Labor Market Decline in Hawaii Raises Questions About State’s Future

HONOLULU, Hawaii—Oct. 6, 2014—A study of labor force participation in all 50 states ranks Hawaii at 42 in the nation–the result of a decline in the labor market that raises important questions about the long-term economic health of the state. The study, which was based on statistics from the Department of Labor, found troubling indicators in nearly every state, providing an overall snapshot of a growing issue in employment and economic security.

Over the past 15 years, labor force participation in Hawaii has dropped among all demographics. According to the study:

  • Total Labor Participation Rate has dropped almost 7 points, from 67% in 1999 to 60.3% in 2013.
  • Women suffered more than average from the decline, with a drop from 63.5%  to 54.7%. (In contrast, male labor force participation dropped by 4.7 percentage points over the same period.)
  • Analysis of the data by race finds clear negative trends for Asians, Hispanics, and Whites as well.

Academics and economists look to a number of contributing factors for the overall decline, from increased government regulation of business (including the Affordable Care Act) to energy policy and economic uncertainty. Among other issues, the study calls into question the utility of short term unemployment and economic forecasts, which may fail to take into account larger trends or workers who remain unemployed or underemployed over a long period of time.

“This survey of labor force participation rates illustrates the importance of considering long term factors when evaluating how to improve the economic health of Hawaii,” stated Keli’i Akina, Ph.D., President of the Grassroot Institute of Hawaii. “From the brain drain to the problem of underemployment, we are looking at the issues that weaken our state’s economic competitiveness and have been chipping away at our productivity and well-being for more than a decade. While the factors that prompt such a decline may be complex, the solution is, thankfully, a bit simpler. We must embrace policies that stimulate innovation and remove unnecessary drag on our economy, making Hawaii a better place to grow a business.”

For details on findings in Hawaii, go here: http://new.grassrootinstitute.org/wp-content/uploads/2014/10/Hawaii.pdf

To read findings on all 50 states, go to: http://www.libertyfound.org/blog/2014/10/national-labor-force-participation-rate

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