The Impact of Natural Disasters on Low-Income Households

Few events capture our attention and sympathy like natural disasters. But eventually the daring rescues and horrendous conditions recede from view, and those affected are left to pick up the pieces and try to move on. And while these disasters pose a serious threat to everyone, it۪s low-income families who often live in the most exposed areas, are least capable of reaching safety, and most lack the financial means to rebuild and recover.

Much of this hardship can be prevented. With the right measures, vulnerability can be mapped before a disaster, and immediately after, the locations of ongoing need can be predicted. With this information, we can better invest in infrastructure to protect the most vulnerable households and target relief aid more effectively. The experience with Superstorm Sandy in New Jersey provides a case in point.

My October 2013 report, The Impact of Superstorm Sandy on New Jersey Towns and Households, revealed that the damage of the storm was far more widespread than originally understood, stretching beyond the coastal communities and disproportionately affecting low- and moderate-income families.
 
For this research, vulnerability was defined using the ALICE measure (Asset-Limited, Income-Constrained, Employed), and a tool known as the Household Hardship Index was used to quantify the damage sustained by and the resiliency of these vulnerable households. More than one-third of New Jersey households fall below the ALICE threshold, which is above the federal poverty line, but below the cutoff for financial stability. Earning low wages and holding minimal or no savings, they are more likely than higher earners to buy or rent in disaster-prone areas and are unable to invest in preventative measures.

More than half of New Jerseyans below the ALICE threshold were impacted by Superstorm Sandy in communities throughout the state, not just in the hardest-hit areas of Monmouth and Ocean Counties. In all, these financially unstable households incurred more than half of all residential damage, a startling $4.1 billion, and yet they have received only $1.7 billion in insurance and assistance, less than 30 percent of the total amount paid out. In total, only 3 percent of these households received FEMA assistance, and the $146 million raised by New Jersey nonprofits is woefully short of filling the remaining gap. Because of the uncertainty with the distribution of these funds, these households cannot borrow or plan like New Jersey municipalities have done.
 
Most concerning, the communities still facing unmet needs could have been predicted in the early aftermath of the hurricane. My research shows that the Household Hardship Index not only calculates the immediate impact on ALICE households, but is a strong predictor of ongoing need, especially in areas outside the worst overall physical damage.

Though most attention has been on shore communities, towns in northern New Jersey Newark and Jersey City top the Household Hardship list. Some shore communities had the resources to recover, while others are still struggling, notably Brick, Toms River, Berkeley Township, and Sayreville. In addition, there are towns that have received very little attention, such as Lawrence and Maurice River in Cumberland County that continue to struggle as well.

We should ensure that these communities have the help they need to recover from the storm. But now is also the time to start investing in the infrastructure to prepare New Jersey۪s most vulnerable households for future emergencies: stronger housing, relocation to safer areas, access to reliable transportation, and more secure jobs with sustainable salariesrather than low-wage jobs paid by the hour and vulnerable to disaster interruption.

The cost of these measures should be compared to potential savings. With increased and reliable income, an ALICE family would be able to save for an emergency. And relocating to a safer location or making structural upgrades to current homes could prevent future storm damage and associated expenses.

Some hard decisions need to be made as well. Initiatives like the federally funded buyback program for properties that have repeatedly flooded make it possible for ALICE families to afford safer housing. These programs need to reach more people, especially those who can۪t afford homeowner۪s or flood insurance or the high cost of housing in other areas. The private market could play an important role, building smaller affordable housing units that, especially after Sandy, are in high demand. But such efforts may require rezoning and tax incentives.

The future depends on a bigger vision, and there are good ideas in the works. With the 100 Resilient Cities Centennial Challenge, the Rockefeller Foundation is promoting efforts to invest in the infrastructure necessary to help cities respond to challenges such as natural disasters. Similarly, the New Jersey Institute for Social Justice has proposed leverage existing infrastructure project investments to achieve greater economic equality with an innovative investment strategy called “Social Covenant Bonds.”  
    
With the Household Hardship Index, we know where to target these efforts. And we need to start before the next disaster, because ALICE families۪ resilience is critical to the strength of every community as well as the wider economy.

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Stephanie Hoopes Halpin is an assistant professor at the Rutgers-Newark School of Public Affairs and Administration.

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