When Whole Foods opened its 72,000-square foot, two-story food emporium in Kakaako last week, it brought its typical array of organic apples, artisanal cheeses and and quinoa sold in bulk. There are two restaurant spaces with two dozen beers on tap.
And, perhaps most important for the local economy, the new store brought 300 new jobs. And it needs help.
After the store’s opening last Wednesday, the Amazon subsidiary still had more than a dozen jobs postings at the new store, including jobs for a maintenance worker, dishwasher and cook as well as a store support supervisor.
It’s a sign of the times in Hawaii, especially in the food service and hotel industries.
With the state unemployment rate at about 2.1 percent “virtually everyone who wants a job has one,” the University of Hawaii Economic Research Organization reported earlier this month in its economic forecast. “Businesses are having difficulty finding workers with—or even without—the skills they need,” UHERO said.
UHERO’s forecast expects the economy to stay hot for a while, driven by visitors.
For the first quarter of 2018, UHERO reported, visitor arrivals rose more than 9 percent. Visitor days, which account for length of stay, are up more than 7 percent. Domestic flight arrivals were up by 12 percent. The outlook for the year remains strong.
While Japanese arrivals are expected to grow just 2 percent in 2018, the strong domestic market is expected to push overall growth more than 6 percent this year.
“When you’ve got unemployment in the 2 percent range, you’ve got to steal them from someone else,” said Carl Bonham, a professor of economics who is UHERO’s executive director. “And to do that, you’ve got to offer them a better job.”
Wages in the hotel and food service industry have been rising. According to UHERO, the average is now hovering at nearly $20 an hour. A big question is whether Hawaii’s wages, along with its climate and spectacular natural beauty, can outweigh the exorbitant cost of living and attract enough workers to grow the population and the workforce.
Melissa Kubrin, a Whole Foods spokeswoman, said the company couldn’t say how many the company hired locally and how many transferred from out of state to work at the new store. She said the workers had not been trained to talk to the media and therefore were unavailable.
Whether new businesses like Whole Foods can lure people to Hawaii isn’t a trivial question. Long term economic growth depends on either growth in the labor force or increases in productivity or both, Bonham said.
The labor force might grow over the short term even if population doesn’t grow, as people are lured back to work for various reasons, Bonham said. But that growth isn’t sustainable for long without a net gain in population. Plus, you can squeeze only so much productivity out of workers.
In 2017, Hawaii was one of only a handful of states to lose population. It followed a fairly flat 2016. To outside observers, it was surprising, given an unemployment rate lower then the rest of the nation.
“Hawaii has record-low unemployment and it’s not a frozen hellscape. Why are people leaving?” The Washington Post asked in January.
To residents, the answer was obvious and nothing new: the high cost of living, especially housing, and relatively low wages, leads people to throw in the beach towel and move to the mainland.
Discussing the outmigration in its forecast, UHERO said, “That tide may have turned back this year.”
“Preliminary figures indicate that the labor force has begun to edge up again, expanding by about 1,500 people over the past four months,” UHERO reported.
So does Hawaii really have an influx of people coming in?
“We certainly don’t know that,” said Bonham. “There’s a lot of hedging language in that paragraph.”
Wookie Kim is one of these people lured to Hawaii for a new job.
When Kim was considering a switch from high-powered corporate litigation to practicing public interest civil rights law, he assumed he’d be working in a city like Denver, Seattle, Portland or the Bay Area.
An avid ultra-marathon runner and triathlete, Kim was living in Washington, D.C., representing Fortune 100 companies in cases involving complex subjects like patent and antitrust law. Kim wanted to go somewhere with opportunities for outdoor recreation as well as the chance to do civil rights work.
“I didn’t think of Hawaii as a place where there were any civil rights opportunities, so it wasn’t even on my radar,” says Kim, who went to college at Yale and law school at Harvard.
Fast forward to January, and Kim was in Honolulu, ensconced as a staff attorney for the American Civil Liberties Union, living in Kakaako.
To Kim, the move to Hawaii has been worth the tradeoffs. Although he’s earning a half to a third what he earned as an associate with Quinn Emanual Urquhart & Sullivan, Kim said appreciates the work he’s doing for the ACLU.
Plus, he said, “After work, I’ll just step out my door and run into the mountains for a couple of hours.”
Despite such anecdotes and UHERO’s cautious optimism about population, the report offered no data to show population growth.
What about getting more productivity out of the existing labor force?
For a state with scant technology and manufacturing industries, Hawaii punches a little above its weight when it comes to productivity. A map published last week by the business news site Seeking Alpha puts the gross domestic product of U.S. states in perspective by comparing them to entire countries. Hawaii’s GDP is about the same as Sri Lanka.
Despite its small population, Hawaii is hardly the nation’s smallest economy. The state’s 1.4 million residents in 2017 produced more goods and services than West Virginia’s 1.8 million and Idaho’s 1.7 million.
Still, some are skeptical that there’s a big payoff for Hawaii residents in the booming hospitality industry.
Rarely noted in the hype about Hawaii’s ever growing horde of tourists is that, accounting for inflation, income from tourism has actually declined since a peak in 1989. Paul Brewbaker, the principal of TZ Economics in Kailua, says tourism export receipts have fallen by $2 billion since 1989 while tourist arrivals have increased by three million.
Considering the negative side effects of tourism — including damaged reefs, increased traffic, and a decline on housing stock as residents rent homes to tourists — Brewbaker questions whether the tradeoffs are a good deal for Hawaii.
“Less income for more work, is that not the objective of every business in Hawaii?” Brewbaker joked in an email.
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