By some measures, employment is booming in Hawaii and the rest of the country. But the shortage of good-paying jobs — the kind where wages are high enough to afford a decent standard of living — is attracting top-level political attention in both Honolulu and the nation’s capital.
President-elect Donald Trump, a Republican, won the presidency by shining a spotlight on the economic anxiety workers feel. And Hawaii’s Democratic Gov. David Ige is making employment a central plank of his administration. Across the partisan divide, and in a time that there is little political agreement on anything, there is an emerging consensus on the need for better-paying jobs and a drive to find ways to get them.
Last week, the U.S. Bureau of Labor Statistics reported that the unemployment rate in Hawaii had fallen to 3 percent, which means that Hawaii has one of the most robust job markets in the country. Workers are in high demand. Retailers all over Honolulu have help-wanted signs in their front windows.
Only four other states, in fact, have lower unemployment than Hawaii: Massachusetts, New Hampshire, North Dakota and South Dakota.
Nationally, the unemployment rate is 4.6 percent, which represents a slow but steady improvement since the economic meltdown of 2009 and 2010, when the unemployment rate soared to about 10 percent.
But wages in Hawaii lag well below national averages. According to the Bureau of Labor Statistics, the average weekly wage in Hawaii is $896, some $600 a month below the national average. According to bureau statistician David Kong, Hawaii’s average wages are lower because the state’s primary industry is tourism, and workers are employed at restaurants and hotels.
“The service industry tends to be lower paid,” Kong said.
But the national average wage — $1,043 a week, according to the BLS — is no great shakes either. Across the country, many people who hold jobs are struggling to pay their bills and afford comfortable homes. The financial stresses they face are taking an emotional and physical toll.
The answer, for both Ige, by training an electrical engineer, and Trump, a businessman, is to find ways to cultivate more and better-paying kinds of jobs.
In a series of recent speeches and interviews in the past month, Ige, the grandson of sugar plantation workers, has publicly reflected on the death of the sugar industry, a former pillar of the Hawaiian economy. The last surviving sugar mill in the state, a Hawaiian Commercial & Sugar Co. property in Maui, shut down permanently last week.
“It’s the end of the big agricultural industry in Hawaii,” Ige said, noting that Hawaii led the world for many years as the primary producer of sugar and pineapples. Agricultural researchers had pioneered ways to effectively and profitably grow and harvest pineapples and sugar cane, designing equipment that made Hawaii a hub for agricultural innovation, he said.
But the subsidies that low-wage countries give to their agricultural producers made it impossible for Hawaii to successfully compete, and Hawaii was forced to look elsewhere for its next economic engine, Ige said.
So about 60 years ago, he said, Hawaii’s leaders decided to make the shift to the hospitality industry. It has cushioned the blow the state would have taken otherwise. Hawaii has had year-over-year record growth in visitors and tourist spending for the past five years, and the industry now employs about 200,000 people in the state.
But there’s little potential for additional growth there, he said.
“There’s no desire to build more resorts,” he told members of the Hawaii Venture Capital Association in a keynote speech Dec. 12.
“The challenge before us is, what’s next?” Ige said on Monday at a press conference unveiling his proposed two-year budget for the state. “What will be the next economic driver for Hawaii?”
The difficulty people have in finding good-paying jobs in the islands is also a pressing personal concern for Ige, whose three adult children have moved to the mainland in pursuit of better economic opportunities than they can find in Hawaii. Ige called the departure of the state’s young people a “brain drain” that causes permanent injury to the state.
Ige said he believes the future is in what he calls the “innovation economy,” ideally high-tech jobs that pay more money so workers can afford to live in Hawaii. He said that unlike other kinds of businesses, tech companies can operate anywhere.
“The global economy is such that there is no business that couldn’t start up in Hawaii and be successful,” he said in an interview with Hawaii Public Radio on Dec. 12.
He has proposed a $10 million investment in the HI Growth Initiative, a request that he made formally to the Legislature on Monday as part of his two-year proposed budget. That would give additional money to the Hawaii Strategic Development Corp., which seeks to spark economic growth by bolstering private startup investments with state funds.
