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Wall Street Week Podcast Summary
Episode Details Title: North America Auto Tariffs, American Worker Shortage, 20 Years After Hurricane Katrina Host: David Westin Overview: This episode revisits significant stories concerning North America’s economic landscape, including U.S.-Mexico trade relations, the impact of auto tariffs, and the long-term recovery of New Orleans post-Hurricane Katrina.
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Key Topics Discussed
- U.S.-Mexico Trade Relations and Auto Tariffs
- Background on North American Trade:
- The episode starts with a reflection on trade integration between the U.S. and Mexico, emphasizing the effects of the USMCA (United States-Mexico-Canada Agreement) compared to NAFTA.
- Post-2016 election uncertainty about trade policies has continued to affect businesses.
- Manufacturing Shift:
- Baldwin Britton, CEO of Plasti Exports, discusses how manufacturing is relocating back to Mexico from China, citing a "Mexican moment."
- Challenges Faced by Investors:
- Shannon O'Neill highlights judicial reform concerns in Mexico and the worsening security situation under the current government.
- There is a notable decline in both domestic and foreign investment due to ongoing uncertainties.
- Impact of Auto Tariffs:
- Rob Wildeboer, from Martin Rea, outlines the disruptions caused by tariffs on auto parts and vehicles, emphasizing the interconnectedness of North American auto supply chains.
- The auto industry is advocating for tariff-free movement to enhance efficiency and consumer affordability.
- American Worker Shortage
- Workforce Challenges in North Dakota:
- The episode highlights Fargo’s significant labor shortage, with 30,000 open jobs and only 30 workers for every 100 available jobs.
- Katie Ralston Howe discusses efforts to recruit international talent through a newly established Office of Legal Immigration.
- Importance of Immigrant Labor:
- Cardinal Glass, a local employer in Fargo, relies heavily on immigrant workers. They are actively working to fill job openings by attracting qualified workers from abroad.
- 20 Years After Hurricane Katrina
- Reflections on New Orleans' Recovery:
- The podcast revisits the devastating impact of Hurricane Katrina and the subsequent rebuilding efforts.
- Rick Blount, owner of Antoine's restaurant, shares personal accounts of the challenges faced during the recovery.
- Community and Infrastructure Recovery:
- Walter Isaacson describes collaborative efforts to rebuild schools and restore essential services post-Katrina, emphasizing the role of federal aid and community involvement.
- Current State and Future Prospects:
- The recovery has seen improvements, but challenges remain, particularly in addressing wealth disparity and job quality in New Orleans.
- Allison Plyer discusses the ongoing issues with income disparity and the necessity for a forward-looking economic strategy to attract investment and create jobs.
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Key Takeaways
- Trade and Manufacturing Dynamics: The shift of manufacturing back to Mexico signals a potential resurgence in North American trade relations, although uncertainty remains a significant deterrent for investment.
- Labor Market Pressures: The acute worker shortage in areas like North Dakota highlights the crucial role of immigration in filling labor gaps, especially in industries reliant on manual labor.
- Long-term Resilience Post-Katrina: New Orleans has made strides in recovery, but continued focus on education, job creation, and addressing systemic inequality is essential for sustainable growth.
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Conclusion This episode of Wall Street Week provides a multifaceted view of the current economic climate in North America, articulating the intertwined nature of trade policies, labor markets, and community resilience in the face of adversity. The discussions underscore the importance of strategic planning and collaboration to foster a robust economic future.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Transcript
Automatic transcript. May contain errors.0:00The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. Find home wherever you roam at Sinesta ES and Simply Suites. Stretch out and enjoy home-like amenities for however long you need. And when you're a Sinesta Travel Pass member, staying at Sinesta ES and Simply Suites means earning points toward free nights, upgrades, and more.
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1:44This is a special anniversary episode of Wall Street Week. I'm David Weston bringing you stories of capitalism. It was just a year ago that we debuted this new version of our program. It's been through several lives since Louis Ruckhizer first broadcast his original version on PBS back in November of 1970.
2:14Good evening, I'm Louis Rukeyser. This is Wall Street Week. Welcome back. Well, folks, it's New Year's again. Abby, welcome back. You've made this walk 10 times. I think you know the way. Thank you, Lou. A lot has changed in the 55 years since then. in the media world, in the worlds of markets and finance, and in the world at large. You, our audience, have largely remained the same. Smart, serious investors. But since you now have so many ways of staying up to date on the markets, we took the program in a new direction, focusing on timely but longer-term stories told from a range of perspectives.
