Gulf Coast Jobless Claims Rising

The number of people forced out of work by Hurricanes Katrina and Rita rose to 363,000 last week as the adverse economic effects of the Gulf Coast hurricanes continued to mount.

And as nearly 75,000 hurricane-related jobless claims were filed, officials say there are bureaucratic snags that will halt new, stronger levees from being rebuilt before the 2006 hurricane season.

Also Thursday, the Federal Emergency Management Agency's chief said the government must help persuade Hurricane Katrina victims to move back to disaster-stricken areas, reminding Congress that states hit by the storm "are suffering tremendously."

Officials "cannot compel any citizen to move back to the disaster-affected region — nor should they," FEMA acting director R. David Paulison said in testimony prepared for a Senate panel. "However, we must work with our state and local partners to develop opportunities that will facilitate their return, and provide help to those who choose to do so."

"Over time, and with encouragement, the good people of the Gulf Coast will return and make the region better, safer and less vulnerable if disaster strikes again," Paulison said.

The Labor Department reported that an additional 74,000 hurricane-related claims for unemployment benefits were filed last week, up from 70,000 the previous week. For the first time, the claims figures included people who lost their jobs because of Hurricane Rita, which hit the Texas Gulf Coast in early September after Katrina struck Louisiana and Mississippi on Aug. 29.

CBS News correspondent Byron Pitts reports that in some communities, more people are out of work than have jobs. Economists estimate that close to 60,000 businesses —

And Tuesday, Mayor Ray Nagin announced the city is laying off as many as 3,000 employees — or about half its workforce — because of the financial damage inflicted on New Orleans by Katrina.

Even though Hurricane Katrina exposed the weakness of the levee system around New Orleans, officials won't rebuild the barriers higher and better — at least not right away.

Col. Lewis Setliff, the engineer overseeing the levee repairs for the U.S. Army Corps of Engineers, said the corps only has the authority to rebuild levees to the strength they were prior to the storms that damaged them.

The levees that broke were built to withstand Category 3 hurricanes, which have winds up to 130 mph. Hurricane Katrina's winds were about 145 mph — a Category 4 — when the storm hit Louisiana.

Without approval from Congress, the Army engineers cannot build the levees higher and stronger. And even if Congress were to give that approval soon, it would come too late to allow them to be finished by the time the 2006 hurricane season begins in June.

"We've got eight months and counting," Setliff said. He added, though, that the levee system in its broken and heavily eroded state might not do much to stop flooding should the area get hit again before the current hurricane season ends in a month.

Setliff said about 10 percent of the New Orleans-area levee system was damaged, mostly because of water running over the tops of the barriers. To repair those levees, crews must first pack down what is left of them, filling in holes scoured out by water. Earth will then be added to get them back to their original height.

Bringing just the area of New Orleans along the Lake Pontchartrain shoreline up to Category 4 or 5 protection would cost between $2.5 billion and $3 billion, according to the Corps.

Meanwhile, on Capitol Hill, the FEMA chief was one of a bevy of Bush administration officials appearing before a half-dozen hearings to update Congress about the government's long- and short-term concerns in Katrina's aftermath. Housing assistance is a top priority as the administration grapples with finding homes for evacuated victims, even as it moves refugees out of shelters and considers ending a program to pay for hotel rooms arranged by the Red Cross.

"These states are suffering," Paulison said. "It will take years to truly recover, and there will be countless hurdles to be overcome along the way."

Sen. Susan Collins, R-Maine, noted that hundreds of thousands of hurricane victims remain in hotel rooms and emergency shelters — despite more than $2 billion already spent by FEMA for 120,000 temporary trailers and mobile homes. Only 109 Louisiana families have been put in those homes, while tens of thousands of state residents remain in shelters, she said.

"More than a month after Katrina's landfall, frustration, concerns and questions about FEMA's responsiveness and planning persist as Gulf Coast residents work to put their lives and communities back together," said Collins, who chaired the Senate Homeland Security Committee hearing.

The panel's top Democrat, Sen. Joe Lieberman of Connecticut, warned Paulison he was facing "an accumulation of frustrations, anger, concerns and questions about FEMA's performance" during Katrina. Lieberman said early inquiries have already revealed "critical gaps" in the recovery process.

"Neither nature nor history will give us a vacation, a break, so we've got to do the work we know we need to do, and do it quickly," Lieberman said.

FEMA estimates that just over 68,200 refugees remain in shelters, down from a high of 300,000 after Katrina hit Aug. 29 and Hurricane Rita's Sept. 17 arrival.

Last month, FEMA launched a $2 billion program to pay three months of upfront rental costs for homeowners or renters whose residences were destroyed by Katrina. Eligible victims can receive $2,358 per family to rent anywhere in the country, and could continue to get assistance for up to 18 months as FEMA works with state and local authorities to rebuild the devastated communities.

So far, FEMA has spent $1.3 billion to help Katrina victims find homes, and 600,000 have registered for the rental program.

But victims still in shelters face an Oct. 15 deadline, set by President Bush, to find more stable housing — including apartments, trailers and in some cases, hotels. Meanwhile, FEMA is weighing whether to extend a program that reimburses the American Red Cross for the cost of hotel rooms for victims.

That program is set to expire Oct. 24. The Red Cross has spent $112 million on hotel rooms for 464,560 people since Sept. 3, said spokeswoman Carrie Martin.