That proposal drew a lot of applause from the venture capital crowd when he told them about it, but the effort has previously gotten a cooler reception from legislators. In January, Ige asked for $30 million over six years for that project but received only a fraction of that amount.
A report by the Economic Research Organization at the University of Hawaii in February found that more than 100 budding entrepreneurs had participated in events the state development corporation promoted. But while state programs of these kinds have supporters, they also have detractors, who argue that government-funded business initiatives can quickly become boondoggles or slush funds for well-connected political insiders.
Trump, meanwhile, wants to bring higher-paying manufacturing jobs back to the United States that have been moved to lower-wage countries. It is not clear whether that is possibl, or if the age of mass industrial employment has passed by forever, but Trump is indicating he intends to try. In a press release Nov. 30 announcing his nomination of steel-company investor Wilbur Ross to be secretary of commerce and financier Steve Mnuchin as secretary of the treasury, Trump said his goal was to create more than 25 million jobs in the next decade.
Ross and Mnuchin have been assigned that task.
One of Trump’s first actions after winning the election was negotiating a deal with an equipment manufacturer in Indiana called Carrier. The company had announced it was moving jobs to Mexico but Trump employed a combination of tax incentives and political pressure to force the company to reconsider its decision. There was later some controversy over how many jobs were preserved as a result of Trump’s intervention, but it is undisputed that several hundred workers kept their jobs who might otherwise have faced the new year on the unemployment line.
Last week, Trump met with tech company magnates to tell them he intended to find ways to help them be more successful. In a press release, Trump stressed job creation as a top priority for the meeting.
Some executives subsequently said they agreed. In a statement, Jeff Bezos, the founder of Amazon and owner of The Washington Post, said he found the meeting to be “very productive.”
“I shared the view that the administration should make innovation one of its key pillars, which would create a huge number of jobs across the whole country, in all sectors, not just tech — agriculture, infrastructure, manufacturing — everywhere,” Bezos said in a statement.
On Wednesday, Trump announced that he had picked economist Peter Navarro to head a new group called the National Trade Council. Navarro, a professor at the University of California, Irvine who earned his doctorate in economics at Harvard University, will serve as assistant to the president and director of trade and industrial policy for the Trump administration.
The group’s mission will be to “help match unemployed American workers with new opportunities in the skilled manufacture sector,” according to a Trump news release. The council will also lead Trump’s “Buy America, Hire America” campaign, according to the release.
Navarro has argued that the official unemployment rate underestimates the number of people who are jobless, and that the real national figure is considerably higher. He has said that increasing the nation’s economic output would allow some of those jobless people to find work.
Other nations have been more successful than the United States at preserving manufacturing jobs, Navarro wrote in a policy paper, “Scoring the Trump Economic Plan: Trade, Regulatory and Energy Policy Impacts.” In 1977, about 22 percent of Americans worked in manufacturing jobs, but lopsided trade deals and tax-system inequities that penalize American firms caused manufacturers to shed jobs in the U.S., with manufacturing jobs dropping to 8 percent of the U.S. workforce today, according to Navarro.
Some affluent countries, however, have been able to hold onto manufacturing jobs, including Germany, where about 20 percent of the workers remain employed in manufacturing, while Japan, Navarro says, has 17 percent.
Trump and Navarro have said they hope to bring back more manufacturing jobs by reducing regulation on American firms, changing tax laws that give incentives to companies to move operations overseas, and demanding that countries that Navarro has called “trade cheaters” mend their ways.
Trump and Navarro have said China is using trade rules and tariffs for its nationalistic advantage in ways that hurt American workers.
The selection of Navarrro by Trump quickly drew a mixed response. Some applauded, but some critics have voiced concern that engaging in trade disputes with other countries can aggravate political tensions. Others say that loosening business regulation and reducing corporate taxes have had a mixed record in terms of stimulating economic growth.