Expert Assesses Options for Hawai‘i Employers In The Thick Of The Crisis

Apr 17, 2020

This week has brought the harsh reality of social isolation into focus for Hawai‘i’s businesses.  State unemployment filings are now equal to over a third of Hawai‘i’s workforce. For businesses with fewer than 500 employees that make up 99% of all businesses here, the impact of COVID-19 is particularly acute. Here's an inside look at what businesses are going through.

Ben Godsey is president and CEO of ProService Hawai‘i. He has led the company since he purchased it in 2015. ProService provides human resource services to 2,500 businesses across the state.
Credit ProService Hawai'i

“Hawai‘i is no doubt the most economically impacted state in the country, even though the incidence of coronavirus is quite low,” according to Ben Godsey, president and CEO of ProService Hawai‘i.

He bought the human resources company 15 years ago and now advises 2,500 businesses across the state, most averaging around 20 employees. 

He says in Hawai‘i, construction, landscaping, distribution, some grocers, and some medical businesses are continuing, but many other companies have shut down or are facing operating losses of 20% to 90%.

“Our economy really depends on social interactions,” Godsey points out, “whether it’s a restaurant, a retail store, or an entertainment business, a hospitality company. My guess is the economy is down 30% from a month ago on a run right basis.”

Some 230,631 jobless claims have been filed since March 1st. That amounts to about 35 percent of the state’s civilian workforce that numbers 669,1000, according to the Bureau of Labor Statistics.

“The typical small business has anywhere from a week to a month of available funds,” according to Godsey. “So without fresh revenue coming in, they don’t have a long runway until they completely run out of cash.

That’s why this has been such an urgent crisis here in Hawai‘i, because our economy is so heavily dominated by small employers. "Most small employers, many have mortgaged their house [or] have personally guaranteed their business. So it’s not just their family but it’s their employees that depend on them.”

“Personnel is always going to be the biggest expense,” says Godsey of businesses struggling to survive. He says they need to turn off non-employee expenses and turn down employee expenses, through layoffs, furloughs, or reductions in hours.

“Think about how do you protect the core of your business, the expertise to run it, and then how do you maintain the flexibility so when your business picks back up, you’ll be able to have the staff to thrive and take advantage of the opportunities when those re-emerge.”

Even as the state reopens, the recovery won't be immediate, he cautions.

“Unless we completely eradicate coronavirus from Hawai‘i, it’s unlikely that we have a really robust recovery,” Godsey continues. “Prepare for an extended period of challenging economic conditions, take immediate action to prepare for that.”

The New York Times reports the SBA’s $349 billion Paycheck Protection Program for small businesses may be exhausted. Distribution of funding has run into problems.

But for out-of-work employees, Godsey says CARES Act funding should provide an extra $600 per week unemployment compensation for an additional 13 weeks, with benefits also for gig workers and the self-employed.

“Our biggest asset and our biggest liability is our distance from everything else. The 2,500 miles of ocean can be a really big asset if we get rid of the virus completely. If we do get rid of it, I think our state will have the opportunity to open up once there are fast tests for the virus, and really have a robust recovery. If we do not eliminate it and it continues to circulate in the community, I think there’s a significant risk that we go through a long period of recessionary conditions and, by that, I mean at least a year.”

ProService has posted a free Employers’ Guide to Corona virus. For employees, the state has created a new jobless claim tracking site.

Editor's Note: Hawaii Public Radio is among the hundreds of clients of ProService, which is also an HPR underwriter.