Life on the home-front was pretty good for the Luttrell family for most of the last decade. How could it not be in their small Kaimuki home, with Diamond Head jutting into the sky several blocks away and the awesome waves of the Pacific crashing a little farther south?
Kevin and Lindsay relished Oahu’s temperate weather, the soft sands, the nearby Kapaolono Community Park and the wonderful neighbors with children around the age of their fourth-grade daughter Lauren and their 2-year old son, Liam.
It was expensive — too expensive — but their merciful landlords never increased the rent of $1,750, which is just below the average market price in Honolulu. Adding utilities, their gross rent of $2,200-$2,300 was in line with what most families pay on Oahu.
But faced with such basic expenses, Kevin and Lindsay came to feel the ever-present pressure of Hawaii’s high cost of living. It sometimes led them to “get creative” during gaps between the arrivals of paychecks and when bills became past-due.
In such circumstances, many people in Hawaii would — and do — place the lion’s share of the blame on unavoidably high prices. But for Kevin the real problem resided in another part of the equation: salaries. Specifically, the shortage of many types of professional opportunities and incomes that often don’t measure up to the cost of living in the islands.
In many cases, this is true even though salaries for similar jobs in comparable places on the mainland would translate into a much higher standard of living.
There is no economic rule that says salaries in Hawaii are — or should — be pegged to the cost of living.
Kevin, like many people I’ve spoken with, was perplexed about why salaries are not linked to the cost of living in the islands. “There is,” as Luttrell put it, “no equity between the cost of living and the money that is doled out” by employers.
The 47-year old — whose LinkedIn page signals skills in communications, media, visual effects, advertising and public relations — seems to be largely correct about the disconnect between salaries and costs.
And for good reason, as high-profile local economist Paul Brewbaker pointed out: there is no economic rule that says salaries in Hawaii are — or should — be pegged to the cost of living.
There are high salaries in Hawaii, including those of some military and federal employees. Certain unions in the private sector have also succeeded in securing relatively high incomes. The state’s medical industry, in particular, includes well-salaried experts, even if some are leaving the state anyway.
But a whole lot of businesses in Hawaii pay professionals less than they would earn in comparable states on the mainland, even though life in Hawaii costs more, much to the chagrin of locals in those fields.
Civil Beat selected a handful of traditionally middle-class professions: contractors, police officers, teachers and pediatricians, to see where the state stacks up. With few exceptions, Hawaii doesn’t do well — and that’s before the state’s high prices absorb a substantial additional portion of those workers’ buying power.
Building contractors in Hawaii enjoyed incomes that were roughly on par with counterparts in places like California, New York, the state of Washington and Boston in 2013.
That’s pretty much it for the good news. The average teacher in Hawaii earned $5,000 less than in Washington, $13,000 less than in California and Massachusetts, and $20,000 less than in New York, according to data from the Bureau of Labor Statistics.
Police officers made $12,000 more in Washington and New York than they did in Hawaii, and about $28,000 more in California. Cops earned about the same in Massachusetts as here.
Pediatricians in Hawaii are out-earned by their counterparts in California by $12,000, in New York by $17,000, in Washington by $22,000 and in Massachusetts by $27,000.
“There is no consideration of the cost of living. I have not seen any client who says to me, ‘This person is moving from Dallas, we need to give them more money.’” — Doug Harb, Honolulu job recruiter
Computer programmers earned $12,000 to $47,000 more in those states than in the islands.
Doug Harb, a professional employee recruiter in Honolulu who focuses on executive job searches, said he wasn’t surprised by the lower-wage phenomenon, even if he did let out a gasp when I told him about the $47,000 pay gap.
Harb, who is president of Makai Search Group, said that in some of his professional circles people refer to this as “the sunshine tax.” Basically, the idea is that for every day that it is sunny, your boss takes a little money off your paycheck.
Like Brewbaker, who went through and debunked the prominent ideological theories about what brings down salaries, Harb has no clear explanation, but he often needs to warn potential recruits that they will likely earn 25 percent less than they are worth elsewhere.
Most potential candidates who are considering moving to Hawaii from major markets understand that they will have to take a pay cut, he says. “I haven’t heard anybody give me a good explanation of why it is,” Harb recounted. “People say: ‘It is how it has always been, and it is how it is always going to be.’”
The recruiter said he hasn’t dealt with any companies in Hawaii that treat the cost of living as relevant to the salaries they offer. “There is no consideration of the cost of living. I have not seen any client who says to me, ‘This person is moving from Dallas, we need to give them more money,’” he said. “They don’t care what someone makes in New York or Dallas. They say: ‘This is what the position pays. If they want the job, great, but otherwise, no big deal.’”
And if the big or dynamic companies competing for outside talent don’t do it, it is clear that companies hiring locally have even less incentive to do so.
“I felt like a battered wife. I had lost my own sense of worth.” — Kevin Luttrell, speaking of his experience in the low-paying jobs market
The lower salaries are just one area where people like Harb need to walk gingerly with new recruits. The honest recruiters also tip people off to local prices, which can be 30 percent or 40 percent above many places people are hired from. “Doesn’t that sound like a great opportunity?” Harb added with a gallows’ chuckle.
