When Mayor Ray Nagin, the mayor of the City of New Orleans, stepped up to the podium for a hastily-fashioned press conference three days after Hurricane Katrina's passage through the city, he said that the city was, "In a state of devastation."
Being one of the five deadliest storms in America's history, the substance of the Mayor's statement goes without saying, and the economic damage (the Congressional Budget Office estimated that the storm would slow the growth of inflation-adjusted U.S. GDP by up to 1.5%, or keep the country from about $161 billion of purchasing power). It was also estimated by an agency with a similar level of authority, the Bureau of Labor Statistics (BLS), that more than 20% of New Orleans' citizenry at the time-- up to 105,300 people at one point-- was left officially unemployed by the storm.
While few are fundamentally unaware of the high cost to both the nation and the city as a result of Katrina, few are also aware of exactly why so many residents lost their jobs and why the economy of New Orleans in particular was so susceptible to the storm's damage.
The answer: tourism, as well as music festivals, such as the New Orleans Jazz Festival, which bring many visitors to the Crescent City in the first place.
According to the BLS, total wages paid to workers in the tourism industry in the Spring of 2004 was $213.8 million, about one tenth of all wages paid to workers in the New Orleans metro area. The BLS also stated that up to the day of the storm's passage through the city, tourism employed 85,000 people (by far the largest employer in the city then and now), while afterwards, only 47,980 were employed afterwards. Thus, Katrina was responsible for a loss of more than 37,000 jobs, or more than one-third of the total lost at the height of unemployment caused by the storm, which was reached in January 2006. When the proportion of jobs held by those in the industry is compared to the proportion of wages paid out, the significance of the loss becomes much more apparent.
The importance of tourism to the employment of New Orleans' inhabitants is shown further in the fact of how fast the BLS has reported that jobs in the industry have rebounded-- statistics for January 2008 show that tourism jobs have grown about 40% from their post-storm level. According to a report published on the New Orleans Conventions and Visitors' Bureau's (NOCVB) website, tourism has a yearly economic impact of $5 billion on the city which had a gross private industry product of $56 billion in 2005, almost 10% of the total.
In comparing the relative impact of tourism upon the New Orleans economy, data from research done by the Bureau of Economic Analysis (BEA), the federal agency in charge of reporting economic output and growth in the U.S. at the national, state and local levels, shows that the major private business sub-sectors of "Accomodation and food services,""Arts, entertainment, and recreation"-- the areas which generate a majority of "tourism"'s overall gross-- constituted about 6% of private business in New Orleans, compared to 3.4% of private business in the New York metro area, 3.6% in the Chicago metro area, and 4.8% in the LA metro area, and approximately 4% in all U.S. metropolitan areas. New Orleans also depends more on tourism, according to the statistics, compiled in 2005, than even Miami or Washington, D.C. The only metro area of a major city that depended more on tourism in 2005 is Las Vegas, which has a long and infamous history of having "Hospitality/Leisure" (the BEA's name for a grouping of the two aforementioned sub-sectors which most closely correspond with the activities associated with travel and tourism) as the backbone motif of its economy.
Why all of these esoteric economic statistics being published on a site that concerns itself mainly with music festivals, though? Because music festivals are included in, and go toward more than 10% of the city's 2008 tourism bounty, earning with a year's worth of the city's festivals more 15% of the total loss caused to the tourism industry by Katrina over time, which is $3 billion according to the NOCVB report. And considering the fact that fans go to festivals primarily for things like "accomodation", "food," "arts,""entertainment," and "recreation," it is unlikely that the BEA's statistics regarding the tourism industry's economic output in 2008, which are yet to be released, would discount with the economic significance of New Orleans' traditional festival boom (again, the majority but not the entirety of the tourism's industry's output is put under the subheading "Leisure and Hospitality," which includes the economic output of private business sub-sectors such as "Food and Accomdation Services" and "Arts, entertainment, and recreation").
The seven-day New Orleans Jazz and Heritage Festival, which between 375,000 and 400,000 attended this year, had an economic impact of $300 million, and an impact of $250 million in 2007. Not even the national college football championship game played at the reconstructed Superdome had a greater impact (it made $250 million for the city).
The three-day Essence Music Festival, which was attended by 200,000 people, had an impact of $150 million in 2007, and while the impact of the 2008 festival has not been determined, it is unlikely that it would be any less than $120 million, as the impact of earlier editions of the festival in New Orleans has been slightly above that number since 2003.
In regards to the smaller, locally-treasured French Quarter music festivals, the three-day actual French Quarter Festival had an impact of $10 million this year (though the impact of last year's edition was $7.8 million according to the NOCVB report and $75 million according to the festival's website, suggesting that the festival may have meant much more business for the city than the city would admit), and, the last year it was tallied (2004), the four-day Satchmo Summerfest generated $7.5 million of business for the city, with the year before earning $5.3 mil. for the city, suggesting that the next economic report concerning that festival can be safely relied upon to reveal an impact of at least $5 million for the city.
There has never been an economic study for the Voodoo Music Experience, but by taking an average of the output per person of the 2008 Jazz and Heritage and 2007 Essence Festivals-- both festivals similar to Voodoo in scope (of attendees, ticket prices, on-site vendors, sponsors, etc.)-- and multiplying it by Voodoo's attendance in 2007, we can get some rough idea of how much that festival is actually likely to make if it operates with the same level of organizational efficiency, ambition, etc. that it has in the past. The rough estimate found from this admittedly rudimentary calculation of the festival's impact is about $6.7 million.
All in all, just the music festivals mentioned account for nearly .8% of New Orleans' total GDP, and make the city's economic stability in the face of a storm like Gustav, which has fortunately not resulted in any structural damage like that of Katrina, or other future storms that pose a significant threat to the city in the late summer of each coming year, much more fragile than it would seem at first.
While it's tempting to largely separate the business of tourism from the business of music festivals, it's important to consider the total attendance for each of the three largest festivals-- all well above 100,000 strong--and compare that to the population of the city, 485,000. With festivals outside a major city, such as Bonnaroo or Coachella, being able to attract 60,000 or 80,000 people, a precedent has been set for festivals of similar stature such as the N.O. Jazzfest, Voodoo and Essence easily attracting tens of thousands of out-of-town fans to fill out their attendance totals. With hotel reservations, souvenirs, museums visited while in the city and other basic components resulting from the "consumption" of out-of-towners no doubt included in the festivals' total economic impact, it becomes obvious that the city and its overall tourist industry depends upon festivals to provide the stimulus for tens of millions of dollars in revenue.
With this and all the stats in mind, New Orleans has proven itself to be a city that might not have economic ailments caused by a natural disaster that would be completely cured with the "traditional medicine." In the unfortunate event that a future storm overpowers the levees and causes damage similar to Katrina, it seems that grants from the National Endowment for the Arts to the local arts councils that know the ins and outs of festival organization, along with the loans and grants from the Small Business Administration and Department of Labor that are currently part of the federal government's fiscal plan, are in order. Whether helping to provide a boost to festivals already mentioned, or perhaps laying a foundation for new festivals or other large A&E and cultural events, these funds would provide the special support needed for a city that empirically parties more than most to keep itself out of an economic downturn.