2:53Still stories of capitalism, but not quite as much what you need to know as what you need to think about. This week we go to New Orleans for a different sort of anniversary. The extraordinary story of the rebirth of a city that came close to death's door when Hurricane Katrina struck 20 years ago. What it took to survive, how far it's come back, and what the future may hold for its residents, its businesses, and its economy. But we start with two updates on two stories we brought you over the last year. stories that drew your particular attention and that remain every bit as timely as when we first aired them starting with what we call the story about potential the potential for further integration across the border between the United States and Mexico when we first told the story in October of last year President Trump had not yet been elected creating uncertainty about the future of US trade with Mexico and the USMCA trade agreement now nearly a year later, the potential we talked about is still there, but so is the uncertainty.
3:57The plastic comes from piping. Baldwin Britton is a manufacturer based in Monterey, trying to seize what some are calling the Mexican moment. And everything comes as a pellet, and it gets melted in this machine. As CEO of Plasti Exports, he runs several factories in northern Mexico making plastic components and finished consumer products. In his newest plant, kitchen containers. So this is for consumer products that we're selling to the United States that basically came from near-sharing projects. So these products were previously made in China, and they're relocating into Mexico. This closer integration between Mexico and the United States was jump-started by the North American Free Trade Agreement, or NAFTA, back in 1994, covering Canada as well as the U.S.
4:48and Mexico. Britton is willing to bet you'll find something he makes in your home. As a longtime supplier of parts to U.S. and European home appliance companies, his new customers are just as likely to be Chinese multinationals you've never heard of. 30 years ago, we saw a lot of shift of business from Mexico to China. And the last four years, we have seen the shift come back to Mexico. Are Chinese companies coming in to compete with you? Yes, they are coming. They're setting up plants in Mexico. As a matter of fact, in Nuevo León, the state of Nuevo León, which is the industrial hub of Mexico, they're setting up.
5:26So that basically forces companies like us to be in our A game to compete with them. Shannon O 'Neill is senior vice president of the Council on Foreign Relations. She sees the window of opportunity others do, but also some troublesome risks for investors. As you talk to investors in Mexico, how concerned are they about some of the issues you identified, like judicial reform, for example? These really are front and center in investors' minds. So the justice reform will mean that judges are now elected, and so businesses worry that those judges could be bought or influenced by the government in particular cases.
6:02What about security in particular? Because it wasn't that long ago that it felt like some of the individual Mexican states were almost in a state of civil war with the cartels. Security has worsened under this last government. Homicide rates have remained at near record highs, but things like extortion, embezzlement, and other kidnappings have grown. One of the things an investor tends not to like is uncertainty. And it's building an uncertainty that happened under the last administration. It's continuing and even deepening. And we've seen it in the investment numbers. You know, what Mexicans were hoping 2024 would be a record highs in terms of investment, and most of it has been frozen.
6:38in both international investment, foreign investment, but also domestic investment. So this is a time of uncertainty in Mexico, even as companies are looking for alternatives to Asia. And if that weren't enough, the USMCA itself, that successor agreement to NAFTA, underpinning the nearshoring system, will be up for review in 2026, with new governments in both the United States and Mexico. I do think these are going to be pretty difficult negotiations. The really looming issue for the review of the USMCA is China. And where does China fit into supply chains in North America? And where does China fit into production more broadly in North America?
7:20Marcelo Ebrard is the new minister for the economy for President Sheinbaum, coming to the job after serving as mayor of Mexico City and as foreign minister under President Andres Manuel López Obrador. Ebrard's appointment itself could be a sign that President Sheinbaum welcomes further U.S. investment and supports more economic integration. In the last administration, Ebrard led negotiations for the U.S.-Mexico-Canada agreement. Well, we are extremely linked with the United States companies and market. So if you put tariffs on Mexico exports, for instance, those tariffs are going to translate in high prices for consumers in the United States.
8:06So I think we have a strong argument in order to reduce this possibility to have tariffs in our exports to the United States, because there are American companies exporting to the United States. You don't solve anything with tariffs between us. It doesn't make sense, because it's the same economy, practically. I know you have some tariffs on steel, for example, from China at this point. How do you see the role of tariffs? When do they make sense? When do they not make sense? Well, it's easy to abuse about tariffs, to put tariffs for any kind of article at the same time. We are not especially friendly with the tariffs for several fields because it can be costly for our economy, even for the United States economy.
8:57So we need to have a common policy with U.S. Let's see what happens in the next election in order to have a conversation about the competition with China. Let's do something really effective. Because you are not going to solve competitiveness through tariffs. It doesn't work. But in the end, Minister Abrard recognizes that the real potential of the Mexican economy and its further integration with the United States will depend on its ability to attract private capital. and he can see a world where that integration transforms the world of Mexican exports. There is no other way to do it. Because we are not going to find new resources from oil.
