Hawaii has the lowest unemployment rate in the country at 2.1 percent, which is something to be proud of. On the other hand, the current labor market has presented problems for employers and masked problems for workers.
Hawaii’s low unemployment rate disguises other problems
The problems for Hawaii’s employers:
- Hawaii’s employers are having a difficult time filling positions with qualified employees because there are so few people looking for work. Young people are leaving the state in search of better job opportunities which is decreasing the unemployment rate but making it even harder for employers to hire employees. Check out our blog post about how to select and hire the best candidate for the job here.
- The state’s aging population is contributing to a lower-unemployment rate as people retire from the workforce but it means not enough working-aged people searching for jobs.
The three main worker problems disguised by a low unemployment rate are:
- Under-employed people who are working one or more part-time jobs when they would like one higher paying full-time job.
- People who have given up looking for work or chosen to go back to school because they don’t have the skills that meet employer needs.
- Employees being paid a wage that they can afford to live on – known as a “living wage.” Decades ago, wage growth was tied to productivity. The more a company made, the better they paid their employees. A change in the labor market dynamic began in the early 1980s and wage growth is no longer tied to lower unemployment or productivity. Hawaii has unique economic challenges because its economy is so heavily dependent on tourism and service jobs typically do not pay a wage high enough to match Hawaii’s high cost of housing.
Consequences of low-unemployment rate
A thriving economy depends greatly on worker productivity and consumer spending. With Hawaii jobs going unfilled due to an extremely low unemployment rate and workers leaving the state, productivity and economic growth have slowed to a rate of about 1.5 percent when economists would expect growth at about 3 percent with such low-unemployment. In the long-term this will impact the state’s ability to pay for pensions and costly infrastructure investments.
Consumer spending accounts for about 70 percent of GDP. When workers are financially squeezed by low wages and skimpy benefits they have less money in their pocket to spend on consumer goods. This leads to a reduction in spending and/or an increase in debt spending which can slow the economy.
The good news for workers and the economy is that many employers are trying to handle the worker shortage by offering higher wages and more generous benefits. The question is how can businesses afford this additional spending?
Partnering with Makai HR
With the cost of doing business in Hawaii at record highs, we know how important it is to keep labor costs in line with revenue. Partnering with Makai HR can reduce your labor costs while improving your employees work benefits; two musts in Hawaii’s current labor market. Our plans are priced competitively and include value-added services like time-in/time-out systems. Our three tiers of PEO service plans are tailored to the size of your business and specific needs. We offer a 100% paperless solution which means that your employees can manage their needs through a computer, tablet or phone.
We have you covered with HR outsourcing services! When you partner with Makai HR you can get on with the business you are trying to grow while we take care of your employee needs from payroll to taxes, health insurance/benefits and worker’s compensation. You also gain peace of mind that you are in compliance with all of Hawaii’s employer laws (if you’ve ever looked you know that the list is very long). When choosing a PEO to partner with, there are many things to consider including cost, services and technology solutions.
What are you waiting for? Companies who partner with a PEO benefit from 7-9% faster growth, 10-14% lower employee turnover; and they are 50% less likely to go out of business. Contact us today to get started!