Jobless rate excludes many out of work
By Sean Hao
Advertiser Staff Writer
Out of work since losing a Waikiki waitressing job in late 2001, Barbara Ikeda feels unemployed.
Yet Ikeda and others who have lost faith in their ability to find replacement jobs since the Sept. 11 terrorist attacks are no longer considered unemployed, from the viewpoint of the state. State officials recently reported that Hawai'i's jobless rate in February dipped to its lowest level in nearly 12 years.
The 3 percent unemployment rate is derived from a formula that combines jobless claims and results of a household survey, but excludes people who have given up looking for a job. It doesn't account for part-time workers who cannot find full-time jobs. Nor does it take into account multiple-job holders who get laid off one job.
"I don't have a job, but I'm not unemployed" according to the state definition, said Ikeda, who lives in Kaimuki.
"There's thousands like me."
The way in which the jobless rate is calculated limits its significance as a barometer of the overall economy, economists said.
Clearly, the Hawai'i economy is not as strong as the 3 percent rate would indicate, said Leroy Laney, a Hawai'i Pacific University economics professor and Bank of Hawaii analyst.
So far the second war with Iraq has not had as devastating an effect on the economy as the first Gulf War. However, war has sapped tourism, as has fear of severe acute respiratory syndrome, casting further uncertainty over the economy, he said. This raises doubts as to whether the jobless rate is really as low as reported.
While the state's economy has rebounded somewhat since 9/11, economists said the uptick is mainly a result of tourism growth and low interest rates rather than any significant success in diversifying the economy beyond its reliance on tourism and in creating a more business-friendly environment.
"I would not use that unemployment rate right now as an indicator of the efficacy or execution of public policy at the state level," Laney said.
Workers who lost their jobs after the 2001 attacks generally would have been eligible for up to one year of unemployment insurance checks. If at the end of that period they were no longer actively seeking a job, they would no longer officially be unemployed.
Those so-called "discouraged workers" would have dropped off the state's radar by December 2002. That appears to be reflected in a drop in the reported state unemployment rate from 4 percent in September 2002 to 3 percent in February.
Normally, a jobless rate of less then 5 percent is considered full employment — when everyone who wants a job is working.
A rate even lower than 3 percent would indicate a market where those with jobs have an upper hand over employers and feel emboldened to switch jobs or to seek higher pay. In 2001, the most recent year reported by the U.S. Department of Labor, the median average salary in the Islands increased just 1 percent to $33,010 a year.
"I don't think you would find anybody in the state that would say this is a job seeker's market," said University of Hawai'i economist Sumner La Croix. "If the labor market were stronger, some of these discouraged workers would start looking for work. Certainly in a good economy, some of them would be able to find work."
State officials do not count discouraged workers, but an increase in this group probably is one reason why Hawai'i's labor force dropped from a seasonally adjusted 619,250 in January 2000 to 592,850 in February 2003. That continues a trend covering the previous decade in which the state lost jobs in the construction, agriculture and finance, insurance and real-estate sectors, according to the U.S. Department of Labor. Job growth during the 1990s occurred in the services, and the state and local government segments of the state's economy.
Economists cite several reasons for the smaller workforce, including an exodus of discouraged workers to the Mainland. However, the biggest cause is the massive loss of hotel and other tourism-related jobs after 9/11, Laney said. "Most of those jobs have not come back," he added.
So what should the jobless rate be? An advocate for the right of workers to full-time jobs estimates that at least at the national level, the unemployment rate is about twice as high as the 5.8 percent rate reported for February.
In estimating an 11.8 percent national jobless rate, the National Jobs for All Coalition in New York includes the 9.3 million Americans who are working part time because they can't find full-time jobs, or who did not look for work during the last year.
The figure comes from a monthly survey conducted by the U.S. Department of Labor, but it is not included in the calculation of the nation's official jobless rate. Excluding such hidden contributors to unemployment has been an continuing matter of debate.
The official unemployment rate "is just the tip of the iceberg," said Helen Lachs Ginsburg, an economics professor at Brooklyn College and member of executive committee for the coalition.
"You could have a low unemployment rate, but that's not necessarily a true barometer because it doesn't count people who have become discouraged and have stopped looking for work," she said.
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