9:44No, it doesn't exist. Everything is going to depend on our capacities to produce better and more. How far can you go? How much progress can you make building the Mexican economy through integration with the United States? I think that if we are agreeing, if we have a common vision with, let's say, the private capital in the United States, this can be something near 25 % of the imports from North America. So you can imagine the impact of this in Mexico. You can change the country in 10 years. Why not? Since we spoke with Minister Abraad in Monterey last October, President Trump has gone forward with tariffs on steel, aluminum, and auto imports, though they apply only to the non-U.S.
10:39parts of vehicles imported under the USMCA. What this means for auto companies and their parts suppliers is still playing out, but Ontario-based manufacturer Martin Rea is seeing the ramifications in Canada, Mexico, and in the United States. Martin Rea is a tier one auto supplier. We're leaders in structural parts, lightweight structures and propulsion systems. We make parts for cars. We're one of the larger suppliers in North America. Rob Wildeboer is the executive chairman of the auto parts company he co-founded in 1993. He says the tariffs have been disruptive up and down the supply chain. Parts on average can cross the border anywhere from six to eight times.
11:22But certainly we make parts that go into assemblies, that go into vehicles. So I'd say a lot of our parts probably two to three times. That flow has been disrupted by President Trump's imposition of a 25 % tax on foreign vehicles. In turn, Canada announced a tariff on U.S. assembled vehicles. companies like Martin Rea are collateral damage in a diplomatic feud between neighbors. So effectively, on average, Canadian assembled vehicles have 50 % or more U.S. parts. So effectively, you're repaying half the nominal tariff. And our argument is that we should basically move to get rid of that. The interesting thing between Canada and the United States is that when you look at assembled vehicles, Canada buys less from the United States than the U.S.
12:10buys from Canada. But when you look at the parts, the U.S. actually has a surplus with Canada in auto. So parts plus assembly. And that's in part because vehicles assembled in Canada that go to the U.S. have at least 50 % U.S. parts. So there's not a trade disparity in that sense between Canada and the United States, contrary to what you often see in the papers and so forth. Now, for the first time in 30 years, Canada imports more vehicles from Mexico than from the United States. But what sounds like a win for Mexico might be a loss for the long-standing trade relationship among the North American countries.
12:47This is what works for North America. You need a Fortress North America approach. We shouldn't have tariffs on vehicles because we make vehicles together, and we shouldn't have tariffs on parts. And for most auto parts, there are no tariffs right now. If you put tariffs on auto parts, you would shut down the industry because there would be suppliers that do not cross the border. The second thing we need is stronger North American content, which the US wants and so the supply base wants. The third thing is we need a penalty for not complying with that North American content. Right now it's two and a half percent.
13:22It should be higher because if you have a low penalty, people essentially don't follow the rules. The fourth thing is I think it's good to have a tariff or some measure to force OEMs in Europe, Japan and Korea to make more vehicles here. And the U.S. has done that with tariffs. I think ultimately you will see more assembly in North America because of that. And then the fifth thing is I think you've got to keep China out in terms of OEMs and parts as well as investment, because China doesn't play by the same rules as the rest of the world does. When you have that, you're going to effectively have a regime that really works.
14:01So our advocacy, whether it's at Martin Rea, or whether it's part of the Canadian Automotive Partnership Council, or the Auto Parts Manufacturers Association, or MIMA, all these associations that we're members of, we basically say what really works for North America and the competitiveness of our vehicle industry is tariff-free movement. And that will get cheaper vehicles to consumers, which is what we all want, and it will make our industry as efficient as it can possibly be. So I think with respect to the tariffs on Canadian-assembled vehicles going into the U.S. and Mexican-assembled vehicles going into the U.S., we've got to work towards a 0 % tariff because, quite frankly, that's how the integrated supply chain works.
14:46The history of the North American auto industry is rooted in tariffs. Canada's auto industry began in 1904 when Henry Ford went to his neighbor in Windsor, Ontario, to establish the Ford Motor Company of Canada to avoid Canadian tariffs on U.S. autos. As it turns out, history is repeating itself, or at least rhyming, for the auto industry. Up next, another story we covered this year that is very much in the news today. The Trump administration's efforts to expel undocumented immigrants and what it means for our workforce.
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18:05Last October, we told you a story about our neighbors. Neighbors integrated into our communities and businesses that have come from abroad. Neighbors like Anna Yor of North Dakota. You can work in Carmel Glass without no experience, without no English. Good for immigrants and anyone who needs a job. My job is machine technician. I'm making spots of the window like this. You make it and then put the glass on. Yor moved from South Sudan to the city of Fargo 14 years ago, seeking a better life. In 2013, she started working at Cardinal Glass and has been an employee there ever since. We have many immigrants.
