Joblessness highest in 5 years

Travel industry losses and an increase in the number of workers raise unemployment

As much as 3.8 percent of Hawaii's work force, the highest level in nearly five years, remained unemployed last month.

In the last few months, thousands of jobs have been lost as Hawaii's businesses and lead tourism sector have grappled with rising fuel costs and other inflationary pressures. About half the workers who lost their jobs when Aloha and ATA airlines shut down are still looking for work, along with those who lost their jobs when Norwegian Cruise Line removed Pride of Aloha from its home-ported fleet. The shutdown of Molokai Ranch and the temporary closure of the Royal Hawaiian Hotel have also resulted in layoffs.

Economists expect further job losses and tightening to continue through 2010. Still, Hawaii's unemployment rate, which was tied for sixth lowest in the nation last month, remains markedly lower than the national average of 5.5 percent. Since April 2002, Hawaii's monthly seasonally adjusted unemployment rate has been at least 1.6 percentage points lower than the U.S. rate.

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Hawaii's jobless rate rose in June to 3.8 percent, which reflected the highest percentage of unemployed islanders since December 2003.

The seasonally adjusted unemployment rate rose 0.2 percentage points over June's rate of 3.6 percent and 1.2 percentage points from a year ago, according to numbers released yesterday by the state Department of Labor and Industrial Relations.

Hawaii's labor force was 663,377 in June. An estimated 25,210 of these workers were unemployed last month. About half of the workers who lost their jobs in the shutdown of Aloha and ATA airlines continued to look for work along with those displaced by Norwegian Cruise Line's decision to remove Pride of Aloha from its home-ported fleet, said James P. Hardway, special assistant to the director of Labor and Industrial Relations.

Hawaii's seasonally adjusted nonagricultural jobs fell in June to 626,900, a decrease of 400 jobs from May. The state's leisure and hospitality sector, which lost 800 jobs due to the temporary closure of the Royal Hawaiian Hotel for renovation and the permanent closure of Molokai Ranch, strongly contributed to that decline, Hardway said. In addition, the trade, transportation and utilities sector lost 500 people, while the government sector lost 600 jobs. The health and educational service sector, by far the best performing last month, gained 400 jobs, and the construction and other services sector gained 100 people.

The state's expanding labor force, which grew 2.1 percent from a year ago, is as responsible for driving up the state's unemployment rate as is decreased job creation and layoffs, Hardway said.

"What's driving this number up is not just the amount of people becoming unemployed, but the amount of people entering our labor force," he said.

Hawaii's economy created more than 15,000 new jobs each year from 2005 to 2007; however, only 4,900 jobs were created in the past year, Hardway said.

"We aren't creating jobs at the pace we were, but we are still able to provide a job to most of the people who are looking for one," he said. "We still have a relatively low unemployment, especially when you consider that most economists view a 3 to 4 percent unemployment rate as full employment."

Most sectors of the local economy will continue to see job losses over the next two years with recovery not anticipated until 2010, according to Carl Bonham and Byron Gangnes of the University of Hawaii Economic Research Organization.

"The annual unemployment rate will peak at 4.2 percent in the fourth quarter of 2009 before beginning to subside," they said in their latest UHERO quarterly forecast, published June 13.

According to the forecast, Hawaii's airline industry will have the largest losses, and tourism weakness will also lead to job losses in accommodation and food services and wholesale and retail trade. There will also be job losses from sectors not directly linked to tourism, such as finance, insurance, real estate, civilian federal government, agriculture and manufacturing, the forecast said.

UHERO also forecast that construction job growth will slow to 1.4 percent this year and begin to shed jobs in 2009; however, the losses are expected to stay below 5 percent. Total nonfarm jobs in Hawaii are expected to contract at a modest rate for the next two years before returning to expansion in 2010, UHERO said. Hawaii's health care and social assistance and state and local government sectors are expected to see moderate job gains, they said.

"We continue to remain cautiously optimistic that Hawaii will be able to continue to show its resiliency, particularly in the private sector, in creating new jobs for those affected by the recent closures in the private sector," said Darwin L.D. Ching, director of Labor and Industrial Relations.

The national unemployment rate was unchanged in June at 5.5 percent but was up from 4.6 percent a year earlier. Since April 2002, Hawaii's monthly seasonally adjusted unemployment rate has been at least 1.6 percentage points lower than the U.S. rate.

Only five states, including Nebraska, North Dakota, South Dakota, Wyoming and Utah, posted lower seasonally adjusted unemployment rates than Hawaii last month. Michigan's 8.5 percent unemployment rate, which was due in part to major strikes and layoffs in the automotive industry, topped the nation.