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Economic Currents

Keep up to date with the latest UHERO news.

UHERO 101.1: Unemployment Rate

How can economics help me understand the world around me? Check in every Friday for UHERO 101: explaining news that matters with basic economic concepts. UHERO cuts through the jargon and tells you what this means to you.

Star Advertiser: Isle jobless rate drops slightly to 5.1%

Hawaii's unemployment rate is often praised as being below the national average. While this is mathematically correct, there are two important caveats to keep in mind.

1. Hawaii's Prepaid Health Care Act provides benefits to employees working more than 20 hours a week. Employers may have incentive to hire 2 part-time workers to do the job of 1 full-timer to avoid this extra expense.
2. The unemployment rate captures people with zero jobs, rather than people with half a job (and from point #1, there are many of these in Hawaii).

The moral of the story is that while there may not be many people with no jobs in Hawaii, there are likely lots of people with less jobs than they need. Therefore, caution should be taken when interpreting Hawaii's low unemployment rate as a measure of economic well-being.

-Kimberly Burnett

Behind-the-counter, but Over-the-border? A case of emergency contraception

Posted May 23, 2013 | Categories: Hawaii's People, Blog

When the state imposes age restrictions on consumption of certain goods and services, potential customers often look for ways to avoid these restrictions. “Border-hopping” refers to the practice of crossing a state’s border from the state that has stricter restrictions to the state with more lenient age policies and is well documented in reference to alcohol consumption and the use of reproductive services (including abortion services). The recent study “Behind-the-counter, but Over-the-border?” by UHERO’s Dr. Inna Cintina applies the same concept to emergency contraception (EC).

EC may effectively prevent unwanted pregnancy if taken promptly after unprotected sexual intercourse. Although some forms of EC were available on an off-label basis for nearly 30 years, it formally received FDA approval on a prescription basis only in the late 1990s. In 2006, the FDA lifted the prescription requirement for women age 18 and older. In 2009, the FDA dropped the age requirement to 17, and in 2013 to 15 years of age.

Since EC efficacy is inversely related to the duration between intercourse and the time it is taken, prescription requirements can make it less effective. Between 1998 and 2006, eight states took steps to relax the prescription requirements, making EC available behind-the-counter* without an age restriction. Washington State was the first state to implement collaborative drug therapy agreements between physicians and pharmacists, essentially increasing the availability of EC. The study “Behind-the-counter, but Over-the-border?” focuses on the Washington state experience and identification of potential spillover effects on neighboring states. The study finds some evidence in support of spillover effects in Idaho, but not Oregon. After accounting for changes in the availability of abortion services, the decrease in fertility rates in Idaho counties with a no-prescription EC pharmacy in close proximity is rather small and models lack sufficient power to detect it.

In Hawaii EC became available without a doctor’s prescription in 2003. Since Hawaii is fairly isolated state, the costs of border-hopping outweigh the potential benefits and spillover effects are unlikely. Figure below shows abortion rate** per 1,000 women age 15-44 in Hawaii, by county of residence.

Between 1996 and 2003 abortion rates were declining in Hawaii, Kauai, and Maui counties and were relatively stable in Honolulu County. After 2003, the abortion rate in Maui County continued a decreasing trend. In contrast, for at least two years, abortions rates had increased in Hawaii and Kauai counties. In Honolulu County abortion rates increased sharply after 2004. The dynamic of the county specific rates may have been affected by the availability of reproductive services, pharmacist participation in collaborative agreements, the general dissemination of information among potential customers as well as a number of other factors. A more rigorous analysis is needed to identify the impact of increased availability of EC on fertility rates in Hawaii after 2003.


 *A formation of collaborative drug therapy agreements between physicians and pharmacists allowed the pharmacists to make an independent assessment of a woman’s need for EC and a decision to dispense EC without a doctor’s prescription. But he still had to follow the established drug therapy protocol therefore the EC was not on the shelves.

 **Abortion rate is defined as the total number of abortions in a county divided by the female population age 15-44 in that county.