18:59We work like a family, a friend, and teamwork. And we help, we support each other. So here in Fargo we have 347 teammates. About 70 % of our team is comprised of people born outside of the United States. Plant manager Mike Arntzen has worked at Cardinal Glass Fargo since it opened in 1998. The company manufactures residential glass for windows and doors with 10 ,000 employees across its 49 locations. In Fargo alone, it employs about 400 workers. What we want to do is attract and hire the most qualified, the best qualified teammates that we can attract. And it just so happens that a lot of those folks that we're attracting happen to be immigrants.
19:52And we're more than happy to have them here. According to the Bureau of Labor Statistics, North Dakota has the worst worker shortage in America, with only 30 workers for every 100 available jobs. That's well below the national average of 95 workers for every 100 jobs. There are 30 ,000 open jobs in North Dakota. And although our workforce continues to grow, if we get every high school and college graduate, every individual coming out of our corrections system, every person on disability into the workforce tomorrow, we would still have thousands of open jobs. And so we really do need to be looking outside of our state's borders and outside of our nation's borders to help identify how we can recruit workers to fill the jobs that we have available.
20:41Katie Ralston Howe is director of North Dakota's Workforce Division, overseeing the newly created Office of Legal Immigration. Their goal? To bring together immigrants seeking employment and companies that need workers. With the political climate that we're in, immigration has become a really hot topic. And when we talk about the work that we're doing through the Office of Legal Immigration, A lot of times the conversation does go to conversations around the border or illegal immigration and that's really not what we're doing. Really our focus is proactively identifying appropriate pathways and programs that we can utilize to help fill jobs in North Dakota.
21:24Employers have been responding really well. There's a ton of enthusiasm around the work that we're doing. Communities are responding well too and so we've been able to really work with those who are already working in this space. North Dakota may be the extreme case, but its shortage of workers can be seen in various forms across the country. According to the U.S. Chamber of Commerce, labor shortages affect just about every industry in nearly every state. Although shortages have become less significant over the past two years, the latest national data show that we still have over 8 million job openings in the U.S.
22:01and fewer than 7 million people looking for those jobs. North Dakota businesses like Cardinal Glass have no doubts about how important immigrant workers are to the success of its operations and to the North Dakota economy overall. As the economy grows, we need people to move to Fargo-Moorhead to help us run our businesses. And whether they come from Kansas City or New York City or Los Angeles or Somalia or Bosnia, We just need people to move here to help keep our economy growing. You don't even have to speak English to come work at Cardinal IG. We've cracked the code on that. We have master trainers that are multilingual, that can train our new teammates in their native language.
22:50And so we have entry-level jobs where we can get people contributing right away. And as they grow in their comfort in those entry-level jobs, then they can graduate on to jobs with a little more difficulty, a little more skills required. And probably within the course of a year, they can be contributing in a lot of different ways. Since we first talked with Arnston, President Trump came to office and his administration has deported what it says are over 350 ,000 immigrants. We returned a year later to see what effect the administration's actions may have had on an employer like Cardinal Glass.
23:33We have 350 teammates here. 70 % of those teammates were born outside the United States, but they're all legal immigrants, so it's had minimal effect so far. But there is a question about Haitian temporary protected status. We have a number of Haitian teammates here, and about two dozen of those teammates are here still on a TPS status, temporary protected status. And so they may be asked to move back to Haiti next February unless something changes. Hopefully that Haitian TPS gets extended beyond February. We are working at sponsoring those teammates, but that's a very, very long process. And I hope we can get it done by February, but I'm not sure that that's going to be possible.
24:26One of those Haitian teammates is Joseph Fleury, who has been in the United States since 2010 under temporary protected status, a status that is likely to end in February 2026. I got 11 years working here. I like to stay, but for the change the government makes right now, so I'm scared because I got TPS and then they want to change everything. So I don't know how I can stay. I hope to stay because my country is so bad now. It's so bad because the gang kill people, kidnap people. So it's very difficult to go over there. If I go, how I can live over there? From your point of view, as somebody who employs these workers, and others from outside the United States.
25:29What comes next to the United States? What should come next? How should we treat the immigration problem? You know, demographically, we are entering a major workforce shortage. And really, there's four ways to mitigate that shortage. Automation, local workforce development, which we're already at 72 % workforce participation rate. importing goods or inputs from other countries. And that's with the tariffs, it's kind of slowing down. And then immigration, importing workers from other countries. And so we have to keep up with workforce demands or it's going to affect our economy negatively. How much stress will that put on you, particularly if there's a worker shortage overall in North Dakota?
