After the storm: Adapting the workforce to a new normal in the face of climate change

2023 marked the hottest year on record, and 2024 is well on its way to take the title. As climate change accelerates, the frequency and severity of natural disasters are increasing, reaping destruction in their wake. According to the National Centers for Environmental Information, between 2023 and 2024, the US faced 43 “billion-dollar weather and climate disasters,” leading to nearly 600 deaths and $132.8 billion in damages.

Homes are destroyed, communities are left in turmoil—and local and national labor markets are not immune. These billion-dollar disasters uproot workers, displacing them and causing substantial economic damage. With scientists projecting the continuation of climate change, companies and workers are taking various measures to mitigate risks amidst increasing natural disasters.

Marcela Ospina Lopez, our Lab expert in humanitarian and social impact work, explains the profound effects these natural disasters have on both the economy and the workforce.

Natural disasters severely disrupt local economies

Natural disasters, especially with their increasing frequency, are disrupting local business operations, causing productivity losses across various sectors. According to commercial risk consulting firm AON, climate change-related events cost the global economy $313 billion in 2022, which is 4% above the 21st-century average.

The necessary relocation of communities in the face of natural disasters can lead to a reduced labor supply, destruction of local wealth, and an exodus of business from disaster-struck areas altogether. In August 2023, the landfall of Hurricane Idalia, one of the most destructive hurricanes in US history, necessitated large-scale evacuations that displaced numerous workers. This resulted in an estimated $12-20 billion in damages and lost economic activity.

The same month, wildfires in Maui, Hawaii destroyed more than 2,000 homes and took 115 lives. An island that heavily relies on tourism, Maui saw a 75% decrease in visitor arrivals due to the devastation, generating more than $13 million in losses in tourist spending every day in the weeks following the disaster. In the immediate aftermath, unemployment was estimated to jump up to a staggering 10%.

The drought that wrought the Southern and Midwest regions in 2023, resulting in $14.8 billion in damages and 247 deaths, also severely crippled agriculture, leading to job losses and economic hardships for many communities dependent on farming. Similarly, Hurricane Idalia resulted in up to an estimated $370 million in agricultural losses in Florida.

Globally, by 2030, climate-induced high temperatures could result in the loss of up to 3.8% of total working hours globally, equivalent to 136 million full-time jobs and $2,400 billion in economic losses, according to the International Labour Organization (ILO) Working on a Warmer Planet report. This loss particularly affects outdoor workers, emergency responders, and those in hot indoor environments, but office workers aren’t immune either. Deloitte projects that over 13 million jobs in the US are at risk due to these climate extremes and economic transitions.

Workforce precarity amidst climate crises

Natural disasters are just one aspect of how climate change poses problems to workers. The US Environmental Protection Agency (EPA) highlights that poor air quality, disease-carrying insects, and extreme weather events hinder workers’ ability to perform their jobs effectively.

The emotional toll of natural disasters is such a growing trend that it’s been given a name: climate anxiety. Dr. Britt Wray, a leading researcher in the field, defines it as a rational response to the global threat of climate change, encompassing a range of distressing emotions such as worry, fear, and panic. Her studies show that nearly 75% of young people feel the future is frightening due to climate change, and 45% find it disrupts their daily lives, leading the younger generation to uncertain futures.

Climate anxiety and brain drain

This fear translates into real consequences for labor markets. Ospina Lopez highlights the growing influence of climate anxiety on migration trends, noting, “An EU study found that up to 60% of young Spaniards feel they will need to leave the country in the coming years due to climate anxiety, planning to work elsewhere because of the adverse climate conditions. Younger generations are more aware of environmental issues. For example, my own child believes he won’t be able to work in Spain due to extreme weather conditions.”

As climate change accelerates, it not only transforms landscapes but also drives a wave of brain drain in vulnerable regions. A study sponsored by the Institute of Labor Economics explores how climate-induced natural disasters drive migration patterns in developing countries. It found that these disasters lead to a surge in emigration, especially among highly skilled individuals, worsening brain drain in these regions. This loss of human capital hampers recovery and adaptation efforts, as these countries lose essential skilled labor during crucial periods. The research shows that migration often serves as a coping mechanism for those affected by environmental shocks, with middle-income individuals being the most likely to migrate.