-- Inna Cintina

Latest Jobs Report Suggests Most Industries Recovering

Although slightly slower than in the second half of last year, conditions in the local job market continued to improve in the first quarter of 2013 according to the latest figures from the Bureau of Labor Statistics (BLS). The total number of nonfarm jobs in the state grew by 1.6% in the first quarter of 2013 compared to the same period last year; resulting in roughly 6,000 more jobs on Oahu and almost 4,000 more jobs across the Neighbor Islands.

Jobs added between 12Q1 and 13Q1Job creation picked up in a wide range of sectors, indicating that the recovery has spread beyond just tourism. Construction led the pack with industry payrolls expanding by almost 9%, adding more than 2,500 jobs compared to the first quarter of 2012. The local construction sector still has a way to go on the road to recovery but the outlook is encouraging; see our latest forecast for the details.  The broad leisure and hospitality sector continued to add jobs as the local tourism industry keeps breaking records; the sector added 1,800 jobs. There was also significant hiring in administrative services (which includes temporary staffing firms) and health care; each of the two sectors added roughly 1,700 jobs. The expansive “other services” sector that includes a variety of industries from auto repair to dog grooming also grew, adding almost 1,400 jobs.

A handful of sectors cut jobs, with the largest cuts occurring in the federal government. Federal government jobs in the state fell by 2.1%, a loss of more than 700 jobs. The data suggest most of the job losses were concentrated in ship building and other divisions within the Department of Defense (DOD). This was likely, at least in part, the result of a civilian hiring freeze and the layoff of temporary workers put into place in the run up to the “sequestration” budget cuts. While lawmakers in Washington continue to wrangle over the federal budget, it remains highly uncertain whether these jobs will return or if more layoffs will be coming. Defense officials have signaled that furloughs could be in store for DOD civilians later this year, though it’s unclear how many Hawaii workers would be affected. 

After a strong year in 2012, retail hiring started off 2013 surprisingly slow with no new jobs created. Moreover, retail employees were working fewer hours: the average work week fell 4.3% from 32.1 to 30.8 hours per week. While it’s too early to sound the alarm, limited hiring and scaled back hours could indicate some potential weakness in the local retail sector. Perhaps consumers have started to cut back on spending in response to the expiration of the payroll tax holiday. Alternatively, visitors faced with higher room rates, or an unfavorable exchange rate in the case of Japanese visitors, may be opting to spend less at local retailers. Check back to UHERO as we monitor this and other developments in the local economy as they unfold this year!


--James Jones and Peter Fuleky

Investigating the Potential for Seawater Air Conditioning in Waikiki

Researchers at the University of Hawai‘i at Mānoa recently concluded a study into the potential for seawater air conditioning (SWAC) in Waikīkī. The study was led by the University of Hawai‘i Sea Grant College Program (UH Sea Grant) in partnership with the the Economic Research Organization at the University of Hawai‘i (UHERO) to investigate various aspects of seawater air conditioning and its applicability to Waikīkī. In examining the appropriateness of SWAC technology, researchers compared SWAC with ‘business as usual’ and various renewable energy and other energy efficiency options. Each option was analyzed in terms of: 1) generation capacity; 2) applicability to existing policy standards; 3) economic factors; 4) environmental and social factors; and, 5) energy and supply security.


According to the findings of the report, while SWAC may be more costly than other efficiency/conservation options, its ability to provide an uninterrupted supply of cool air gives it a solid advantage over the use of more intermittent renewable energy technologies (such as wind and solar power) for air conditioning purposes. For Waikīkī, where demand for air conditioning is constant, SWAC has the potential to decrease the cost of air conditioning and reduce the amount of harmful emissions that are released as a by-product of generating electricity from fossil fuels.

Traditional air conditioning systems require large amounts of energy to cool air to the desired temperature. In contrast, SWAC technology harnesses the cooling properties of cold seawater to achieve the same purpose, reducing the amount of electricity required. SWAC is particularly relevant to Hawai‘i, where the close proximity of deep, cold, ocean water to areas of high population make it an ideal location to implement the technology. In addition, the first seawater air conditioning unit was invented by a UH Sea Grant researcher in the early 1980’s.

