Even with news last week that Hawaii’s unemployment rate dropped to 5.2 percent in December, its lowest since October 2008, the state is still a year or more away from regaining all the jobs lost during the recent recession.
The labor market is typically one of the last pieces of an economic recovery to fall into place, and this time job growth has been even slower than during previous expansions both in Hawaii and at the national level.
After peaking at an average 624,900 nonagricultural payroll jobs a month in 2007 at the height of the last economic boom, Hawaii’s labor market began contracting in 2008, according to data from the U.S. Bureau of Labor statistics. By 2010 the local economy had shed 38,000 jobs.
Job growth turned positive in 2011, and the expansion picked up speed in 2012 with number of payroll jobs averaging 600,300 for the year. However, the number of jobs won’t be fully restored to pre-recession levels until 2014, according to a forecast by the University of Hawaii Research Organization. The state Department of Business, Economic Development and Tourism is predicting a full recovery in the job market will have to wait until 2015.
"We’re still about 25,000 jobs below the peak of the job market in 2007," said Eugene Tian, the state’s chief economist. "The recovery has been slower than during previous business cycles."
Hawaii isn’t alone. It is one of 44 states where payroll jobs are still below their pre-recession levels, according to the BLS data. Sluggish job growth during the economic recovery is the main reason Hawaii’s unemployment rate was stuck in the 6 percent to 7 percent range from the start of 2009 through the summer of 2012. The jobless rate broke below the 6 percent level in September, falling to 5.7 percent. By November it had reached a four-year low of 5.3 percent.
Although the overall trend in Hawaii’s job growth has been positive, performance by sector has varied widely, Tian said. Employment has been steady in the health care industry and in the federal government, but hiring in construction and financial services has lagged. In some industries growing demand for workers is putting upward pressure on wages.
Jobs in the leisure and hospitality industry have increased sharply during the past two years and are now just 1.2 percent below their 2007 peak, according to the BLS data. In the hard-hit construction industry, job losses didn’t bottom out until last year. The industry, which employed an average of 39,100 workers in 2007, saw that plunge to 28,300 positions in 2011, a drop of 28 percent. Construction job growth was flat in 2012.
Jobs in the business and professional services sector, which contracted sharply in 2008, are now just 1.4 percent shy of their pre-recession high. Accountants, business analysts, information technology specialists and paralegals are among the most sought-after hires in the field, said Liesl Bernard, Honolulu branch manager for staffing firm Robert Half.
The unemployment rate for some IT workers is in the 1 percent to 3 percent range, well below the state’s official 5.2 percent jobless rate, Bernard added.
"There’s been a tremendous increase in hiring. Most of the highly sought-after talent are already employed, and people are making moves for higher salaries and better benefits," she said.
Increasing demand for certain highly skilled workers could begin to push up wages in those areas "which are typically 10 percent lower than the national average," she said. In places with a comparable cost of living to Honolulu, such as San Francisco, workers in some specialities earn roughly 130 percent of the national average, Bernard added.
Although there are some positive signs in the construction industry, the outlook for hiring remains mixed, said John White, executive director of Pacific Resources Partnership, a nonprofit labor-management organization of the Hawaii Carpenters Union, Local 745, and its member contractors across Hawaii.
Nationally, construction spending fell from $116.7 billion in 2006 to $77.8 billion in 2011, a drop of 33 percent, White said. The drop in private-sector construction spending was even sharper, he added.
"Hawaii has not been immune from these trends. There is typically a lag between a broad economy rebound and one in the construction industry," White said.
Construction is an industry characterized by long cycles, according to White. Investors have been reluctant to take on big projects, in part because of the perceived risks and the challenges faced in getting projects approved, he said.
"Construction is a key driver of Hawaii’s economy. Any growth or setback in the industry impacts other areas of the economy such as retail and housing," he said.
Recent data from the Honolulu Department of Planning and Permitting show new building permits are lagging on Oahu, the biggest construction market in the state, White said.
"But the good news is that Oahu saw a significant rebound in (private-sector) permit value in 2012 after a weak 2011. As these projects get under way, it should mean increased work opportunities in the construction industry."
Another positive for the industry is the Honolulu tail transit project, which will "revive construction activity and boost employment levels in the construction sector and influence growth in other industries," he said. After several delays rail construction is expected to resume as early as this summer, according to White.
The state’s tourism industry has been able to rebuild its workforce thanks to booming visitor spending.
Starwood Hotels, which operates about a dozen hotels on four islands, has picked up the pace of hiring over the past year, said Keith Vieira, vice president and director of operations for the company’s operations in Hawaii and French Polynesia.
While Starwood had been steadily adding housekeeping staff as occupancy increased, it decided to leave some management positions vacant since 2008 and 2009, Vieira said.
"There are probably 70 to 80 (management) positions that we began filling last year, and have continued to put back jobs at all levels. There is no question our hiring is up and has been increasing," he said.
Hilo Hattie, a retailer that serves both the visitor and local market, saw its workforce grow by a net 14 percent in 2012, said Mark Storfer, the company’s executive vice president and chief operating officer.
"We had a wonderful year in 2012, and we’re very bullish for 2013," he said.
Hilo Hattie filled about 70 positions in 2012 and is looking to fill another 37 openings, Storfer said.
"It’s quickly becoming an employee’s marketplace. From 2008 through 2011 it was an employer’s marketplace. Wages were suppressed. They’re higher now and we’re OK with that. We’re paying a little bit more in wage premiums," he said.
