Spending for Recovery in New Orleans Promotes Equal Opportunity

As we all know, Hurricane Katrina hit New Orleans hard. It’s been years since that disaster, but while much of that city has recovered, many areas of the city and its people are still struggling.

Recognizing that New Orleans had a long road to recovery, civic and business leaders founded the New Orleans Business Alliance in 2010 to create economic opportunity across the city. The organization — referred to as NOLABA — focused on attracting and retaining businesses in the area, developing new small businesses, investing in neighborhoods, and implementing necessary workforce development training.

I started working with NOLABA in my role at Living Cities, right around the ten-year anniversary of Hurricane Katrina in 2015. Despite lots of hard work and lots of dollars put into the recovery, there was still much more to do. Living Cities donated financing to NOLABA to support its work, and I helped them expand and manage their partnership with corporate leaders and government officials.

NOLABA was partnering closely with the city government and the mayor’s office, particularly its Network for Economic Opportunity initiative, which was working to create equitable growth strategies to ensure that economic development benefited all people, not just the wealthiest or most privileged. This equitable strategy was based on research that showed if all people of color throughout the New Orleans area had access to the same opportunities as white people, the state would see an additional $7 billion in earnings and $20 billion in economic impact.

Most of the people and places that were hit hardest by Katrina and its aftermath were the Black community. New Orleans lost about one in three of its Black residents in the aftermath of the storm, and even ten years after Katrina, about half of the city’s Black residents said they had not recovered, compared to just a quarter of white residents. NOLABA knew that to help create robust economic development across the city, they would have to fully invest in the Black community and its businesses.

Part of the challenge was that Black-owned small businesses had not had access to the opportunities that other businesses in the city receive. Even though about 40 percent of the small businesses in New Orleans are Black-owned, they received only 2 percent of the total receipts — a trend going back to the mid-90s. Without greater access to the city’s economic activity, they are unable to grow and thrive at the same levels as other businesses.

To help solve this disparity, NOLABA worked with the city government to connect small, Black-owned businesses with developers and other companies supporting the Katrina recovery efforts. Billions of dollars were being spent to rebuild the city and NOLABA worked to ensure that those dollars stayed local, and that small businesses, particularly small businesses owned by Black people, were able to secure contracts to assist in that recovery. They saw this massive spending opportunity as an equally massive opportunity to create equitable impact.

The city also established a local hiring policy for these contractors to ensure that New Orleans residents could access and benefit from the jobs created. It also passed an employee and contractor minimum wage, raising it from $7.25 to $10.10 an hour, and adjusting it yearly for inflation. In 2021, it reached $15 an hour.

By doing this, NOLABA created a multiplier effect from these development projects. The money spent not only went to the physical recovery of the city with new homes, buildings, and infrastructure, but also to local businesses and their local employees who supported their construction, either as direct contractors or subcontractors.

These and other efforts led to massive benefits for the city and its residents:

• Over 30,000 jobs created in the last 10 years.
• Three percentage point decrease in unemployment rates over the last 10 years.
• In 2019 alone, $8.5 million in contracts awarded to entrepreneurs of color.

These results are not only because of the work NOLABA did to direct spending and contracts to small businesses, but also because of their broader equitable strategy to ensure all can benefit from the economic activity in New Orleans. The procurement and contracting efforts were (and are) a major pillar of their approach, and show what’s possible when you think more intentionally about how you spend your money, where you spend it, and who you spend it on.

Even if you aren’t working with city governments and major developers, how can you use your spending differently to create the kind of equitable impact NOLABA was able to create?

Read more stories of equitable impact in my book, The Social Impact Advantage!