Hawaii's worker shortage bodes future problems

THE ISSUE Hawaii's unemployment rate dropped to a record 2.1 percent, lowest in the nation, in October.

HAWAII'S anticipated influx of military construction and the retirement of baby boomers remain on the horizon, but the state already is beginning to feel the strain of a severe worker shortage. The state and business community must devise a strategy to compete with other states to attract workers before the scarcity results in economic calamity for Hawaii.

A poll of Americans last month ranked Hawaii the eighth most desirable state to call home, chiefly because of its climate and environment. Foreigners ranked the state third, perhaps unaware of factors such as affordability, amenities and housing availability, for which domestic respondents ranked Hawaii No. 48.

Hawaii's unemployment rate has been below 3 percent for nine of the last 12 months and in October shrank to 2.1 percent, less than half the national rate and Hawaii's lowest since the Bureau of Labor Statistics started keeping track 30 years ago. The rate is more than 1 percent lower than it was in early 2004, when apprehensive employers convened a special "jobs summit" at Fort Shafter.

Meanwhile, other states are implementing strategies aimed at dealing with a job shortage certain to become more severe. Labor is especially scarce in Western states, partly because of the expansion of energy development and despite the growing Hispanic work force.

In Utah, second behind Hawaii with a record-low jobless rate of 2.5 percent, a trucking company has begun to recruit drivers from Puerto Rico, where the rate was 10.8 percent in September. Utah economist Mark Knold recalls that Utah's previous low was 3 percent in April 1997, and the economy stumbled three years later when it "ran out of workers."

Seeking more workers for its coal, oil and natural gas expansion, Wyoming state and company officials have attended job fairs and put up billboards in Michigan aimed at luring people from the troubled auto industry. The strategy is paying dividends among those accustomed to harsh northern winters. The mountain state had tried a job campaign in the South after Hurricane Katrina, but prospective workers chose not to move after learning about Wyoming's frigid winters. They might find Hawaii more suitable.

In some sectors, especially the health-care industry, the impending crunch is nationwide. The average age of registered nurses is nearing 50 years, as baby boomers approach the period at which they will need increased health care. Hawaii's shortfall of registered nurses already is more than 1,000 and expected to reach nearly 4,600 by 2020.

Hawaii has nearly 20,000 more jobs than a year ago, reaching employment of 644,000 in October, but it remains an employee market. Economists predict businesses will have no choice but to raise wages to attract workers, passing on higher costs to consumers, thereby worsening Hawaii's low-ranking affordability and housing shortage, thus discouraging migration of workers from the mainland -- an ominous circle.