Business sustainability through climate change

Despite the devastating toll on human lives and communities, the effects of climate change on corporate labor dynamics are profound and multifaceted. Companies and workers alike must adapt to these changes, often requiring innovative and proactive strategies to mitigate harm and remain resilient in the face of disaster.

Corporate responsibility

Today, there’s an increasing assumption that companies have a responsibility to support and help communities, and some people even demand it, explains Ospina Lopez. According to Gallup, confidence in institutions, including corporations, has been mostly flat, reflecting a general skepticism. A key factor contributing to the lack of trust in corporations is their perceived inadequacy in addressing climate change. Pew Research Center data indicates that nearly two-thirds of Americans believe that large businesses and corporations are doing too little to reduce the effects of climate change. This perceived inaction likely fuels the declining trust in these institutions.

Despite this general skepticism, some companies are proactively taking steps to combat climate change. Places like Ferrer, an international pharmaceutical company, set the example, notes Ospina Lopez. “Ferrer dedicates 50% of its profits to social and environmental causes—a mission often associated with NGOs. As part of the B Corp movement, Ferrer has helped set industry standards for pharmaceuticals, emphasizing a business model where profit serves as a means to achieve broader societal goals, not the end goal itself,” says Ospina Lopez.

Companies that ignore these trends risk losing even their most well-compensated staff. As Ospina Lopez explains, “Employees are more likely to stay if they feel their work contributes to solving environmental and social issues. If companies fail to address these broader concerns, even well-compensated employees may choose to move to organizations that align better with their values.”

Planning for climate resilience

Not all companies want to sacrifice their bottom line for sustainable practices, yet many have no choice but to face damages and plan accordingly. “Big corporations are feeling the effects as we witness relocations in vulnerable industries like agriculture and coastal businesses due to rising sea levels and extreme weather,” Lopez notes.

She highlights the case of Familia Torres, one of the largest wineries in Spain, which is already adapting to the shifting climate. “To mitigate the impact of rising temperatures on winegrowing, they are seeking higher altitudes where the climate is cooler. Consequently, they have planted vines in the Catalan Pyrenees at 950 meters above sea level. They are also exploring opportunities in the Aragón Pyrenees at 1,200 meters above sea level, although it is currently too cold there for planting.”

However, relocation is expensive and complicated, says Ospina Lopez. “Companies need to consider the financial consequences of relocating. If a company relocates, how will it handle the financial aspects? Will they support the new lives of employees in the new city or area? Also, consider the mental consequences. Training people to adapt to a new community and landscape is essential, as everything will be different.”

Companies face damages from heavy rainfalls or extreme heat every year and can plan accordingly by training employees on new skills to both maintain operations and adapt for future relocation.. In the case of Familia Torres, the company has much more to do than just relocate operations, says Ospina Lopez. “They are investing in regenerative agriculture and training local workers to manage vineyards in these new regions, which were unsuitable for wine production 20-25 years ago.”

Joining forces for change

Determining the extent of corporate responsibility in addressing societal issues is complex. Ospina Lopez argues that it’s a joint effort. “Some companies may not inherently prioritize addressing environmental or social issues, but they comply due to regulatory requirements. If they meet these regulations, they will retain the ability to operate within a few years. Therefore, regulatory pressure often drives their action. If companies don’t comply, they risk being unable to operate in the future. Regulatory pressure forces them to take action.”

However, Ospina Lopez explains that companies are still held responsible. “The primary responsibility of any company remains the safety and wellbeing of its employees, and this awareness is already ingrained in corporate consciousness. Companies must actively ensure their employees’ safety and wellbeing while also addressing broader societal problems.”

Building a resilient workforce

As climate change continues to reshape our world, the future of work will inevitably be influenced by the need for greater resilience and adaptability. Ospina Lopez explains that companies must invest in disaster preparedness and develop flexible policies allowing remote work and rapid relocation. Additionally, governments and businesses will need to work together to strengthen infrastructure and build community support systems to better withstand natural disasters. Proactive planning and resilience-building are essential for businesses to maintain operations and support their employees through these challenging times. Companies can plan ahead by offering competitive salaries and fostering a supportive organizational culture.

So, what does the future hold for the labor market in the face of increasing climate disruptions? As businesses and governments work together to navigate these challenges, the strategies implemented today will shape the workforce of tomorrow. The ability to adapt, innovate, and prioritize the wellbeing of employees will be key to sustaining economic stability and growth in an ever-changing climate landscape.

Photo by Thomas Decamps for Welcome to the Jungle

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