Isle jobs flying away

The state says recent airline shutdowns could trigger thousands of more job losses and stall the economy

Hawaii's economic growth could fall to zero and its jobless rate could rise by nearly a percentage point as a result of Aloha Airlines' decision to stop flying, the state said yesterday.

It is not just the 2,050 Aloha employees who already have lost their jobs in the shutdown. An additional 3,500 people who work for companies who did business with Aloha could lose their jobs, the state Department of Business Economic Development and Tourism said yesterday.

The agency estimates the job losses will increase statewide unemployment by 0.8 percentage points. That would push Hawaii's jobless rate, not including seasonal adjustments, to 3.8 percent from 3.0 percent in February.

If that happens, it is not just Aloha's former employees who are likely to feel the pinch. State and other economists agree that the growth rate of Hawaii's overall economy could flatten.

To try to keep from being unemployment statistics, former Aloha Airlines employees packed the Blaisdell Center yesterday for a job fair (see related story). The city and First Hawaiian Bank sponsored the fair, open to the unemployed of Aloha and ATA airlines as well as workers of Weyerhaeuser Co., which shuts down in May.

About 190 businesses solicited resumes from the displaced workers, all still licking wounds from last week's abrupt shutdown but most in good spirits as they look to the future.

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Statewide unemployment could jump and economic growth effectively flatten this year in the wake of bankrupt Aloha Airlines' decision to stop flying, according to new state estimates.

Following the company's abrupt shutdown, 2,050 Aloha employees lost their jobs. But an additional 3,500 employees of other companies that had contracts with Aloha or were dependent on their operations could potentially lose their jobs, according to an economic impact statement released yesterday by the state Department of Business Economic Development and Tourism.

The department has not finished calculating the impacts of ATA's closure, but economists have said that it is likely to compound any economic effects.

As a result of Aloha-related job losses, the statewide unemployment rate -- not including seasonal adjustments -- could rise to 3.8 percent from 3.0 percent, DBEDT said. Hawaii's seasonally adjusted jobless rate -- more widely reported, and also used for national comparisons -- was 3.2 percent in February.

But it is not just Aloha's former employees who are likely to see a change in their economic welfare. If unemployment rises, any growth in the state's real gross domestic product, or total market value of all final goods and services produced in Hawaii, is likely to flatten, said Bank of Hawaii Chief Economist Paul Brewbaker.

"We thought Hawaii's growth rate would stay at 1 percent before Aloha, but now it's more likely to be zero," he said.

DBEDT's economic impact calculations are based on the assumptions that none of the newly unemployed are hired in the state's tight labor market and that no other carriers enter the Hawaii market to fill the void left by Aloha.

"These estimates would be high in an elastic economy. However, these airline decisions were made at a time when the economy is kind of hung up, so they are more likely to be accurate," Brewbaker said. "And, it might take longer for the impact of these effects to fade away than if capital and credit were available, oil prices were lower and consumer demand for long-haul travel was higher."

While economists had expected the state's unemployment rate to hit 4 percent by the third quarter of 2008 and 5 percent by 2009, Aloha's retreat from the Hawaii market could accelerate the process, Brewbaker said.

"Unemployment was already rising. Now, after one week of airline announcements, we'll see it move up about a year faster," Brewbaker said.

While a 3.8 percent unemployment rate would be a big jump for Hawaii, it would still be low compared with a 4.8 percent national average, said James Hardway, a spokesman for the state Department of Labor and Industrial Relations.

And chances are that many Aloha employees will be able to find jobs in Hawaii's tight labor market, Hardway said.

"They'll probably be able to get jobs faster than usual because they have a higher skill set, and we are experiencing a labor shortage for skilled laborers," he said. "It's just going to be difficult for some of them to find jobs at their current income level."

The state held another briefing yesterday for former ATA Airlines and Aloha Air employees and soon-to-be-displaced Weyerhaeuser employees to apprise them of the job placement opportunities, medical services and other support services available to them, Hardway said. Employees have had access to two job fairs this week, with another scheduled for today and three more scheduled through Saturday, he said.

"There are jobs open, or the employers would not be holding job fairs," Hardway said.