The slow rebound

Job growth, the lifeblood of any economic rebound, has been slow to recover in Hawaii since the end of the recession two years ago.

The economy lost an estimated 60,000 payroll jobs during the downturn, including 40,000 during the 11/2-year recession and another 20,000 in the 12 months that followed, according to an analysis of data from the U.S. Bureau of Labor Statistics.

IHS Global Insight, a Boston-based economic forecasting firm, estimates it will take until the second quarter of 2015 for Hawaii’s job count to return to pre-recession levels, as much as six months longer than the national average.

Hawaii’s anemic job growth was highlighted in a report last week that showed the state’s unemployment rate rose to 6.5 percent in October, the fourth consecutive monthly increase. The unemployment rate has declined only marginally since peaking at 7 percent in 2009.

"Partly in light of the fragile U.S. national recovery and lower confidence levels, which will undoubtedly have at least some impact on the local economic scene, the outlook is only for muted job growth for 2011 as a whole, with only a minor variation in 2012," said Leroy Laney, Hawaii Pacific University professor of economics and finance.

Job declines triggered by the 2008-2009 recession hit virtually every sector of the economy, with the biggest drops occurring in the construction, financial services and tourism industries. The only sector to dodge the bullet was health and education, which suffered only a minor loss of jobs followed by a strong rebound.

Construction was the biggest casualty by far with the industry shedding 30 percent of its jobs between the start of the recession and the beginning of this year. Leading up to the recession, the construction sector was employing, on average, 40,000 workers a month. That dropped to a low of 27,500 in January of this year. The duration of the decline in construction jobs was also one of the longest of any industry, lasting 37 months from peak to trough.

The construction sector across the country was harder hit than other industries because of the nature of the recession, which was fueled in part by a collapse in the housing market. There is still a backlog of foreclosures and short sales that will have to be worked through before home construction will be able to rebound, Laney said.

Despite some signs of improvement, the construction industry still faces some "pretty precarious and volatile economic conditions," said John White, executive director of Pacific Resource Partnership, an advocacy group that represents the Hawaii Carpenters Union.

Unemployment among carpenters has been as high as 50 percent in recent months, White said.

"That’s why it’s critical that projects like rail transit come on line to stimulate the construction industry," he said.

After construction the sector with the largest job decline on a percentage basis was financial services, which lost 13 percent of its work force from peak to trough.

The biggest losses were in the mortgage origination business, which took a hit from the subprime mortgage crisis. The duration of the job decline was 41 months, surpassing even the construction industry.

The industry that had the shallowest downturn was professional and business services, which includes a broad range of white-collar workers such as accountants, architects, clerical staff, engineers and temporary workers. Companies often hire temporary employees following recessions because they are reluctant to take on full-time workers when economic conditions are uncertain.

There was an 8.4 percent decline in professional and businesses services jobs during a 21-month period.

The leisure and hospitality sector lost about 10,000 jobs, or 10 percent of its work force, during a 29-month period. Job growth in the sector resumed in the summer of 2010, but employment remains about 6 percent below its pre-recession peak.

Job growth is an important part of an economic expansion for several reasons, said Lawrence "Bill" Boyd, a labor economist with the University of Hawaii-West Oahu.

"People need jobs to earn income, and that income gets fed back into the economy as they purchase goods and services, and that leads to general prosperity," he said.