26:23Well, we're going to have to find 25 more teammates to hire. Fargo-Moorhead has a 72 % workforce participation rate, so it's the highest in the country. We have a 1.2 % unemployment rate here in Fargo-Moorhead. For every unemployed worker, there are 2.4 open jobs here in Fargo-Moorhead, so it's not easy to find new teammates when you need them. And so if two dozen of my teammates, and I don't know how many other Haitian folks are here in Fargo-Moorhead under temporary protected status. If they all have to move back to Haiti, it's going to leave a big hole. Despite the TPS extension being up in the air, the Fargo economy remains strong, an economy driven in part by immigrant workers.
27:10Our economy continues to grow. You know, we're doing really well. workers are moving to the region because of the great job opportunities here. You know, at Cardinal IG and Fargo, our wages are 45 % above what the nationwide average is for light industrial workers. So we are attracting probably more than our fair share of workers, but it's just not fast enough to keep up with our growing economy. Coming up 20 years after Katrina laid waste to much of New Orleans, we return to the Big Easy to see what was done to rebuild, where it is today in its recovery, and what future it hopes to achieve.
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30:22This is a story about coming back to life. Two decades ago, the city of New Orleans was nearly lost when it was hit by Hurricane Katrina, the costliest natural disaster in American history and one of the deadliest. On the 20th anniversary of the hurricane, we went back to New Orleans to see what it took for the people and businesses who stayed to rebuild their shattered city. At this hour, monster storm Hurricane Katrina bears down on New Orleans. There's a lot of aid surging toward those who have been affected. A lot of people working hard. The results are not acceptable. We took a helicopter and landed at the Superdome.
31:06And I could see my home on Napoleon Avenue where I grew up. It's really still underwater. And I started crying. It was the largest disaster by a long shot in the U.S. in many, many, many decades, right? I lost everything, just like everyone else. I had 30 neighbors, 30. I knew all of them. Today, I have four. My business is in the street of New Orleans. And it's like, oh, what do I do now? Nearly 80 % of New Orleans flooded and more than 1 ,800 lives were lost. The economic toll? Over$200 billion in damage adjusted for inflation. But as stunning as the video and the overall numbers are, the real story of what happened to New Orleans in August of 2005 is told in the experiences of the individual people living there.
31:59You all right? All right. If it gets bad, you got to holler at somebody. This whole area, all four floors above it, were all destroyed. People like Rick Blount, who runs the iconic French Quarter restaurant Antoine's, owned by his family since his great-great-grandfather founded it in 1840. It was way worse than I could have imagined. I thought that a wall had fallen down, and I thought we could fix a wall. But when we got into the building, the entire building looked like it was going to fall any second. And I didn't know what to do about that. Given the devastation, Blount, along with so many of those in New Orleans, had to make a choice.
32:42Cut his losses, move on, move out, or rebuild, knowing that a new New Orleans would never be the same. And some of the spokes were broken. For Blount, the decision was an easy one. Did it ever occur to you, I'm sorry, it just can't be done? No. I don't think I had that luxury. Maybe I did and I didn't know it, but I didn't ever have that feeling. I had the feeling that it was my duty to rebuild it. Antoine's needed to be what Antoine's always was. Right after Katrina, when the city was still flooded, and the only people that were here were military and police and reporters. So when the reporters would ask, you know, what are you going to do?
33:28You know, this has got to be the end. If my great-grandfather could have survived the Civil War and my great-grandfather could survive the First World War and Prohibition and the Second World War, there's been a lot that's happened to Antoine's. I think we could figure out a hurricane. And figure it out they did. But it wasn't simple. It took a lot of money and time for Blount to rebuild, as it did for the rest of the city. Roughly$120 billion in federal aid poured in, with the government spending nearly$15 billion to rebuild and improve the levees, flood walls, gates, and pumps. One of the biggest investments was in the levee system.
34:11So we now have the best levees in the country. Allison Plyer is the chief demographer at the Data Center, a nonprofit that, since Katrina, has compiled a biannual New Orleans Index, keeping track of the city's progress. A lot of the money, of course, went to homeowners to rebuild their homes, and that's contributed substantially to the recovery of the population. It would be, the city would be virtually depopulated had we not gotten a lot of funding to support homeowners in rebuilding their homes. And then of course we had to rebuild schools, hospitals, all of it. Those kind of investments were absolutely critical for getting the city back on its feet.
34:50When we're thinking about how to justify that or if it was worth it, you have to think about the role that the city and the metro plays in the nation's economy. The shipping, although it doesn't produce a lot of jobs, the shipping and ports here are critical for the exporting of all of the grain and other foodstuffs from the Midwest. The oil and gas that is drilled off our coast is an enormous contribution to the national economy. Standing here in the square, you can kind of see all the pillars of New Orleans. Walter Isaacson was there from the start of the reconstruction efforts. Born and raised in New Orleans, Isaacson left the city to build a career as an acclaimed biographer, as well as running Time Magazine, CNN, and the Aspen Institute.
