Economist: Thousands Of Residents May Leave Hawaii Due To COVID-19 Recession

Jun 2, 2020

The recession stemming from the global COVID-19 pandemic may accelerate Hawaii’s ongoing population decline, according to local economic forecasts.

The sobering assessment came from economist Carl Bonham, executive director of the University of Hawaii Economic Research Organization, known as UHERO. A recent report from the group outlined three possible scenarios for recovery from the recession, which has produced record-setting job losses.

UHERO’s three scenarios are skewed toward optimistic, pessimistic and a middle or baseline outcome. Bonham told a panel of state lawmakers and industry leaders on Monday that the baseline scenario projects that by 2022, roughly 30,000 residents will likely relocate to the mainland as a result of the economic fallout from the pandemic. That number almost doubles in the pessimistic scenario, according to Bonham.  

Hawaii was one of only 10 states that experienced a net loss of people in the Census Bureau’s 2019 population estimate. It marked three consecutive years of decline. The numbers have been most stark on Oahu, which saw a net loss of 62,000 people to out migration since 2010.

Statewide, the number was more modest, with a net loss of just under 5,000 residents. That may seem negligible, but it can have significant economic consequences if the trend continues or accelerates.

So why the sudden increase in people relocating? Bonham says that it stems from the nature of the pandemic recession, which has been particularly destructive to the tourism, hospitality and travel sectors.

“Because tourism is such a dominant piece of the economy, many other state and county economies will recover much more rapidly,” Bonham said. “The job opportunities will simply not exist here that will exist in the rest of the country.”

Tourism employs more civilian workers in Hawaii than any other industry.
Credit Hawaii Department of Business, Economic, Development, and Tourism

Tourism employs 168,000 non-military workers in Hawaii, representing 19% of the total workforce, more than any other industry. According to some estimates, it may take 2 to 3 years before Hawaii’s tourism economy recovers to pre-pandemic levels, largely due to health concerns over air travel.

According to Bonhmam, Hawaii’s dependence on air travel to deliver the visitors vital to economic activity leaves the local tourism economy at a disadvantage compared to mainland destinations like Las Vegas or Orlando, which vacationers can reach by car.

Bonham expects the tourism industries of other states and cities to recover faster, creating more job opportunities in cheaper locales will likely draw some Hawaii residents away.

Around 1,000 people per day are currently arriving in the islands. That is roughly 3 percent of the daily arrivals, which includes visitors, returning residents, travelers on layover, and air crew, compared to the same period in 2019.

Business leaders have been pushing the state to release a plan for resuming tourism, but so far nothing has been produced by Gov. David Ige's administration.

In Monday’s meeting, state House Majority Leader Della Au Belatti noted the concerns of the business community, but cautioned that residents will likely reject any resumption of tourism that feels rushed or unsafe.

“If we were to open and escalate from what is now 1,000 incoming tourists to 3,000, 5,000, 6,000, 10,000, you’re going to have local residents say, 'That’s too much,'” Belatti noted. “I think we have to proceed more slowly.”

Bonham acknowledged that the state is not yet ready to begin accepting large numbers of visitors, but stressed the importance of rapidly developing a plan to do so.

“The urgency is really important,” he told lawmakers.