As Hawaii prepares to reopen to tourists in August with a plan allowing those who test negative for the virus to skip a 14-day quarantine, one thing is clear: the state’s short-term economic recovery – and the lives and livelihoods of tens of thousands of residents — depends on the plan succeeding.
Facing a foundering economy marked by a 23% unemployment rate and a looming financial cliff as federal stimulus money begins to dry up, Gov. David Ige’s administration hasn’t been able to create a short-term economic recovery plan to create jobs for the more than 140,000 Hawaii residents who are out of work.
For now, recovery depends on tourists coming back.
“That’s totally correct,” said Mike McCartney, director of the Hawaii Department of Business, Economic Development and Tourism. “You’re on the mark.”
Hawaii Sen. Sharon Moriwaki serves on a senate committee that recently held a briefing to hear Ige’s recovery plan. She says lawmakers also don’t see much in the state plan for economic recovery that will help in the short term.
Moriwaki’s district, which includes Waikiki and Kakaako, has been especially hard hit by the 14-day quarantine for arriving air passengers, which Ige imposed on March 21 to stop the spread of the COVID-19 virus. The measure, coupled with stay-at-home orders which have now been mostly lifted, succeeded in ebbing the virus. But it also has battered an economy where hotels and restaurants provide about one in six private jobs statewide.
McCartney has been in charge of crafting a recovery plan, which he finally presented to lawmakers last week after repeated aborted briefings and political theatrics.
But McCartney acknowledged on Wednesday that DBEDT’s plan is a work in progress and designed more for the medium and long terms.
Ige has appointed Alan Oshima, a former electric utility chief executive, to a newly created position of Hawaii Economic and Community Navigator. However, Oshima has not unveiled any short-term plan either and didn’t return a call for comment.
Moriwaki said Oshima’s focus seems to be on the longer term.
“But what about the people who are suffering today?” she said.
And there are a lot of people suffering. There were 143,200 Hawaii residents unemployed in May, which was slightly less than 23% of the total workforce, according to the U.S. Bureau of Labor Statistics. And the unemployed don’t count some 33,000 people who have left the workforce, which was 667,000 in December compared with 634,000 in May.
The good news is that federal stimulus money has provided a robust safety net, including a $600 boost to unemployment, which has made many people better off now than when they were working.
Meanwhile, the federal money, known as the Paycheck Protection Program, provided about $2.4 billion to small, struggling firms to keep workers employed even if they didn’t have enough revenue to justify keeping people on the job.
But the bulk of that money is expected to run out at the end of July, which could mean even more people out of work and with less unemployment money to pay the bills in a state with the nation’s highest cost of living.
Lawmakers had repeatedly asked McCartney to appear before committees to explain what Ige’s administration planned to do to rebuild the economy, and twice McCartney had snubbed lawmakers, abruptly refusing to present DBEDT’s plan and accusing senators of previously bullying his staff. Meanwhile, the document posted on DBEDT’s website, which is dated June 4, was short on specifics and more like a PowerPoint presentation than a work plan to create jobs.
“It’s a list of aspirations with no meat,” Sen. Glenn Wakai, who chairs the Senate Energy, Economic Development, and Tourism Committee, said of the June 4 document. “And the public deserves to have some meat on these skeletal plans.”
A document finally presented to lawmakers on Friday also was late coming and short on specifics, said Sen. Donovan Dela Cruz, who chairs the Senate Special Committee on COVID-19.
“We couldn’t tell which were the priorities,” Dela Cruz said.
“The reality is the state has been too complacent about creating new jobs and diversifying the economy because of our over-reliance on tourism,” he said. “And the uncomfortable reality is that DBEDT is now going to have to step up.”
During a candid, hour-long interview Wednesday, McCartney acknowledged the June 4 report was not actually a recovery plan drafted in response to COVID-19. Instead, it was a more sweeping report on what DBEDT’s agencies were doing, including some initiatives that have been in the works for years. Those will continue, he said, and crisis could show the way for more.
But McCartney likened the COVID-19 crisis to the loss of an engine on a twin-engine plane while flying.
“You can’t flame out an engine and rebuild another engine to replace it while the plane is flying,” he said. “You need to nurture and repair that engine first.”
Before the COVID-19 crisis Hawaii was struggling with tourism run amok: more than 10 million annual visitors, or some 250,000 per day, crowding beaches and hiking trails and spilling into residential neighborhoods staying in illegal Airbnbs.
McCartney echoed other policymakers saying Hawaii needs to rebuild the tourism industry in a way that creates more revenue with fewer negative side effects. But he said for now, the state must rely on the industry to start rebuilding.
“The reality is our economy is based on visitors coming here and us being hosts,” he said. “It provides a way of life to the people of Hawaii. It’s who we are. It defines us. And it connects us to the rest of the world.”
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