Saturday, October 31, 2009

WHY THE ECONOMIC DOWNTURN IS DIFFERENT IN HAWAII

As the surge in foreclosures in Hawaii and the State furloughs and layoffs begin to hit home here in Hilo, we wonder how tough this downturn will get in the Aloha State. We realize that Hawaii has a long way to go before there is a turnaround and there will likely be more painful pay cuts and layoffs here in Hilo over the next year or two. But we are convinced this downturn will be different and shorter in Hawaii then on the mainland and here are our reasons:


1. Many of the jobs created by the tourist and real estate industry over the past ten years were filled by people from the mainland and Europe. We have noticed that as the jobs have evaporated over the past year, the mainlanders have already packed up and returned to the mainland. This helps the unemployment situation here because the large number of unemployed workers that would normally be competing for the few remaining jobs available in Hawaii are no longer in the State. So unlike the situation on the mainland, every new job that becomes available in Hawaii will have less people competing to get it.

2. The Hawaii tourist industry has a long history of being volatile with big increases in visitors after sharp downturns. Hawaii has traditionally had a low rate of unemployment, so the sudden high rate of lost jobs is likely to recover as quickly as it has in the past. In spite of this current downturn, visitors are likely to keep coming to Hawaii for the same reasons they have always have: Hawaii is an incredibly beautiful and fun place to visit.

3. Over 25% of Hawaii’s visitors are from foreign countries and that percentage has been growing as Asian countries have become richer. This makes Hawaii less dependent on the mainland US recovery for its recovery. The strong drop in the dollar as compared to the Euro and Yen since 2007 makes Hawaii a real travel bargain for foreign tourists. When the concern over the global pandemic flu lets up, we believe that the Asian, Japanese, and European tourists will return in even greater numbers.

4. Boomers have been a big factor in the surge in tourism in Hawaii over the last decade and as they start retiring they will have even more time to visit. One of the benefits of retirees moving to Hawaii is that they usually don’t take a job away and their retirement and savings income adds to the economy. As the 77 million Boomers in the US retire over the next 10 years there will be a huge increase in their visits and relocations to Hawaii creating more jobs and new sources for State tax income.

5. Though the furloughs and layoffs are really tough, people in Hawaii don’t have their identities defined by their job and they enjoy and value the extra time to talk story with their family and friends. Food is shared as a part of family and groups that socialize and people take the time to fish and grow food in their backyards, so most people living in Hawaii are not going to go hungry. The pain of lost income has the buffer of the Ohana factor in Hawaii where families move in together to share costs and help each other out. Those without a job have much to contribute to their family like fixing the roof, keeping up the garden, watching grandma and the kids, cooking or making clothes. When the jobs come back, people won’t be depressed or out of practice but happy to have work outside the house.

Hawaii is the best place in the US to be unemployed. People in Hawaii are not obsessed by world news or getting ahead and they don’t look down on you if you don’t have a job which makes it easier for us to focus on the warm beautiful days gained instead of career opportunities lost.

5 comments:

canders said...

Thanks for this perspective. I hope you are right about the tourist industry resilience. We look forward to being a small part of that 'boomer' bump in the not-too-distant future.

NoExpertsNeeded said...

Job loss...Been there. Done that. Yep, still 'there'. My heart goes out to those still getting pinked. And I pray you are right about HI; I love visiting your paradise!

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Victoria Hokulani said...

Excellent post, my friends! Another thing I would add to this, would be that the dominant Asian population tends to be big savers, living below their means. These wise people, know that downturns are the BEST time to remodel, paint, and do those jobs that need quality help. That help is hard to get in boom times. Also, many of them see this as a good time to pick up distressed properties, with cash! I don't see that many for sale signs in Hilo. Puna, however, is a far different picture. Lots of new houses, half finished and never lived in.
Although, folks are pulling back on discretionary spending and big purchases, I see evidence of a still vibrant and growing economic climate here. Furlough Friday is just another opportunity for folks to do those little things that never seem to get done. Also, kids are pretty okay with a 4 day week. I know I like it! One more day to sleep late.
I see lots of "green shoots" around here, but I realize my perspective is one of being self employed with an in demand recession proof craft. Still, new businesses are sprouting up and folks are painting and remodeling. Ross is still crazy busy and Walmart's parking lot always seems to be full.
Your post was thoughtful and shows how much you love your island paradise. Victoria

Keahi Pelayo said...

We have come to rely on Government too much. Too man jobs there and too few private sector. Time to cut it back.
Aloha,
Keahi

Devany said...

I think Hilo is a different animal as far as tourists go, many of ours are more interested in nature and old Hawaii, not the glitz and glamor. Not that we even offer that!

A cruise ship just pulled into the harbor, there will be 2000 extra people around East Hawaii today and since it is their first stop after being at sea for several days, they will spend $$$. As crazy as it is, many of them go to Ross and Walmart as the highlight of their day. Victoria is correct, in that those parking lots are always packed and the lines are always long at both of those stores. The new Target will give Walmart some competition.

Sadly there are still a lot of downtown merchants that are hurting and quite a few empty storefronts. From what I hear the mall is like that too (never been in there.)Landlords have not lowered their prices either. But all and all, Hilo is a town that is not so affected as many others. Look at Kona and Waikola for instance.

My husband is a realtor and seeing a surge in sales in the last two months, but it never was as bad here as say, California and summer is typically the low season here for real estate. Still it is nice to see sales picking up again.

I am a writer and artist, I have noticed a slow down in sales in the art world, probably the first thing to cut back on. My writing assignments are growing though and this slight lul in the art sales is giving me time to work on my novel based in Hilo.

I also agree with you on the statement that Hawaii is the best place to be unemployed. Values are quite different and yes, we care less about the news and stories that run wild on the mainland. Many people re-invent themselves here and discover new realms in their lives. I find East Hawaii deeply inspiring and creativity abounds here.

Mahalo for your insight and writing. I love you blog and have for a long time.

~devany