Is Hawaii Becoming a Perfect Contradiction?

 

1. The state depends on tourism but cannot guarantee covid regulations for conventions in 2022.
2. An island state without ferries but more than enough "environmentalists" that killed the Superferry.
3. A state with the best astronomy in the world, but with enough cultural opposers that killed the 30 Meter Telescope.
4. A place where people have multiple jobs and things to do that they cannot carpool two or three at a time, but will take a train 500 at a time.
5. A place where politicians such as Ige and Caldwell do not deserve one term, but were voted into top office twice.
6. A state with a button pusher who drove us all nuts, and still kept his state job.
7. The state with the most workers per capita, but 15 months after the lockdown does not have nearly enough workers to clear the unemployment benefits backlog.
8. The Aloha State takes care of ohana, but has the most homeless per capita.
9. A state with modest incomes and high cost of (basic) living has exorbitant housing costs and a high preference for private K-12 education at $20,000 or more per year!
10. A state having among the highest taxation delivers among the worst public K-12 education in the US.
11. A state that has a waste to energy plant that makes electricity, but prefers to ship recycled paper waste 2,000 miles away.
12. A state that has no connection to external electric grids for help, but focuses on unreliable intermittent energy for baseload power supply.
13. A state with a rich volcanic reservoir enough to solve its energy problem, but hates geothermal energy development (New Zealand has a profit sharing scheme for use of culturally sensitive geothermal energy for the benefit of the indigenous Maori.)
14. A state that has an 85% dependency on imported food, but converts prime agricultural lands such as Koa Ridge and Aloun Farms to cookie cutter suburban subdivisions (that are primarily car dependent too.)

Hawaii Jobs: Outlook for Jobs in Education, Government, Military and Tourism

There are basically four main industries in Hawaii: Education, Government, Military and Tourism. And a fifth large one serving these four is Services. In round numbers, education (DOE, UH system and private) employed 63,000 people in 2010, civilian federal, state and county government employed 77,000 people, the hospitality industry including entertainment, restaurants and bars employed 90,000 people, the armed forces employed 50,000 people, and professional, business and other services employed 100,000 people. These five types of industries employ 60% of Hawaii's people.

While we have been inundated about a need for "construction jobs," the construction industry typically employs less than 5% of the workforce as the detailed breakdown below indicates.(1)


This article presents a brief analysis of Hawaii’s four main industries and assesses their growth potential.

Education
At roughly $15,000 per pupil, the annual expenditure Hawaii’s state based education system is among the highest in the nation. This level of expenditure all by itself indicates that this is certainly not an area of future growth.

Part of the Education industry but separate from the state DOE is the UH system which has become administratively bloated in the last two decades and its diversity of campuses has added more to its costs as a system. UH-Manoa is one of the top pork-barrel research funding recipient universities in the nation which is unsustainable past the retirement of Senator Daniel Inouye. Several units will continue to excel, but the UH as a whole is not a promising locus for job growth in Hawaii.

Private education will continue to hold its own but escalating tuition costs place a ceiling on the potential for large expansion unless citizens receive the choice of having education vouchers. Given the poor outcomes of Hawaii’s public education system, this opportunity may arrive sooner than it is currently thought to be possible.

Civilian Government
The table above suggests that Government provides 21% of the jobs in Hawaii but the table below suggests that if public education and US DOD are taken aside, then the share of the rest of the government’s shrinks to 10%. (The percentage shown is out of the total civilian employment in 2010.)


Over several decades Government has been a “growth industry.” Hawaii had 125,200 civilian government workers in 2010 of which 57% in state government, 28% in federal government and 15% in local government. This is an area that will experience reductions in the next few decades as city and state budgets come under heavy stress from necessary infrastructure investments, consent decrees, and pension and health fund liabilities vis-à-vis the actuarial reality of long-living baby boomers. Even larger pressure will be on federal employment.

In 1960 the ratio of government employment to the population in Hawaii was 7.8%, that is, there were 8 government workers for every 100 Hawaii residents. This ratio reached a high of 9.5% in 2000 and dropped to 9.2% in 2010. In 1960, the federal civilian employment was large at 4.3% but it reduced to 2.6% in 2010. State employment went the opposite way: From 2.3% in 1960 to 5.3% in 2010. State employment doubled from 1960 to 1970, and it doubled again between 1970 and 1990. County employment was 1.2% in 1960 and 1.4% in 2010.

It is clear that there has been no bloating in county employment and a reduction has occurred in federal employment. So the bulk of anticipated future government employment cuts will be from state ranks and from the education portion of it in particular.

Military
The explosive economic and military growth in Asia is a strong force behind stability and expansion of military in Hawaii. This is one area that the retirement of Senator Inouye may have relatively little negative effect. The geopolitical placement of Hawaii is highly advantageous. However, shifts may occur that may be less desirable for Hawaii resident employment: Military personnel numbers may increase but local civilian jobs may be reduced as Hawaii becomes more of an action-ready base rather than a storage and maintenance base. The existing Navy shipyard may be too costly and too limited to maintain at its current size.

In the past three decades the ratio of armed force personnel to Hawaii’s population has dropped from 5.3% in 1960, to 4.5% in 2000, and all the way down to 2.9% in 2010 in part because of deployments to wars. Defense cuts and vastly improved automation in military operations may result in keeping armed force employment in Hawaii below the 4% mark.

