest workers from Mexico.

The Mexican workers -- about 300 of them -- live in a fenced-in compound at a site that's near the shipyard. When we started to interview the workers, the labor contractor that brought them in, Knight's Marine and Industrial Services, told us to leave. They refused to answer any questions.

The workers live in wooden sheds without windows, plumbing or insulation. They sleep in bunk beds -- six to a cabin -- where they store food. These pictures were taken and provided to us by workers who asked to remain anonymous, saying they feared retribution.

Putting foreign workers up in sheds may represent an extreme response to the labor shortage. But Mississippi businesses worry that the problem will not be resolved easily or soon. Bruce Nourse is vice president of MGM's Beau Rivage Casino in Biloxi.

BRUCE NOURSE, Beau Rivage Casino: We lost about 70,000 homes on the Mississippi Gulf Coast. We have never built more than 2,500 homes in one year on the Gulf Coast. So just by virtue of that fact, it'll take us years to recoup what we had prior to the storm.

JEFFREY KAYE: The rebuilding brings with it a catch-22: As government and insurance money flows in, the demand for workers will be even more urgent.