35:37But when Katrina hit, he answered the call to return home and pitch in. Today, he's a professor of history at Tulane University. The governor called and said, will you be the vice chair of the recovery authority? I said, sure, but who's the chair? And she said, Norman Francis. And he's a living saint here. Forty years head of the largest historically black university here. And so together, we said we're going to have to unite the city, black and white, Democrat, Republican, because we're all in the same boat now. How did you do that, unite the city? You know, a crisis should do it, meaning you're literally in the same boat.
36:17You say, all right, we don't care where you're from or what your beliefs are or anything else. I think we did it by saying, look, put every agenda aside. Put all partisanship aside. How did you take apart the problem and say, we need to do this first, this second, this third? Well, first of all, we needed to get the electricity back on. And we were in the back room of Mother's Restaurant, a po' boy restaurant, not too far for you, when President Bush came down and Laura Bush was with us. Everybody's going around the table and somebody said, well, the traffic lights aren't working in St. Bernard, Lower Nine.
36:51And somebody said, well, that's because the electricity's not back on. And people kept going around the table talking. And Ms. Bush turned to me and said, wait a minute, the electricity's not back on? And so the FEMA director, who was no hero there, said, well, we're trying to figure out whether the generators were capital or other type of... And George Bush said, get the electricity back on. So that was step one. Then we had two big jobs. One was the school system and one was housing. As Walter Isaacson was working with his commission to get the electricity back on and houses and schools rebuilt, Rick Blunt had his own task of putting Antoine's back together.
37:30Although the restaurant was able to partly reopen towards the end of 2005, it was years before the historic establishment was back to its former self. We had a huge amount of water damage because we lost the whole roof structure. The main building is four stories. The top two floors of the east side collapsed and collapsed into the street. And so that sort of collapsed the entire inside of the building. All the floors sort of fell down on top of themselves, all four floors of them, pushed down onto the first floor and caused a massive, massive amount of damage to that building. But in order to get back up and running, you need labor.
38:14And even among those who wanted to stay and work in the city, there were no easy options. Even if you hadn't left for the storm, you were now completely flooded and you had to be evacuated. You were taken out of New Orleans. We had to figure out housing for people so that we could bring them into New Orleans to work. Within a matter of weeks, all of our employees were calling and stopping in and trying to figure out their lives and wondering how we were doing. And we figured out pretty soon that they needed two things. They needed health insurance, which we kept, kept them all on health insurance.
38:52And then we tried to hire them all. We tried to bring them all back in. So I had several of my waiters. They had a ship that the Corps of Engineers had parked in the port, and they were renting bunks in the ship for people to sleep. So I was housing a handful of my waiters in there, and we were using my own staff to rebuild, to do all of the labor work that were here. And we had these really great, skilled craftsmen, this team of Creole gentlemen from western Louisiana that literally saved that building, that saved our building from collapsing. And I, even to this day, I owe them a huge debt of gratitude for their expertise and their patience and their dedication to preserving a building that I think should have been preserved.
39:43And they got it done. This is the dining room that in 1856, when Antoine bought this building, that he was operating Antoine's restaurant in. This is the building that had all the major damage in Katrina. And this building and these beams above her head were made of cypress. And when the building came apart, it put all the pressure, all the weight of the building down on these cypress beams above these columns. As devastating as Hurricane Katrina was for Antoine's, and the French Quarter, and the rest of the city, it was the Lower Ninth Ward that was hit the hardest, not by Katrina itself, but by the pressure the storm put on the levees, which eventually broke.
40:26One reason the Lower Ninth is called that is because it's lower on the river, and it's beyond the levees on the Industrial Canal. In other words, if you're upriver from the levees, you're in the Upper Ninth, or you're in the 7th Ward or other places. That makes it harder to protect. It's further downriver, it's lower level. The difference with the Lower Ninth Ward was that the levees broke in such a way as the rush of water pushed the houses off their foundations. Unfortunately, that makes it much more difficult to rebuild. The Lower Ninth Ward has therefore had much slower recovery rates than much of the rest of the city.
41:05I think about a third of the population is back. And it's incredibly sad because that was an area that had higher home ownership rates than the city average. A lot of folks there who were craftsmen, helped build across the city, built their own homes. And a lot of the properties were handed down to grandkids and great-grandkids. All this grass and high weeds, all that was houses and businesses. One of those residents who did come back is Brunel Kotlin. He grew up here and spent his life savings to open the only grocery store in the Lower Ninth Ward. My childhood dream was to be a policeman. So I ended up joining the United States Army, and I was the police of all places in Germany.