Hawaii’s middle-income salaries have lost ground nationally over the last quarter century or, as is the case for Hawaii County, much longer. Inflation-adjusted median household incomes in the state are lower than they were a quarter century ago. On Oahu, they are below 1989 levels; they peaked at $76,239. Maui County reached $72,839 and Kauai hit its high of $70,310 that same year. It has been 45 years since Hawaii Country reached its high point of $56,087 in 1969.
It might seem like common sense that higher incomes help to draw — and retain — higher-grade employees. People who are less stressed about money are, in some cases, likely to be more relaxed and able to better focus on work performance. This can translate into greater creativity and productivity.
But on the other side of the equation, Hawaii has a relatively small-scale and isolated job market in most sectors beyond tourism, military-related work and construction. A specialized type of lawyer, for example, can’t shift as easily to a competing firm, which might lead to a competition for her or his services. The same goes for a computer engineer or a wide array of specialized consultants.
Even Harb noted that he headhunts for a wider array of professions than he would on the mainland, where someone like him would be more likely to specialize in recruiting for specific fields.
Ultimately, if employers in Hawaii don’t accept that local prices should be factored into their salaries, then they won’t be. And if people take jobs at the salaries on offer — whether because they already live here and have little choice, or because they want to move to “paradise” and are willing to sacrifice — then those jobs get filled.
Of course if the jobs paid more they might attract better talent, so this effect could undermine innovation, professionalism and dynamic energy at some companies.
Such logic also helps to explain why someone like Kevin Luttrell saw many of his professional opportunities evaporate when he and his wife moved from Alameda to Oahu around the middle of the last decade. Hawaii has far fewer jobs in film, advertising and his other areas of interest. His income dropped by about 40 percent, by his calculations, when he moved here. It all adds up to what he described as “a real buzzkill.”
Gone was the cracking, worn voice that he had when we spoke months earlier. Defeat suddenly seemed far off.
His professional motivation was sapped by going on scores of job interviews, initially in the fields that he was most interested in, but then in other areas. Rejection often came in the form of being told he was overqualified for the positions he was applying to and that he would demand too much money. His willingness to take entry-level work to get a foot in the door — to show what he was capable of — spurred similar responses.
He did various time-limited gigs, including formal temp work. He says he declared $35,000 in income on his taxes last year. Earning what seemed to him to be such a small income during his prime earning years, given his professional experience, was “insanity.
The Luttrells were a two-income family. Lindsay was a massage therapist who worked out of offices in both Kailua and Honolulu, but because office rents were so high, she could barely make ends meet despite working six days a week.
Luttrell ended up doing temp agency work with a hospitality company. He interviewed at title and mortgage companies in the hopes of winning a starter gig that would allow him to quickly demonstrate his skills. “My last assignment,” he told me in October, was essentially a three-month gig that “equates to an internship.” When he finished, the executive in the company told him nothing was available — but to check back in at some point.
Such professional experiences left Kevin feeling severely undervalued — and then undermined. “I felt like a battered wife,” Luttrell said. “I had lost my own sense of worth.”
On Wednesday, I called the cell phone number that I had for Kevin. When he answered, I briefly thought it was someone else. There was background noise — he was walking on what sounded like a busy street. With a confident, vibrant voice, he said he was in a famously friendly, multicultural city, but not Honolulu. He and his family moved to Vancouver, Canada, where he is three months into a training program to learn to create visual special effects for film and perhaps video games.
Gone was the cracking, worn voice that he had when we spoke months earlier. Defeat suddenly seemed far off.
When I told him that he sounded downright jubilant, he said that leaving the islands “kind of turned my whole world view around. The last time we spoke, I was kind of at the end of my rope there. I had gone through this whole series of misfires. The interviews didn’t go anywhere. People didn’t really get what I was into. Here, as soon as I mention visual effects” — what he’s studying now — “and working in movies, people get it.”
He spoke of future work prospects after the eight-month program. Fresh graduates of the program start out earning $25 per hour, while the school told him that within 18 months, graduates can expect to bring in $100,000 or more. His middle class life is back on track. Kevin recounted schmoozing with people in the motion picture and video game industries — “not small time, but Triple-A video games.”
After we switched our conversation to Skype, so that I could photograph him and his family, Kevin noticed the partially cloudy skies of Oahu out the window behind me. When I lowered the screen, he smiled at the sight of Waialae Avenue in Kaimuki, his old neighborhood.
For a brief moment, he acknowledged a hint of nostalgia for Honolulu.
But in our conversations, he also noted that Hawaii has the mild weather and the beach, but after all he went through he knows something: “The beach can only get you so far.”
That’s why Kevin says he is done paying “the paradise tax.”
Do you have a compelling story about the human impact of the cost of living, whether about you or someone you know? If you want to write it up, or tell it to me, please drop me a note at firstname.lastname@example.org.
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