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Economic Policy Institute

OCTOBER 6, 2005
1:10 PM

CONTACT: Economic Policy Institute
(202) 775-8810

Lessons from Los Angeles for Louisina, Alabama, and Mississippi
New EPI Report Urges High-Road Strategies for Rebuilding after Katrina


WASHINGTON - How rebuilding is carried out after a natural disaster has enormous consequences for businesses, families, and local economies. Missteps now being taken by the federal government post-Katrina are likely to impede efforts to repair the physical and economic damage, in sharp contrast to the highly successful rebuilding of infrastructure in Los Angeles after the 1994 Northridge earthquake.

A report released today by the Economic Policy Institute, “Lessons for Post-Katrina Reconstruction: High-Road vs. Low-Road Recovery ,” compares and contrasts the federal response to these two major disasters. Peter Philips, the University of Utah economist who prepared the report, offers a point-by-point comparison of the federal response, showing where current policy falls short of the framework so successfully utilized in L.A. He explains why these differences will likely produce a less satisfactory outcome in the Gulf Coast than in L.A., where rebuilding was completed well ahead of schedule, putting the community and families back on their feet firmly and quickly, thanks to the high-road strategy pursued by the federal government.

According to Philips, the rebuilding of critically important infrastructure in Los Angeles became an important engine driving the city’s economic recovery because the federal government did not suspend pre-existing wage standards, competitive bidding procedures, or minority hiring rules for federal contractors. Businesses that won the contracts to rebuild in L.A. reaped generous profits, and the workers they hired shared in those profits, which were, in turn, pumped back into the community, creating more opportunity and prosperity.

In contrast, President Bush’s decision to suspend the rules for contractors along the Gulf coast could produce a result more like the one that followed Hurricane Andrew rebuilding in Florida, in which money generated by the federal contracts flowed out of the state rather than staying in the communities where it was needed for economic rebuilding.

Click here to download the report.


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