Hawaii’s astronomical unemployment rate spiked higher than initially reported in April and remained at an elevated level in May even as the state economy started slowly opening.
With thousands of people still trying to file for unemployment, the state reported Thursday that the seasonally adjusted jobless rate dipped slightly last month to 22.6% after peaking at a revised all-time high of 23.8% in April, according to data released by the state Department of Labor and Industrial Relations. The rate for April was previously reported to have been 22.3%.
One of the state’s top economists said unemployment likely will remain high until the governor-imposed 14-day trans-Pacific quarantine is lifted. Currently, the quarantine has been extended until July 31.
“With more of the kamaaina economy opening, the unemployment will improve in the next few months,” said Eugene Tian, chief economist for the state Department of Business, Economic Development and Tourism. “But the rate will remain high until the trans-Pacific travel opens. The double-digit unemployment rate may remain until the end of this year.”
Hawaii, which 2-1/2 years ago had the lowest unemployment rate in the country at 2.2%, now has the second-highest jobless rate in the U.S., trailing only Nevada, which was at 28.2% in April. May data for all the states will be released today.
“Tourism is the major industry in both states, and that is why Nevada and Hawaii are the top states with unemployment rates,” Tian said. “It is not surprising if Hawaii’s unemployment rate (goes) higher than Nevada if our tourism industry reopens late.”
Nevada reopened its casinos June 4, so its May unemployment rate, which is due out today, won’t reflect the surge in visitor traffic and added employment for another month.
The previously reported U.S. unemployment rate was 13.3% in May after hitting 14.7% in April.
Initial claims for unemployment insurance in Hawaii spiked to records in March and April before declining 67.6% in May after the first wave of filings were made online. However, the number of claims being processed each week soared 116.1% as the Labor Department processed more claims and many businesses remained closed due to COVID-19.
The numbers are in stark contrast to a year ago, with initial claims up 9,866, or 813%. and weekly claims expanding by 113,033, or 1,665%.
Nonagricultural jobs dropped by 6,000 in May from the previous month and plunged by 131,600, or 20.1%, from the year-ago period. Not surprisingly, the tourism sector, which was virtually shut down due to trans-Pacific and interisland quarantines, suffered the greatest losses, with the leisure and hospitality industry down 4,500 jobs, to 52,700, in May from the previous month, and off 58.2%, or 73,500 jobs, from 126,200 in May 2019. The interisland 14-day quarantine was lifted Tuesday.
Overall, the number of people unemployed in the state’s labor force improved slightly to 143,150 in May from 150,900 in April but was up sharply from 18,200 in May 2019.
Tian expects there could be another uptick in unemployment because the Small Business Administration’s Paycheck Protection Program ends this month, and companies that received loans in exchange for keeping employees furloughed but on the payroll for eight weeks might need to make additional moves.
“When the PPP funding runs out and some of the businesses still cannot open or fully open, there will be layoffs,” he said.
The unemployment rate edged down in the state’s four major counties in May from lofty levels in the previous month. State and national labor force data is adjusted for seasonal factors, but the county jobs data is not seasonally adjusted and thus does not take into account variations such as the winter holiday and summer vacation seasons.
Honolulu County’s jobless rate dipped to 19.9% from 20.5%, Hawaii County’s rate fell to 21.1% from 23.3%, Kauai County’s rate dropped to 29.9% from 33% and Maui County’s rate slipped to 33.4% from 34.6%. In Maui County, Maui’s rate fell to 34.5% from 35.7%, but Molokai’s rate rose to 14% from 12.3% and Lanai’s rate increased to 5% from 4.2%.