A few years ago, despite the nation’s lowest unemployment rate, Hawaii was one of the few states that lost population: a situation so striking that a national newspaper described it with the headline, “Hawaii has record-low unemployment and it’s not a frozen hellscape. Why are people leaving?

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The population decline has continued in the islands, but in 2020-2021, Hawaii was no longer mostly alone. It was one of 17 states and the District of Columbia with a net loss of residents.

The bad news: Hawaii lost more residents than all but three other states.

That, says University of Hawaii housing economist Philip Garboden, “is not where we want to be.”

Nicole Lim
Nicole Lim, director of the community organization Movers and Shakas, is trying to help stem Hawaii’s brain drain. Stewart Yerton/Civil Beat/2022

Peter Ho, chairman and chief executive of Bank of Hawaii, put it more bluntly. He said Hawaii’s population decline reflects a hollowing out of the state’s middle class, which he calls “an existential economic issue for the state.”

In order to remain strong, Ho said, an economy needs productivity and a growing population, which leads to a larger workforce.

“You’ve got to have one of those conditions to have a vibrant economy,” he said.

What’s worse, the problems driving people out of the state involve a broad range of things, none of which is easy to solve, says Carl Bonham, executive director of the University of Hawaii Economic Research Organization.

“There isn’t one solution,” he said. “Or we would have already tackled it.”

In sheer numbers, Hawaii’s recent population loss might not seem big. From July 2020 to July 2021, the state lost 10,358 residents, according to latest data from the U.S. Census Bureau. But as a percentage of population, it was a 0.7% loss; only Washington, D.C., New York and Illinois lost more people as a percentage.

In addition, Hawaii should have gained population because births outpaced deaths 15,510 to 11,279 during the period, creating what should have been a 4,231-person increase. This means about 14,500 people left the state in 2020-2021.

Combine that with losses from previous years, and, Bonham says, Hawaii has lost 30,000 residents.

“That’s basically the entire change in the workforce,” Bonham said. Hawaii’s civilian labor force had about 650,000 workers in November compared with 675,700 in February 2020, before the coronavirus  pandemic started.

The Hawaii Department of Business, Economic Development and Tourism took a hard look at the demographics of those leaving Hawaii and quantified what many people had seen anecdotally: that Hawaii’s best and brightest young people were leaving.

Tilted “Brain Drain: Characteristics of Hawai‘i-Born Adults on the U.S. Mainland,” the study by DBEDT economist Wayne Liou found that kamaaina “leaving for the mainland are both younger and more educated.”

For instance, the study found that almost 15% of Hawaii-born people living on the mainland are between the ages of 18 and 44 and have a bachelor’s degree or higher, compared to 7.7% of those remaining in Hawaii. Another finding: in sheer numbers, there are more Hawaii-born people with a bachelor’s degree or higher living on the mainland than there are who stayed in the state.

“Thus, brain drain of young, educated working-age adults appears to be non-trivial,” Liou wrote.

'Brain Gain'

State government has taken some steps to address the issue by creating more economic opportunities for residents. In September 2020, DBEDT's director, Mike McCartney, said he believed the state could create 38,000 new remote-work jobs in a year. To that end, the state launched the Hawaii Remote Work Project, a pilot program meant to connect Hawaii residents and out-of-state employers.

But it seems Hawaii isn’t close to reaching McCartney’s vision. While the state recovered some 70,000 jobs in the year after McCartney’s announcement, some 40,000 were in food service and accommodations and another 5,000 in retail, according to UHERO data from the U.S. Bureau of Labor Statistics. The bureau doesn’t report on remote workers as an industry.

The private sector is also stepping up. Nicole Lim is the director of Movers and Shakas, a program designed to attract, integrate and retain talented workers, especially returning kamaaina.

Lim herself is a kamaaina who returned, an Iolani School graduate who went on to earn degrees from Yale and the Wharton School of the University of Pennsylvania before going to work as a management consultant and as a senior manager for eBay.

Lim had shed the corporate life and was traveling the world teaching yoga and doing leadership training when her mother interrupted a trip to Patagonia and “voluntold” her to come back home as Covid-19 was engulfing the planet.

“When your mom voluntells you to come home in the middle of a pandemic, you’re kind of like, ‘OK, I guess I’m coming home,’” she said.

Lim landed the job as Movers and Shakas’ director after writing an op-ed piece expressing reservations about the program’s original focus on recruiting people from elsewhere to work remotely in Hawaii.

The very existence of Movers and Shakas shows how concerned Hawaii's business elite are about the state's population loss. The organization’s parent is the Hawaii Executive Collaborative, a business organization chaired by Hawaii entrepreneur Duane Kurisu, whose ventures include magazines like Hawaii Business and Honolulu, radio stations and restaurants in Honolulu and San Jose. He's also a minority owner of the San Francisco Giants baseball team.

The collaborative’s other board members are Micah Kane, president of the Hawaii Community Foundation; John Dean, chairman emeritus of Central Pacific Financial Corp; and Ray Vara, chief executive of Hawaii Pacific Health.

Since taking over, Lim has reshaped Movers and Shakas in key ways. The organization’s 30-day flagship “Cohort Fellow Program” for remote workers now seeks especially to connect to returning kamaaina.

Movers and Shakas soon will launch another initiative called the Hawaii Talent Onboarding Program. The goal is to help talented newcomers adapt to Hawaii’s unique culture and avoid leaving after a few years. As Lim describes it, in part this is practical, to avoid the employee churn that’s costly and frustrating for businesses needing to recruit talent from elsewhere. But Lim’s vision runs deeper.

“The overall goal is really brain gain,” she said. “How to tie people into Hawaii for the good of Hawaii.”

With only 50 fellows per cohort, Movers and Shakas will not offset the thousands of people fleeing Hawaii each year. But Lim said the organization's fellows will contribute to the community.

"It's really about finding needle movers who can have a large impact," she said.

And as Bank of Hawaii's Ho described it, the type of people Movers and Shakas is targeting -- talented, productive workers -- are key to Hawaii's economy.

While healthy retirees moving to the state and buying real estate boost Hawaii's economy, Ho said, they aren't the same as younger people moving here, building companies, raising families and doing community service.

"The middle class really punches over their weight economically," he said.

Hawaii’s Changing Economy” is supported by a grant from the Hawaii Community Foundation as part of its CHANGE Framework project.

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