Tourism
Tourism is long regarded as the economic engine of Hawaii by capitalizing on the trifecta of natural beauty, warm climate and Hawaiian culture supported by the political and economic might of the US.

Although 2012 is expected to be a “banner year” for Hawaii tourism more dark rather than rosy clouds are in the horizon. The fundamental problems are neither market size nor marketing. It is cost.

Hawaii cannot be moved 200 miles off of the US mainland or 200 miles off of Asia. As a result, 8 million tourists have to fly to it. Fuel is roughly 25% of an airline’s cost when oil is just under $100 per barrel. If oil price grows to $200 per barrel, fuel cost will be roughly 50% of an airline’s cost and airfares will be adjusted upward accordingly. Necessarily, the market will shrink. So here is a summary of positive (+) and negative (-) forces on Hawaii tourism which, in turn will affect its job count in the hospitality industry and its supporters such as the food, culture, entertainment and transportation industries.

(-) While in the next decade there will be large changes in energy innovation and a reduction in electric power production from oil, there are no foreseeable fixes for transportation fuels, particularly when it comes to air and marine transportation, both of which are Hawaii’s only lifelines. Hawaii’s sensitivity to oil prices will only worsen.

(+) Vast improvements in personal wealth in China, Russia and other developing Asian nations combined with possible relaxation of visa requirement bodes well for tourist arrivals from Asia.

(-) There will be a long-term reduction of arrivals from Japan not only because it is a mature market but also because it’s becoming an aging, less populous and heavily indebted country with somewhat slowed ability to innovate and outsourced production of most of its consumer and industrial products.

(+) Korea has almost 40% as many people as Japan and it’s a growth market for Hawaii.

(+) Hawaii has the ability to follow the American tradition of innovation by continuously developing niche tourist markets (adventure, ecotourism, fishing, LGBT, wedding, etc.)

(+) The large national debt is forcing a progressive devaluation of the dollar which makes foreign visitation to Hawaii more attractive. This may also boost arrivals from the mainland because foreign destinations become more expensive for Americans.

(-) Development of the proposed Honolulu rail with its debilitating multi-year construction, and the resultant non-improvement of traffic congestion and eyesore guideway will cause a prolonged tourism loss on Oahu, some of it made up by the other islands.

(-) Unless city and state budgets are re-aligned with emphasis on infrastructure improvement and maintenance, the resultant traffic congestion, potholed roads, sewer spills, water main breaks, poor park condition and homeless camps will cause a prolonged loss of tourism for Oahu. Eventually the disproportionally large budget allocations to outer islands will shrink to avert the collapse of Oahu.

While tourism and related occupations account for one fifth of the jobs in Hawaii, this is actually a fairly fragile industry that is heavily dependent on strong forces beyond its control. This is apparently lost on Hawaii legislators who on every downturn turn up the taxation scale for the tourism industry. Mismanagement in Hawaii and Washington, D.C. can easily affect Hawaii’s tourism and its related job count. So far Washington has no path to managing the national debt and Hawaii has no path to managing its looming infrastructure and energy crisis. So the dark clouds clearly overtake the rosy ones.

Summary
Oahu already had a net 50,000 out-migration from Honolulu County to other US or Hawaii counties. This will expand to all of Hawaii in the next two decades. State and federal government jobs, and DOE and UH jobs will be cut back. If local government improves its priorities there will be thousands of private local jobs for needed infrastructure replacement and maintenance, as well as productive energy projects. In the next couple decades, the job count in Hawaii will remain stable but several sectors in the economy will experience large changes.

(1) Source: State of Hawaii employment data is 2010 State of Hawaii Data Book.

Tourism Industry: Fact, Action, and Possible Destruction

Fact: Tourism is important to all of us on Oahu but the grim reality is that since the 1996-1998 high, tourism has been at a fairly constant slide, as DBEDT monthly statistics since 1990 show.


The graph above of international arrivals shows that 9/11 and SARS and Iraq war had strong negative impacts. Add to this the weak national economy since 2008 and domestic arrivals also have dropped sharply. See below.


Today's visitors observe a congested, aging and increasingly unappealing Oahu with potholed roads, tired looking parks, and hordes of homeless.

Action is needed now. My vision is to restore the postcard image of Oahu as a great tourist destination by focusing on fixing the infrastructure and maintaining our parks, beaches and tourist attractions. That is real value to the tourist industry and all of us.

The more attractive we are as a visitor destination, the more the hotels can get higher rates and higher quality jobs in the hospitality industry can be had.

Destruction. My opponents in the mayor race will significantly harm Oahu's tourist industry in three ways:

(1) Both advocate rail which is a giant project that will involve 10 years of messy construction to deliver a system that very few will use, according to the city's forecasts. The construction mess and the very ugly all-elevated rail line will be tourism killers for Oahu.

(2) The rail is gigantically expensive so other needs such as dilapidated parks and beaches, homelessness and potholed roads will be under-funded. Thus they will get worse and Oahu's tourist appeal will worsen.

(3) The taxes needed to construct and maintain rail and the sewers add up to $10 billion which means heavy extra taxes. How heavy? The typical sewer bill 15 years from now will be about $2,500 per year plus another $1,000 for rail for each taxpayer.

People in the hospitality industry will find it increasingly difficult to afford to live in Hawaii. Hotels may increase wages and will have to pay higher city taxes. So hotels will have to charge much more for their rooms to offset the costs, thus making a visitation to Hawaii more costly and less competitive.

My competitors' model for "rail jobs" is a long term disaster.