41:51But unfortunately, I came home just in time for Hurricane Katrina. After I rebuilt my personal home, I noticed we didn't have anything. We didn't have any grocery stores. We had nothing. I called up every big box store you can think of, and I begged them to open up a grocery store here in the little night board. So I said, well, you know what? Since they're not going to build anything, I'm going to build it. Before I opened up these doors, I had a small grocery store window that's right in the back. I opened that window up in 2009. I was selling everything out this little bitty window, and I had to save up all my money before I had enough money to open up these doors.
42:28I sold everything out this window. Milk, eggs, bread, cheese, you name it, it all went out this window. Right back there is where I collected money, the cash cage. And I'm not going to say the lady's name because she still shops today, but she came in. She had her grandkids with her. She had like a gallon of milk, some chips and candy. And she swiped her card and it declined. And she said, Mr. B, can I do it again? I said, yeah, try it again. And it declined again. And she spoke around the tears right behind me to start crying. So I came out of the cash cage. I did something I was supposed to do.
43:00I gave a hug. And I said, when you get your stimulus money or your unemployment, whatever you come, come back and pay. And I saw it again and again and again. So what I did, I took out a little tablet and I started a journal. And I would write down the customer's name and how much they owe. Some came back and honored the tabs. Unfortunately, some didn't. It was hard. And it's still hard even today. Despite the devastation, despite all the lives lost and companies driven to the point of extinction, New Orleans did come back, thanks to people like Brunel Kotlin and Rick Blount and Walter Isaacson, turning the city back into a living and breathing version of what it had once been, with the hope of a brighter future.
43:45And that's where we turn next, to the state of the city today and its prospects for tomorrow.
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46:35There was nothing easy about the long way back that New Orleans faced in the wake of Hurricane Katrina. When you're thinking about a city and whether it's being resilient is whether it can rebound to its pre-disaster trends, right? So we're kind of rebounded to our pre-disaster trends, but we haven't really transformed where we're actually improving those trends. And that's some of the big challenges that we've got going forward. So how is the city at the foot of the Mississippi different from what it was 20 years ago? Allison Plyer says one way to find out is to look at jobs and the population.
47:13The city has about 10 percent, or the metro, I should say, has about 10 percent fewer jobs than it did before Katrina. The population has been declining as well across the metro, and it's now about 7 percent less than it was pre-Katrina. We don't have the kind of jobs that pay wages that would help folks to build wealth. And that has to do really with something that people don't talk about that much about New Orleans, which is that we continue to focus on older industries. So New Orleans is kind of like Detroit in the way that we're looking at these old industries, oil and gas, petrochemical manufacturing, shipping, all of which are replacing workers with automation.
47:54What about wealth and income disparity? Is it getting better? Is it getting worse? It's not getting better, I'd say. We do know that white households in New Orleans and in the New Orleans Metro have about 10 times the wealth of black households and about six times the wealth of Hispanic households. You know, one of the challenges is that our tourism industry continues to pay lower wages, and that makes it really hard for the people of color who are in a lot of the hospitality occupations to accumulate wealth and have the kind of wealth necessary sometimes even to buy homes or put their kids through college, etc.
48:30The tourism industry is still the number one driver industry of the region. And again, it pays lower wages, but it too, like oil and gas and shipping and logistics and petrochemical, is declining in jobs because workers are being replaced by computers, various kinds of automation. So that makes it really hard for people to generate wealth. One driving factor behind getting a good job is having access to education. And one of the projects that Walter Isaacson took on was using the tragedy of Katrina to rethink the entire school system. We decided to have sort of like you'd call charter schools, but that's a loaded word.
49:13So we gave all the schools autonomy. They got to run themselves, they got to try to attract students, and they got funded based on how many students they attracted. So it was a competitive system based on parents having a choice. And that made it so some of the schools said, well, we're going to stay up until 5 p.m. because dumping a kid on the streets at 3 p.m. is not a great idea. And they would end up getting more students. So it was just that simple thing of letting parents have choice that helped upgrade the school system. You rebuilt the school system. Is it working? And is it working better than before?
49:46How do you know? It used to be, you know, New Orleans school system was at the bottom of the state, at the bottom of the nation. The increase in reading scores just this past year, I mean, every year it gets better, because we still have the same system. If people don't like the school, they can move their kid to another school. And so the reading and math scores have had double-digit gains more than any school in the state, and putting New Orleans now in the center of the pack, at least nationally, which may not be the best, but it ain't the bottom of the pack. We have nine universities and colleges in New Orleans everything from Tulane University and Loyola University to historically black colleges and universities like Dillard and Xavier.