When surveyed, 62 percent of O‘ahu residents indicated support for SWAC development in Waikīkī, compared to 8 percent opposed and 30 percent neither supporting nor opposing. Individuals more familiar with SWAC technology were more likely to support its development than those who were not aware of the technology (69 percent in favor compared to 54 percent). Slightly less than half of O‘ahu residents, 46 percent, also supported the use of public funds to help develop SWAC in Waikīkī, versus 26 percent opposed and the remaining 28 percent neither supporting nor opposing.

# # #

The University of Hawai’i Sea Grant College Program is part of the University of Hawai‘i at Mānoa’s prestigious School of Ocean and Earth Science and Technology. It supports an innovative program of research, education and extension services directed to the improved understanding and stewardship of coastal and marine resources of the state, region and nation. Science serving Hawai’i and the Pacific for over 40 years.

UHERO is a unit within the College of Social Sciences (CSS) at the University of Hawai‘i at Mānoa. Established in 1997, UHERO is dedicated to informing public- and private-sector decision making through rigorous, independent economic research on the people, environment and economies of Hawai‘i and the Asia-Pacific region.

The College of Social Sciences (CSS) at the University of Hawai‘i at Mānoa is engaged in a broad range of research endeavors that address fundamental questions about human behavior and the workings of local, national and international political, social, economic and cultural institutions. Its vibrant student-centered academic climate supports outstanding scholarship through internships, and active and service learning approaches to teaching that prepare students for the life-long pursuit of knowledge.




Benchmark Revision of Non-Farm Payrolls

The annual benchmark revision of employment statistics from the US Bureau of Labor Statistics (BLS) indicated that 4,000 more jobs were created in Hawaii over the past two years than previously thought. The benchmarking process is an annual revision that incorporates unemployment insurance tax records to supplement preliminary payroll estimates, which are based on employer surveys. The latest official figures show that the number of non-farm payrolls in Hawaii grew by 1.2% in 2011 and 1.9% in 2012; roughly 18,400 new jobs were created since 2010. While the state still has a way to go to recover all of the 38,000 jobs lost during The Great Recession, the positive revision indicates that the local economy has made more progress on the road to recovery than previously thought.

Geographically the positive revisions were concentrated entirely in Honolulu County. The benchmarked figures show that the number of non-farm payrolls in Honolulu County grew by 1.3% in 2011 and 1.8% last year; creating 13,600 new jobs and clawing back almost two-thirds of the jobs lost since 2007. In contrast, in the state’s three Neighbor Island counties the benchmarking process cut payroll estimates. After losing almost 17,000 jobs during the Great Recession and limited job growth of less than 1% in 2011, preliminary figures indicated that job creation was beginning to pick up in earnest on the Neighbor Islands last year. But the benchmarked figures cut estimates for job growth last year from 3.1% to 2.3%. While the revised figures still show positive job growth across the Neighbor Islands, given the severity of the economic downturn any indication of a slower recovery is certainly disappointing.

Some of the state’s key industries underwent significant revisions. Preliminary figures indicated that the local construction sector continued to shed jobs through 2011 and grew by less than 1% last year, but the revised figures show that construction jobs actually stabilized in 2011 and grew by 2.4% last year. For an in-depth analysis on construction conditions in the state and the outlook going forward see UHERO’s latest report Hawaii Construction Forecast: Construction Upswing Picks Up Speed. Public sector job counts also saw a surprising upward revision. Locally and across the nation public sector layoffs have put a damper on the recovery but the latest figures indicate that state and local government agencies in Hawaii added more than 1,100 jobs last year, up from 200 new jobs indicated in preliminary estimates. While almost all sectors had job counts revised up, a notable exception is the leisure and hospitality sector where preliminary job counts were actually slashed during the benchmarking process. Preliminary figures indicated that the sector added almost 8,500 jobs since 2010, but revised figures indicate the number of new jobs is closer to 6,800. Despite the negative revision, the leisure and hospitality industry added more jobs over the past two years than any other sector and accounted for more than one-third of all of the new jobs created in the state.

-- James Jones and Peter Fuleky

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