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The Honolulu Advertiser
Posted on: Sunday, February 3, 2002

50,000 local jobless claims filed since Sept. 11 attacks

By Dan Nakaso
Advertiser Staff Writer

Sometime in early January yet another person without a job filed Hawai'i's 50,000th unemployment claim since the Sept. 11 terrorist attacks and established a new, ignoble benchmark to measure the damage to the state's economy.

The speed at which Hawai'i's unemployed have filed claims with the state Department of Labor and Industrial Relations has no precedent and surprised even the professionals.

Before Sept. 11, an average of 1,400 people filed weekly claims. After Sept. 11, the number nearly doubled to 2,700.

Under normal circumstances, it usually takes about 36 weeks to see 50,000 unemployment claims in Hawai'i.

"This time it only took 17, 18 weeks," said Tom Jackson, the Department of Labor and Industrial Relations spokesman. "The only other time when we had this kind of a situation was the Gulf War and that took several months for us to get up to these numbers. This time, the numbers just shot up."

What worries economists, business leaders and government officials most of all is that — even in the best weeks since September — unemployment claims continue to run at least a third higher than normal.

DFS-Hawai'i last week added another 20 or so positions to the list of 70 full-time jobs and the equivalent of 300 workers through reduced work hours that it has already lost since Sept. 11.

And while Hawai'i's two major interisland airlines have begun recalling some of the 600 workers they furloughed, the overall employment picture remains gloomy for hotels, retailers, restaurants and other businesses that depend on tourism.

Many stores that cater to Waikiki tourists, for instance, won't be able to hang on much longer, said Taka Kono, market analyst for Japan Report.

Come February, he said, "as sales continue to be a fraction of what they once were, there won't be as many business owners stubbornly riding it out. The number of stores shutting down in Waikiki will likely hit double-digits in the month."

Leroy Laney, an economics professor at Hawai'i Pacific University, doesn't focus on the 50,000 threshold for unemployment claims, which was broken sometime between Jan. 5 and Jan. 13.

He's more concerned that the 54,309 applications filed so far underscores the message "that we were devastated by the effects of Sept. 11. The consensus forecast of economists is that the state is still in recession and should emerge in the first part of this year or second quarter."

But then new problems could emerge for Hawai'i businesses.

The money they pay in to the state's unemployment insurance trust fund was supposed to increase Jan. 1. Legislators instead postponed the increase during their special session to address the economic problems following Sept. 11.

So while businesses continue to pay an average of 2.4 to 2.5 percent of their payroll into the fund each year, the rate will probably rise Jan. 1, Jackson said.

"If they (legislators) don't hold it back again, it will go up. That's a guarantee," Jackson said. "There's just no way of knowing how much."

Increasing unemployment insurance rates will only end up hurting Hawai'i's unemployment problems by suppressing hiring, said Sam Slom, president and executive director of Small Business Hawai'i and a Republican senator representing Wai'alae Iki and Hawai'i Kai.

"The unemployment compensation tax that we pay is one of the highest in the country," said Slom, who has been paying the tax for 18 years. "It's not going to help unemployment at all, even though there's work to be done out there and employers would love to have more people. Combined with the minimum wage going up, employers will only be reluctant to hire."

Unemployed workers in Hawai'i are eligible for six months' worth of benefits and have to file separate claims each week. The fund pays a maximum of $395 per week — which is taxed — for those who had earned a salary of $6,000 per month.

The fund had $300 million on Sept. 11. And as the number of claims shot up, so did the demands.

Unemployed workers had been averaging $9.4 million in monthly claims for the first eight months of this year. From September to December, monthly claims jumped from $10 million to a whopping $19.4 million — a total of $65 million. The fund also paid out an extra $4.1 million to cover the people who got a three-month unemployment extension from the legislative special session.

The rapid pace of unemployment filings "is draining the pot, but it's not going to empty it," Jackson said. "We're not even close yet. ... Even though we're worried about the trust fund, we'd rather see the people get it first."

Among all of the gloomy unemployment statistics has been one bit of good news.

The number of claims seemed to have peaked the week of Jan. 13, when 3,137 people filed for unemployment insurance. The next week, the number of claims suddenly dropped to 2,595.

But the people at the Labor Department can't explain why. And they're certainly not relaxing.

"That's just one week," Jackson said. "Every time the numbers go down, they just seem to go back up again."

Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or 525-8085.