Hawaii’s labor market remains stable, but it could be just a matter of time until the Trump administration’s federal layoffs kick in and employment starts to weaken.
The state’s seasonally adjusted jobless rate in February held at 3.0% for the eighth straight month after six consecutive months at 2.9%, according to data released Friday by the state Department of Business, Economic Development and Tourism.
But Eugene Tian, DBEDT chief state economist, said February’s labor statistics did not reflect reductions in federal civilian unemployment because the state employment data was collected during the week of Feb. 10-14. Since the employment numbers change every day, the survey uses the week that includes the 12th day of the month as a reference week and ask people to report their employment status of that week.
“If the federal layoffs occur in Hawaii, there would be an increase in the unemployment rate and people may look for jobs elsewhere, causing outmigration,” Tian said in an email. “Currently, since Hawaii has a labor shortage, laid-off federal employees may seek job opportunities in Hawaii, and there will be an increase in employment and population. The Operation Hire Hawaii (OH-HI) being implemented by the Hawaii state government is attracting workers into the state government.”
Tian noted that the Hawaii data includes about 35,000 federal civilian employees and that about 56% of those civilian employees are working on military bases and another 7% are post office employees.
“These employees may not be impacted by the federal layoffs,” he said.
Hawaii’s 3.0% unemployment rate in February was tied for the fifth lowest in the country, according to the U.S. Bureau of Labor Statistics. Only South Dakota, 1.9%; North Dakota and Vermont, both at 2.6%; and Montana, 2.8%, have lower rates. Maryland, Minnesota, Nebraska and New Hampshire are tied with Hawaii at 3.0%.
Tian said initial unemployment claims are another indicator of the stability of Hawaii’s labor force.
”During the first three months of 2025, initial unemployment claims were lower than the same period in 2019 for all the counties including Maui County,” he said.
Hawaii’s labor force, which includes those who are employed, those who are unemployed but actively seeking work and those who are self-employed, increased to 684,800 in February from 683,250 in January.
Those employed rose to 664,500 from 662,850, while the number of people unemployed decreased to 20,300 from 20,400.
“The labor force and total number of people employed in February were both the highest since the COVID pandemic started in April 2020,” Tian said. “However, both the labor force and employment numbers were not fully recovered to the pre-pandemic levels. The labor force recovery was 99% and the employment recovery was 98.2%, as compared with February 2020 levels.”
Nationally, the unemployment rate rose to 4.1% in February from 4.0% in January.
Nonfarm payrolls, calculated from a mail survey of employers, increased by 1,300 in February from January. The private education and health services category showed the largest increase at 700, with construction next at 600. Over the past year, nonfarm jobs were up by 10,100, or 1.6%.
Meanwhile, the unemployment rate was mixed in the state’s four major counties from the previous month. State and national labor force data is adjusted for seasonal factors, but the county jobs data is not seasonally adjusted and thus does not take into account variations such as the winter holiday and summer vacation seasons.
Honolulu County’s rate rose to 2.7% from 2.6%, Hawaii County inched up to 3.2% from 3.1%, Kauai County rose to 2.7% from 2.5% and Maui County held at 3.4%. Within Maui County, Maui’s rate remained at 3.4%, while Molokai’s rate decreased to 2.6% from 3.2% and Lanai’s rate fell to 3.5% from 3.6%.
