Isle jobless rate lowest ever
At 2.1 percent in October, it is expected to start slowing economic growth as businesses are forced to spend more on wages
If Hawaii employers thought it was hard to find qualified workers before, they might not want to look at the latest unemployment numbers from the state.
Hawaii's seasonally adjusted unemployment rate plunged to an all-time low of 2.1 percent in October, marking the third straight month that the state had the lowest jobless figure in the nation, according to data released yesterday by the state Department of Labor and Industrial Relations.
That may be good news for people looking for work, but it lends more credence to the slowdown that state economists have been forecasting as businesses find their growth prospects limited and are forced to raise wages to attract workers. Those higher costs for businesses could then be passed on to consumers.
"It's a major part of why our forecasts have been predicting a slowdown in the economy for the last six, eight months," said Carl Bonham, an associate professor of economics at the University of Hawaii and director of the University of Hawaii Economic Research Organization. "We're predicting slower growth next year and the year after that, and this year as well, because of the extremely tight labor markets -- the fact that it's very difficult to find qualified workers to fill your positions."
No one knows that better than Bob Taylor, president and chief executive of Maui Divers Jewelry.
"We've been in this mode for a long time -- trying to find people -- because we started our current expansion program in 1997 and have been adding about six locations a year," Taylor said.
Taylor said Maui Divers, which has 54 of its 60 stores in Hawaii, has more than 100 openings in the state for salespeople and managers. He offers current employees up to $2,000 for referring a person who gets hired.
"We could increase our sales substantially if we could fully staff our stores," Taylor said. "We have very few locations that are fully staffed. It's going to limit our growth, and it's not just Maui Divers. It will limit the growth of the whole state."
Until last month, the lowest Hawaii unemployment rate ever was 2.2 percent, in both October and November of 1989. Not only did last month's 2.1 percentage rate represent an all-time low, it also marked a significant drop from 2.5 percent in September.
"We're way below frictional levels, meaning there's always somebody between jobs and, even in the tightest economy, there still will be people unemployed," said Leroy Laney, a First Hawaiian Bank consultant and a professor of economics and finance at Hawaii Pacific University. "You'll never get down to zero. But at 2.1 percent, it doesn't get much lower than that."
Yet, Laney said the possibility exists that the unemployment rate could go even lower with a strong Christmas hiring season.
The state's unemployment rate has dropped for four consecutive months now from the year-earlier period.
"It went up after the big rain (in February and March) and sort of topped out (at 3.1 percent in June), and has worked its way down," Bank of Hawaii economist Paul Brewbaker said.
Hawaii's labor force actually fell by 1,300 in October to 657,700, from 659,000 in September. Bonham said that might be attributed to the redeployment of troops and the loss of military personnel who held second jobs, as well as jobs held by their spouses. In October 2005, the labor force was 642,300.
The number of people employed rose to 644,000 in October from 642,750 in September and 624,600 in October 2005. Those unemployed dropped to 13,700 last month from 16,200 in September and 17,700 in October 2005.
Hawaii's seasonally adjusted unemployment rate has been below 3 percent for nine months out of the last 12, and has been 2 percentage points lower than the U.S. rate, on average.
Nationally, the jobless rate fell to 4.4 percent in October, from 4.6 percent in September and 4.9 percent in October 2005.