Natural disasters cause havoc for low-income Americans

Jeremy Ney
8 min readMar 20, 2023


Half of all the billion-dollar natural disasters have occurred in the last decade, and some communities get it much worse

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  • 🌉 Where has all the funding for the Infrastructure Bill gone so far? Awesome visualization — Data to Decisions
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  • 🏦 The World Bank changed the threshold for global poverty from $1.90 to $2.15 a day — see what that means poverty in different countries — Our World in Data

Both the number and the magnitude of natural disasters has been increasing in America in the last decade. Floods, wildfires, tornadoes, and earthquakes are causing billions of dollars of damage as these grow in size and occur more often. Moreover, they are not as random as you may think. The same communities continue to be ravaged by these events over and over again, impacting households’ ability to recover, rebuild, and move forward.

7 months after I published an op-ed in the Lexington Herald on hidden flood risk in Eastern Kentucky, 43 people died in the exact counties that we identified as having the highest flood risk in America.

Natural disasters have some of the highest consequences for inequality in America.

📊 recently released a new tool for mapping climate resilience and adaptation in the face of growing disasters. Given the prevalence of this work, let’s dive in.

📈 The number of natural disasters that cost over a billion dollars in damage has increased more than 4x over the last 40 years, rising from an annual average of 3 in the 1980s to 13 in the 2010s. In total, there have been 341 disasters that have caused more than +$1 billion in damages over the last 40 years.

🚨 In fact, nearly half of all the billion-dollar natural disasters in our history have occurred in the last decade alone, even when adjusted for inflation. 🚨

Natural disasters consist of 18 different categories of events. The 7 disasters that cause the most damage, though, are flooding, wildfires, winter storms, severe storms, tropical cyclones, drought, and ice storms. Think: the 10 plagues.

📍California and Louisiana have the highest number of natural disasters over the last 70 years, with Los Angeles County experiencing almost 1 natural disaster per month over that time period. The natural disasters in these regions are always changing too. Last week, Los Angeles just issued its first blizzard warning in more than 30 years.

In fact, property values in these at-risk areas were recently found to be overvalued by $121 billion to $237 billion, which means that when those properties are lost, the homeowners stand to lose a large amount of equity.

Teton County, ID had just 3 natural disasters over the last 70 years, the fewest of any county in the US. Teton is landlocked and near the Teton mountains, making it less susceptible to tropical storms, tornadoes, or hurricanes. The county is 81% White with a $73K median annual income, 9% above the national average.

Low-income communities struggle the most from natural disasters

Natural disasters hit low-income families the hardest. Super severe natural disasters (i.e. those that cause +100 deaths) cause 1% of the region’s population to fall below the poverty line. Moreover, infrastructure that may be substandard, which is often found in affordable housing units, results in more severe shocks and longer times to recover for these communities.

For example, during Hurricane Harvey in Houston, low-income neighborhoods were struck harder than wealthier neighborhoods as poor families were more concentrated in flood-prone parts of the region, taking on more water and experiencing greater losses to property.

Families who are victims of natural disasters can also fall into economic hardship. Research from the Federal Reserve found that 10 years after Hurricane Katrina, families whose homes flooded had lower credit scores and lower rates of home ownership. 💳🏡

💸 Low-income families cannot afford to endure natural disasters. Research shows that it can take low-income families 2x — 3x longer to financially recover from natural disasters. While FEMA can provide some support, in 2019 the head of FEMA shared that its financial responsibility had become “unsustainable” as costs had risen. “The only way we can survive as a nation,” Peter Gaynor said, “is to set aside pre-disaster money and build state and local capacity.”

A man stands outside of his home that Hurricane Ida destroyed in Lafourche, Louisiana. The region is one of the most disaster prone in the entire country. Source: NBC News

Brennan Matherne lives in Lafourche Parish, Louisiana which has been struck by natural disasters more than almost every county in America. In 2019, Hurricane Ida made landfall in Lafourche. It was the region’s worst storm in more than a century and a half. “It’s just complete devastation from wind damage with Hurricane Ida… there’s damage to 100% of structures in Lafourche Parish… obviously no power — that’s a given… we don’t have running water either. We’re seeing lines hours long at every gas station that is open in Lafourche Parish now. Every time that you solve one problem, another problem emerges.” These are the types of compounding challenges that emerge from natural disasters.

15–75% of people who face natural disasters develop post-traumatic stress disorder (PTSD). Natural disasters can also exacerbate mental health challenges like anxiety, depression, and schizophrenia. As we have discussed in other newsletters, geographical areas with increased mental health challenges can also struggle with employment, incarceration, and other social issues.

