DEBBIE ELLIOTT, host:

From NPR New, this is ALL THINGS CONSIDERED. I'm Debbie Elliott.

A new hurricane season opens next week. And the National Oceanic and Atmospheric Administration is predicting there will be more tropical storms and hurricanes than usual this year. That's never welcome news in coastal communities, especially those working to come back from a hurricane strike.

While much of the public attention since Katrina has been focused on the struggle to bring New Orleans back, profound changes are also underway in Mississippi nearly two years after the storm.

Today and tomorrow, we take a closer look at how Katrina has altered the economic landscape of the Mississippi Gulf Coast.

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ELLIOTT: The French first built ships here three centuries ago. Today, the United States defense contractor Northrop Grumman operates this 600-acre shipyard where the Pascagoula River meets the Gulf of Mexico.

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ELLIOTT: The company builds ships for the Navy, like the Truxton DDG-103, a hulking vessel, 500-feet long and more than six stories tall.

Mr. BILL GLENN (Company Spokesman, Northrop Grumman): It's an aegis-guided missile destroyer. It's the 25th ship that we built and that ship will be christened on June the 2nd here. It will be a big gala event. We'll have a thousand guests.

ELLIOTT: Company spokesman Bill Glenn says the shipyard has been one of Pascagoula's major employers since 1938. Today, Northrop Grumman is the largest private employer in the state of Mississippi, and it's still struggling to come back from the storm, but not because of structural damage.

Mr. GLENN: Well, our biggest need ever since Katrina has been people. Right now, we need 400 craft jobs, 250 professionals.

ELLIOTT: On his office computer, Bill Glenn pulls up a list of job openings.

Mr. GLENN: Director of destroyer integration, surveyor-burner-pipe foreman, rigging foreman, paint foreman, sheet metal…

ELLIOTT: The labor shortage combined with rising insurance costs forced another major employer, the Oreck Corporation, to leave the coast. The vacuum maker closed its Longbeach, Mississippi, plant and moved to Tennessee.

Shipbuilder Northrop Grumman had 13,000 employees before Katrina and is down to 11,500 today. With its average wage of $18 an hour and a strong benefit package, Northrop Grumman has traditionally attracted workers from all along the Gulf Coast, from Louisiana to Pensacola, Florida.

But after Katrina, the competition for workers drove wages up. McDonald's offered signing bonuses, and skilled laborers could make more working construction than at the shipyard.

Glenn says competition is still stiff, but there's a bigger issue causing the labor shortage today.

Mr. GLENN: Affordable housing is the number one problem right now. If we go out and recruit folks from other areas and want them to move here, you know, affordable is the main word. Can they afford to live here?

(Soundbite of ad)

Unidentified Man: This home, also known as the king of the cul-de-sac, is located in the heart of Ocean Springs.

ELLIOTT: Online ads like this one feature homes more than double what they would have cost before Katrina. This two-year-old brick home in Ocean Springs, Mississippi, is selling for $350,000. You used to be able to get a nice home here for about $120,000. It's not the dynamic people expect it after Katrina's destruction.

Ms. D'AUBY SCHIEL (Chairman and CEO, Community Bank of the Coast): We would all expect that, oh, my goodness, the land values are not worth anything. Well, now, it's like gold. And there's this, you know, sort of frenzy.

ELLIOTT: D'Auby Schiel is chairman of the board and CEO of Community Bank of the Coast. She says some families with homes here for generations found it too costly to rebuild once they factored in stricter building codes and insurance premiums that have jumped as much as 150 percent. They're selling, opening up prime waterfront lots to speculators.

The premium property lines U.S. Highway 90, the road that follows the coastline here. Before Katrina, the landscape was an odd mix of modest neighborhoods, local shops, stately ante-bellum homes and, in the last decade, glitzy casinos.

The casinos are back — some even bigger than before. But Schiel says developers are bundling much of the rest of the land into tracts for large condo projects. And this is squeezing out working-class folks.

Ms. SCHIEL: Someone working for our bank, one of that would be a teller, or that would be a customer service representative. The person you see on the line were really always able to afford a home. However, now, the cost of that home is considerably more because of the cost of the land being more and the cost of building materials being more that that employee would not be buying a house as nice as they did before.

ELLIOTT: As I drove along Highway 90 and I've hit most of the coast, and I was struck that big hotels are back, the big casinos are back. But the smaller, like the gas station that might have been on the corner, they're not back yet.

Ms. SCHIEL: And I don't know if they'll ever be back because that corner on the Highway 90 in Biloxi would now be, maybe, a $2 million dollar piece of property. So you can't pump a gallon of gas with that kind of land cost.

ELLIOTT: What you'll see instead, Schiel predicts, are smaller mom-and-pop retail stores and affordable residential developments moving inland. That worries community activist Derrick Evans of Gulfport. He's concerned that the recovery on the coast favors what he calls big-box economic development at the expense of what made the region unique.

Mr. DERRICK EVANS (Community Activist, Gulfport): I mean, who wants to drive from Arizona to go eat at a Hooters? You know, they want to come to coastal Mississippi to maybe get us a shrimp sandwich, or a barbeque sandwich, in a more culturally rich situation, I would think.

ELLIOTT: Evans is critical of the state legislature for quickly passing a law that allowed casinos to rebuild on land, instead of on the water, which was the policy before Hurricane Katrina. Many here argue that the casinos are the economic engine of the coast and re-starting them was vital to the rest of the economy. Derrick Evans disagrees.

Mr. EVANS: They're, you know, hooking the wagon up to the mule of casinos and tourism. But it's really unfortunate for neighborhoods and older communities and small business owners who are still trying to figure out where there's capital available for them to either rebuild or start anew.

ELLIOTT: Local businesses have banded together to tackle these issues. They've formed a private, not-for-profit corporation to build 10,000 affordable homes so workers can stay on the coast, close to where the jobs are.

But Mississippi Governor Haley Barbour says it may not be possible to return to the way things were before the storm.

Governor HALEY BARBOUR (Republican, Mississippi): The Mississippi Gulf Coast is one of the few areas of the country where not only working class people, but literally poor people, live a stone's throw from the water, where they could see the water. After the storm came through, and many of those areas, because they were low lying were devastated, real estate interest from various kinds came in and said, look, we'll offer you a million dollars an acre for your property. And of course, for a lot of those people, they - okay, I'll sell my property, collect my insure, move inland, across the bay or north of the interstate, I can build three times as a good house and still have a bunch of money sticking in my pocket. Some of those people will decide to do that.

ELLIOTT: I spoke with a real estate agent in Biloxi. And she was a little concerned that because the prices of real estate had gone up so much, and that rental prices had gone up so much, that things were changing and that the character of the coast might somehow be changed forever.

Gov. BARBOUR: Several things are certainly going to change to a degree. The Mississippi Gulf Coast had never embraced high-rise condominium projects. There literally were next to none, if - there weren't five in 75 miles. There are going to be several now. It's not going to be like Miami Beach. But we're going to have more of that, which just means more density of population. The main areas are going to get balled up where there used to be several single-family houses. And that's going to happen.

ELLIOTT: Mississippi Governor Haley Barbour on the changes coming to the Gulf Coast.

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ELLIOTT: Tomorrow, a visit a one small Mississippi town where residents are determined to stay together while getting back to business.

Unidentified Woman: We had little shotgun houses. For years, I want those people to be able to come back and afford their homes and live there. I don't want them displaced by what some may consider as progress or smart growth. We can have the best of both worlds. But we cannot have the largest transfer of property since the Great Depression.

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