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.