Isle jobless rate lowest in 30 years

The low rate is making it difficult for businesses to get their work done

The slowdown that economists have been predicting for Hawaii certainly isn't showing up in the unemployment line.

Hawaii's jobless rate -- already the lowest in the nation -- fell to 2.0 percent in December, hitting the lowest level in the 30 years that the state has been calculating seasonally adjusted numbers, according to data released yesterday by the state Department of Labor and Industrial Relations.

But Leroy Laney, a consultant for First Hawaiian Bank, thinks it will be just a matter of time before that number starts to creep up.

"If we continue to have a slowdown in the economy, and there are some signs of that even though construction jobs are continuing to underpin the job count, we should see it rise some," said Laney, a professor of economics and finance at Hawaii Pacific University. "But that may not happen until the end of 2007."

Laney, one of several Hawaii economists who has been predicting a slowdown this year, said the economy is slowing because businesses can't find people to fill job vacancies.

Hawaii, whose jobless rate dropped from 2.3 percent in November, has now posted the lowest unemployment rate in the nation for the last five months. The next lowest last month was Utah at 2.6 percent.

Nationally, the seasonally adjusted unemployment rate remained at 4.5 percent in December.

"There's a frictional level of unemployment in that it gets down to a certain level and it's hard to get it any lower," he said. "I think we're getting to that level at 2 percent, which is enormously low. There's always going to be some people between jobs and they'll file for unemployment and be counted for the unemployment rate."

The previous low for Hawaii was 2.1 percent in October. Before that, the lowest rate had been 2.2 percent in both October and November of 1989. In December 2005, the unemployment rate was 2.7 percent.

Nelson Befitel, director of the state Labor Department, said the historically low unemployment rate "is a testament to the vibrancy of our local economy."

But Laney said in the end, the labor supply constraint will be the leading contributor to the economy slowing down. He said even though construction jobs continue to be plentiful, building permits have been decreasing.

He also said there could be upward pressure on wages as businesses raise pay to attract workers and then pass on those higher costs to consumers.

Many Hawaii businesses have said they are operating short-handed because they can't find enough qualified employees.

Wages also could increase as unions negotiate to try to get their share of the state's $732 million budget surplus.

The state's labor force increased last month as it rose by 1,000 to 661,800 from 660,800 in November.

A year ago, it stood at 644,100.

The number of people employed increased to 648,750 in December from 645,950 in November and 626,600 in December 2005. Those unemployed dropped to 13,050 from 14,900 in November and 17,550 a year ago.

Nonagricultural jobs fell in December to 623,200, a drop of 2,500 from the previous month, primarily due to the release of general election workers. However, the private sector expanded in December from November by 1,300 jobs.

Construction jobs rose for the third consecutive month, with the majority of the 500 added positions going into special trade construction.

Education and health services jobs rose by 300, primarily due to the hiring of health care workers in doctors' offices and social service programs.

Hawaii's homeless problem isn't necessarily borne out in the unemployment figures, Laney said.

"You've got to be looking for a job to be considered unemployed," he said. "A homeless person sleeping under a tree and not looking for a job is not considered unemployed; you're considered out of the work force. And some of those people out of the work force are not employable (due to mental conditions and other reasons)."

The state Labor Department, which only releases non-seasonally adjusted numbers for the neighbor islands, showed that the jobless rate last month was under 2 percent for all of the neighbor islands but Molokai.

On Oahu, unemployment fell to 1.6 percent from 2.2 percent in November.

On the Big Island, it fell to 1.9 percent from 2.6 percent. On Kauai, it decreased to 1.5 percent from 2.1 percent.

On Maui, it fell to 1.5 percent from 2.1 percent.

And on Molokai, even though the jobless rate was 3.2 percent in December, it was still down from 6.0 percent the previous month.

Lanai showed the only increase as the jobless rate rose to 1.9 percent from 1.4 percent.

The seasonally adjusted rate is regarded by economists as a better gauge of the employment picture since it takes out the effects of changes associated with the seasons, such as teachers being out of school.