In New Orleans, Business Is Booming—for Some

In the 10 years since Katrina, entrepreneurship has grown in the city. But not everyone is reaping the benefits.

Construction on levees in New Orleans (Sean Gardner / Reuters)

NEW ORLEANS—When George W. Bush climbed atop a stage in the middle of New Orleans’s Jackson Square and announced that the city was open for business shortly after Hurricane Katrina hit, he was overstating the case. The lights used to illuminate his stage stood in stark contrast to the rest of the parish, where electricity, food, and clean water were all in short supply. New Orleans was far from a functioning business center.

In the storm’s aftermath, New Orleanians were putting the pieces of their lives back together—reaching out to relatives, trying to find places to stay, wondering if their homes had been destroyed, if things would ever go back to normal. Those who owned businesses also had that to worry about. Iam Tucker’s father, who ran a New Orleans-based engineering business, Integrated Logistical Support Inc., was one of them. He worked remotely from Florida and Baton Rouge, trying to win contracts for the firm to keep it afloat. The company’s vice president was at work too, writing proposals by candlelight, still in the devastated city. When a project to inspect the levees was won, the firm’s inspectors had to live and work out of their cars for a time. “The staff was literally scattered all over the place,” Tucker says. “It was a very scary time.”

But those scary times were also a moment of opportunity, and in the years since, there has been a surge in small-business growth in the city, said Tim Williamson, one of the founders of Idea Village. “After Katrina, in a unique weird way, everyone became an entrepreneur. The city was closed, so everyone had to start over with tons of uncertainty and limited resources.”

Williamson says the return of small business has come in three waves: Right after the storm, retailers who had existing businesses headed back first. They were followed by former New Orleanians who were drawn back to the city, and opened up new stores or took over family businesses. Finally, there were the outsiders, who saw the opportunity for entrepreneurship as the city healed.

A few years on, in 2008, Tucker was a part of that second wave, coming back to her native New Orleans, after a stint in Baton Rouge as a police officer, to run the family business. She makes up a growing class of small-business owners in the city, but as a black woman business-owner, she’s part of a much smaller group.

Ten years after the storm, much of New Orleans feels new, especially to those born here. It’s difficult to assess the number of residents who lived in the city before the storm versus transplants who moved in afterward. But the city’s changing demographic vibe is unmistakable, with more white and affluent residents moving in. Now it’s fair to say that business in New Orleans is by many counts booming. Between 2011 and 2013, entrepreneurship growth in the New Orleans metro area outpaced the national rate by 64 percent.

But the success is uneven. Tucker says that New Orleans’s small-business economy tends to be very white. She’s not the only one who sees the inequity. Williamson agrees that when you look at the businesses that are thriving, they’re predominately headed by white males. Everyone agrees that there’s much work to be done when it comes to diversifying the small-business sector so that more minority- and women-owned businesses can reap the benefits of the city’s revitalization, but coming up with a plan to make that happen is a challenge.

New Orleans’s economy was badly in need of help even before the storm hit. The city saw a 30 percent population decline between the 1960s and the early aughts. There wasn’t even a dedicated economic-development organization, according to Quentin Messer, the CEO of the New Orleans Business Alliance.

Following the storm, rebuilding was especially difficult for the poor and minorities, whether it was their homes or their business they were trying to fix. “It was really hard for black people to get back. It was the black areas like New Orleans East and Ninth Ward and other areas that were inundated much, much stronger than say, Uptown New Orleans,” Tucker says. And getting aid from FEMA was often a confusing process. “If you talked to five different FEMA agents, you'd get five different answers,” Tucker says.

Since about 2010, the number of businesses owned by economically or socially disadvantaged people, referred to as disadvantaged business enterprises (DBE), has doubled, from 300 to 600. But the success is limited. The city has set a goal of using DBEs for 35 percent of the work on any city-funded project, but it has  fallen short, and only about  12 to 16 percent is, Tucker says. “The businesses are here, we've come back, we've invested back in the community, we've jumped through the certification hoops, we're ready to do work,” she says.

Tucker says that the new blood and competition are welcome, good even. But a problem arises when it comes to who is benefiting from the New Orleans’s “booming” small-business industry. “It's booming for everybody, but us,” she says.

Still Tucker is hopeful. She says the mayor’s office has agreed to a disparity study, which would look into the lack of diversity in government gigs, and she thinks that will help. But she’s also frustrated. She says that when she and other minority business owners see commendations about the city’s small-business sector, she doesn’t recognize the progress they’re talking about.

“The residents that are from here and look like me, we're not feeling that,” she says. “I want to see my city recover. But, I want to see it recover equitably—that's what I'm worried about.”

This project was made possible with support from the W.K. Kellogg Foundation.