Erina Peters, a single mom who has called Hawaii home since she was 3 years old, packed up her things and made the tough decision to relocate to Nevada in mid-February.
The worsening pandemic and its ripple effect on the tourism industry, which both of her two jobs relied on, threatened her livelihood, she said. It wasn’t going to be worth “killing yourself to try to survive in a place that was already pricing locals out.”
The exorbitant cost of living already had her contemplating moving away even before COVID-19 hit Hawaii’s shores, Peters said. “There never was a chance to breathe, never a chance to try to get ahead and save for a house for my daughter, just never a chance to live,” she said.
Then it became clear the virus was not only going to kill people, but jobs, too.
“My industry is dead,” said Peters, who worked in timeshare and bartending while in Hawaii.
Cost of living and economic hardship have historically been among the top reasons driving residents away from Hawaii. The state’s population has been declining for three consecutive years, which economists and demographers say is a sign of economic and social ills, and the continuing pandemic is only expected to amplify the problems that make people leave Hawaii.
COVID-19 has sickened and killed people, shuttered businesses and deprived people of their jobs. It’s crippled industries — particularly the tourism and hospitality industries here, which employ a large number of Hawaii residents. Hawaii’s strength over the years has been the relatively low unemployment rate, but the pandemic has altered that reality — it went from 2.7% in January to 22.3% in April after emergency shutdown measures were introduced.
If this virus persists — or worsens as seems possible with the surge that began in late July — that could lead to a greater exodus from Hawaii, said Justin Tyndall, an assistant professor of economics at the University of Hawaii Economic Research Organization.
And when a state’s population declines, that affects the economy adversely, because fewer people mean a smaller labor force, less tax revenue and shrinking household spending.
“The virus seemed relatively under control,” he said. “More recently, that seems not as true. So if that continues, we would see a lagging economy compared to other states.”
That’s cause for concern, he said. While it’s difficult to measure how COVID-19 could affect migration — and thus the economy — in the immediate future, we should keep an eye on what could happen in the long term.
And likely, it could be that more people choose to leave, which would then make things worse on the economy — it’s cyclical. People move because it’s a hard place to make a living and because of that, the place loses money and becomes a harder place to make a living, so more people move because it’s become a harder place to make a living.
U.S. Census data shows Hawaii was already losing population well before unemployment rates skyrocketed due to the pandemic — for three years in a row since 2016. Between 2018 and 2019, Hawaii was one of just 10 states to lose population, UHERO’s research of the data that Tyndall co-authored showed. The state’s loss numbered about 4,700 that year.
Keep in mind, though: a net loss of 4,700 doesn’t mean 4,700 people left. Population is calculated based on people coming in and out, to and from elsewhere domestically and internationally, and people dying and being born.
Between 2017 and 2018, Hawaii had a net loss of 3,800 and the year before, about 3,200. Those seem like small numbers, but the persistent decline still worried economists.
“I believe this trend will continue into the future,” said Chief State Economist Eugene Tian. People will continue to leave the state, as what’s driving the population decline are longstanding issues, including Hawaii’s high cost of living, especially housing costs.
The population was already declining back when unemployment rates were in the single digits. A 2018 Washington Post article noted that the unemployment rate in Hawaii then was 2%, yet the population was declining. It asked, why would people want to leave a place with record-low unemployment?
The article’s hypothesis: home prices, which brings us back to, you guessed it — cost of living.
These days, the unemployment rates look quite different and not in a good way. In August, it was 12.5%, according to the state Department of Labor and Industrial Relations. The month before, it was 13.1%. It was even worse in May, at 23.5%.
That certainly isn’t going to help things, in terms of keeping folks around. Home prices and rent are still unaffordable and unemployment rate is higher while there are fewer jobs available? Not a winning combination.
“While the labor market is struggling everywhere, Hawaii has seen a larger drop in employment relative to the places people are likely to consider moving to,” Tyndall of UHERO said, such as California and Nevada. “I think a lot will hinge on the rate of labor market recovery in Hawai’i relative to other states.”
How does all of this translate to money? There aren’t neat and tidy ways to measure exactly how much people’s departures are worth, but there’s data out there that may give us some idea.
One way is through the Internal Revenue Service’s Statistics of Migration income data, which tracks the movement of individuals from one location to another and their Adjusted Gross Income based on their 1040 forms. If you’re a tax-paying citizen, you or a member of your family has surely filed one of these forms.
Between 2017 and 2018, which is the latest data available, Hawaii lost about $34.4 million in Adjusted Gross Income. That was calculated based on about 26,400 tax returns coming in to the state and 29,600 tax returns moving out.
Thirty-something million doesn’t sound so bad in the grand scheme of a state’s wealth. But let’s delve deeper into the data. If we look at the City and County of Honolulu separately, it lost about $219 million. The other counties helped make up for its loss. So people were moving away from Honolulu, but the other counties actually gained population, at least between 2017 and 2018, according to this data.
The year before, between 2016 and 2017, the net loss in Adjusted Gross Income for the state was about $271.5 million. Again, the story is the same: the City and County of Honolulu lost $513.5 million and the other counties partially made up for the loss. Hawaii County had the highest gain of $144.3 million.
In December 2019, the Department of Business, Economic Development and Tourism published a study on Hawaii’s migration flows that looked, in part, at the continuing decline. The study found that of the people who moved out of state between 2013 and 2017, 20.5% moved to California, followed by 7.6% to Nevada, and 6.9% to Texas.
Tian, the chief state economist, says he actually thinks there won’t be a huge outflow during the pandemic, at least in the short term. The virus has put a lot of restrictions on people’s movement not just in the U.S., but in other countries, too. But that also means not a lot of people are coming in either, he added.
It’s expected that more people will continue to leave, especially with higher unemployment rates triggered by the pandemic, than can be replenished by those who come, and economic growth will be impacted, Tian said. “For Hawaii’s businesses, it may be difficult to find the workforce and skills they need. That will limit economic development.”
Peters, who made the move to Nevada in February, said people ask her all the time why she would leave a paradise like Hawaii.
“I don’t think anyone understands what it’s like living in Hawaii,” she said. “Yes, it’s paradise. It’s everyone’s vacation. But before all that, it’s our home,” she added.
But home wasn’t allowing her and her daughter to keep their heads above water, she said. Then to make matters worse, the pandemic came. “Even if I wanted to go back, there’s no way I could,” she said.
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