50:29Xavier produces more graduates who go on to medical school than any university in the country. The universities really worked together post-Katrina to increase the knowledge that we all have about resilience and how to be resilient in the face of shocks. They employ a lot of folks and in the last about 10 years they've increased the educational attainment of our adult population, so we're now on par with the nation. Huge water damage in Katrina. Rick Blount's restaurant, Antoine's, has come a long way back from the damage of Hurricane Katrina. But in 2020, the restaurant was hit with another big blow, one affecting not just New Orleans, but the entire world.
51:12In 2020, you had the pandemic hit. What did that do to your business? That one was also very painful, and very painful for my staff, too. The forced closure of a business. At COVID, I had about 200 employees. It wasn't quite 200 families, but let's just say 150 families. But there's 150 families that depend on getting a paycheck on Friday from this business. Are you fully recovered from that in terms of business? I think we're now ready to turn a financial page from COVID. It took substantially longer for the economy to rebuild in New Orleans. There was a lot of damage. It was, and a lot of damage to the economy.
51:51So it took years and years longer for New Orleans to recover from Katrina than it did for New Orleans to recover from COVID. We're just a little picture of this bigger picture, which is our community. We live and die by the success or the failure of that community. One of the wonderful things to reflect on 20 years later is how well the damn community's done. And I'm very, very proud of that. I think New Orleanians ought to be proud of it. Even in the Ninth Ward, there's been some progress, though still nowhere near as close to the rest of the city. In this building right here, I have a barbershop, I have a head salon, I have a sweet shop, a snowball stand, thanks to Ellen DeGeneres, a laundromat, and the most important thing, the grocery store.
52:44This is the only business back here 20 years later, this is it If you want something to eat, you're coming to see me You want to wash your clothes, you're coming to see me Today, I have four, four neighbors So I tell people, if you have a community You have a store, you have a neighbor Go outside and hug your neighbors Hug your store Just be grateful and appreciative that you have all of that Because not having anything, I don't wish this on anybody If I wasn't here, this community wouldn't have anything. That's it, Bob. You cannot live your life in fear. You're here for a reason. You have to find your purpose.
53:21I found my purpose in life. My purpose is service. So you have to embrace it. So I have to, just like I serve my country, now I have to serve my community, and you can't be afraid. So I'm not afraid of another hurricane. I'm not afraid of nothing or nobody. You just have to keep on going. The city of New Orleans and its people have seen some of the worst Mother Nature can offer. It's survived and reclaimed a good part of what it was. But what's next? The schools are better. The entrepreneurial spirit's better. The politics, the sense that we're all in this together, is better. What we have to do is start growing our population, growing our business, and growing the number of jobs we have for young people.
54:04I do think it's really important that the folks working on economic development in Louisiana and in the New Orleans area really start to have a forward vision. They continue to really emphasize and incentivize these older industries that are just replacing workers with automation. As I said, oil and gas has 50 % fewer jobs than it did 25 years ago, and that's because of automation. And so I think here in New Orleans, just like across the country, we really have to look carefully at what industries are growing jobs and invest in those industries rather than industries of the past. We have a creative industry.
54:44We have all sorts of musicians and artists and even writers like myself or whatever, but it makes for a creative economy. We had to celebrate that. Our biggest hope is that so many young and educated people have come down here, which is why I love teaching my class at Tulane, and these people are starting businesses. And I think you're going to see an entrepreneurial economy here. So what's the case for investors to say invest in New Orleans as opposed to some alternatives they may have? I think what you need to invest in New Orleans is for small, medium-sized and startup companies that are doing great things in biotech, tropical medicine diseases, carbon capture, energy, where we have great strengths here.
55:28We have great engineering coming out of Tulane now, but we also have people who are very experienced in oil and gas and energy, and for that matter, tropical diseases, medicine, biotechnology. So I don't think people are going to be building huge corporations here, but I do think that having the type of funds we now have, the venture funds we now have, we're getting a lot of people to start businesses here. New Orleans has been through an ordeal few American cities have faced. And it's taken a lot of money and hard work and hope to bring it back to where it is now. And yes, maybe just a bit of providence.
56:08I thought the city, for a moment, we thought we've lost. Boy, I could still choke up feeling that way. And then we made a deal with the good Lord. We said, all right, bring the city back and have the Saints win the Super Bowl. And then the Saints won the Super Bowl, and that's when we knew we were coming back. That does it for us here at Wall Street Week. I'm David Weston. See you next week for more stories of capitalism.
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58:43We'll be right back. agent at CINFIN.com.
From the publisher
This week, we revisit two stories we brought you over the past year and discuss what has changed since then. How has trade between the US and Mexico shifted since President Donald Trump took office, and where do Canadian auto parts fit into the trade spat between the North American countries? And, how one manufacturing plant in Fargo, North Dakota is navigating legal immigration challenges that impact its workforce. Later, how did New Orleans come back twenty years after the city’s worst disaster?
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