Hawaii Unemployment Rate Rises to 2.8 Percent

The state jobless rate climbed in September as more residents re-entered the labor force amid rising living costs.

Updated on Oct. 24, 2026 in Employment

Hawaii Unemployment Rate Rises to 2.8 Percent

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Hawaii's seasonally adjusted unemployment rate increased to 2.8% in September 2026, up from 2.7% in August. The state labor force grew to 694,900 people, though the growth of the labor force outpaced the creation of new jobs.

Why it matters

The rise in unemployment is driven by more individuals re-entering the workforce to cope with inflation and the high cost of living. This influx of job seekers has caused the jobless rate to climb despite a modest increase in total employment over the past year.

Hawaii's unemployment rate reached 2.8% in September, a rise from the 2.2% recorded in January. The labor force expanded by 7,550 people between September 2025 and September 2026, even as employment grew by only 2,650 during the same period.

The players

Hurricane Lowell

This weather event impacted Kauai island in early September and contributed to local economic disruption.

The details

The unemployment rate is determined through a telephone survey of households, while nonfarm payroll jobs are tracked via a mail survey of employers. Meanwhile, Hurricane Lowell, which struck Kauai on September 7-8, contributed to a localized unemployment rate spike of 5.1% in Kauai County.

September 2026: Hawaii unemployment reached 2.8%.
January 2026: The jobless rate was 2.2%.
Sept. 7-8, 2026: Hurricane Lowell struck Kauai.
End of 2026: The unemployment rate is projected to reach 3.0%.

Macro View

The current uptick in Hawaii's labor force participation marks a departure from the restricted market conditions seen since the March 2020 pre-pandemic labor market peak. Comparisons to this benchmark highlight how inflationary pressures are fundamentally shifting workforce availability.

Residents may see increased competition for available jobs as more individuals return to the labor market. Meanwhile, the 5.2% inflation rate in Honolulu continues to impact household budgets and monthly purchasing power across the state.

The takeaway

The rise in Hawaii's jobless rate is largely a symptom of more people seeking work to keep up with the rising cost of living. Planning for higher expenses is recommended as economic forecasts suggest the unemployment rate may climb further toward 3.0% by the end of the year.