Natural disasters have adverse economic effects on a region, perpetuating cycles of poverty

Natural disasters can decrease household incomes by 21.5% for years afterwards and increase poverty by 2.5% in impacted areas. This is because of the pervasive impacts of natural disasters — loss of agricultural land, for example, will disrupt supply chains and prevent other businesses from getting the materials they need. Roads may be destroyed which makes it harder to get raw materials for production. Businesses shutter, which may cause more businesses to shutter.

👨‍🔬 Natural disasters can also create “brain drains” from areas, making it harder for regions to grow and develop as highly educated civilians, doctors, or scientists may leave. If a county experienced 2 natural disasters, migration out of that county increased by 1%, averaging about 600 people. If a county experienced a natural disaster with +100 deaths, the effect was twice as large.

Even when we look at the periods both before and after the creation of FEMA in 1978, we find this effect persists. In fact, many residents after 1978 seemed to move away from their disaster-struck region faster — taking the FEMA money and setting up shop elsewhere.

👷 While the recovery phase that may create new jobs and increase demand for materials like lumber is often short-lived and is increasingly performed by outside contractors, depriving local communities of investment or growth.

Negative feedback loops make it harder for regions to recover, which has resulted in rising income inequality both across regions and within communities. This isn’t just an American phenomenon — it holds true in Japan, Malaysia, Vietnam, and Nigeria as well.

☠️ Long-term impacts of pollution, poison, and toxic chemicals from natural disasters also contribute to inequality in healthcare outcomes. Lower income communities, which may be more closely situated near toxic sites, will be increasingly exposed to sewage, asbestos, heavy metals and others after disasters strike.

After 9/11, research in this space has increased dramatically, and we are only just beginning to understand these long-term health impacts. For example, researchers found in 2017 there was a 15% increase in people in the region diagnosed with asthma after the wildfires in Northern California, though expansive studies had not occurred prior to this despite the persistence of fires in the region.

The Path Forward

Communities need financial support and structural change in the face of increasing occurrences and severity of natural disasters.

Federal and local governments can provide support, individuals can build up their own dedicated natural disaster savings, and globally we can work together to reduce the impacts of climate change on at-risk communities.

  • 🌊 Increase benefits for low-income residents after disasters: There are two types of relief that are critical for low-income families after disasters to get food and money — Disaster Unemployment Assistance (DUA) and Disaster Supplemental Nutrition Assistance Program (D-SNAP). These are administered by the Department of Labor and local governments. Both programs can use the power of defaults to automatically give aid to those who may need it most, either by sending SNAP funds to EBT accounts in zip codes that were impacted by the disaster, or by sending DUA funds to workers registered at impacted businesses. Policymakers can also reform DUA to provide more funds rather than less for when households need it most.
  • 💰 Start a household savings account specifically for natural disasters: Start to save for the rainiest of days. Households may save money for healthcare emergencies or car accidents, but they should consider creating a separate store of money for natural disatsers. FEMA may be able to give households some funds; city or state programs may be able to provide financial services, but natural disasters aren’t going away anytime soon. This will continue to cost individuals. FEMA found that nearly 1 in 3 adults have not put aside any money to prepare for a natural disaster. Using FEMA’s financial first aid kit can be critical for helping people not only build good practices to prepare for a disaster, but to also put away funds to ensure resiliency in the face of adversity.
  • 🌎 Slow down climate change: As explains, “the number and cost of weather and climate disasters is rising due to a combination of population growth and development along with the influence of human-caused climate change.” We are in part responsible for all of the climate-caused natural disasters. While 90 large companies are responsible for much of the climate change we experience, individual choices can help too.

Natural disasters don’t choose who they hit, but they do hit the same communities repeatedly. They show up with force and they destroy communities. But city planners, government officials, developers, and lenders do make choices about the types of resiliency and support they are willing to provide. Certain communities are going to get hit over and over again. We can decide to help those communities, or we can be slow to act and let them suffer in the aftermath.

Learning from Hurricane Katrina

When the levees broke during Hurricane Katrina, the failures caused flooding in 80% of New Orleans and 95% of St. Bernard Parish. On September 1, 2005 President Bush said, “I don’t think anybody anticipated the breach of the levees.” But, for years before, scientists, journalists, and emergency officials had been sounding the alarm about the impact that a major hurricane could have on New Orleans. How do we align these alarms and the concrete actions needed to protect these hard-hit communities? We have limited time and limited resources. Let’s focus on at-risk regions to provide support where it is most needed.

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Jeremy Ney

Former Federal Reserve policymaker, currently at Google, now writing about inequality at