UH economist: Tens of thousands could flee Hawaii

  • HO

  • SAIKI

  • BONHAM

A University of Hawaii economist predicts that by 2022, tens of thousands of Hawaii residents will leave to seek employment elsewhere because of the effect COVID-19 has had on the state’s economy.

Carl Bonham, executive director of the University of Hawaii Economic Research Organization, told the House Select Committee on COVID-19 on Monday that because of Hawaii’s dependence on tourism and air travel, “many other state … and county economies will recover much more quickly, and the job opportunities will simply not exist here that will exist in the rest of the country.”

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In a response to a question by Bank of Hawaii President and CEO Peter Ho, Bonham said the baseline forecast for the economic exodus is about 30,000 people, but it could be worse — “not quite double that in a pessimistic situation.”

In April, the most current numbers available, the statewide unemployment rate was 22.3%, but that number is thought to be low because it doesn’t count the self-employed and independent contractors who in May began receiving federally funded jobless benefits.

Bonham said he’s expecting the number of jobless to plummet further by late July if the federal government doesn’t renew forgivable Payroll Protection Program loans to small businesses, part of the Coronavirus Aid, Relief and Economic Security Act.

“The falloff in jobs if tourism hasn’t reopened sometime in July is about 50,000 jobs lost between June and July, compared to about 30,000 … ,” in a more optimistic computer forecast model, Bonham told lawmakers and business leaders.

According to Bonham, if the state lifts its 14-day quarantine on trans-Pacific air passengers and reopens the visitor economy by late July, there could be a scenario by the end of the year “where you’ve recovered about half of the jobs lost in the state.”

He added a “pessimistic scenario” forecasts a continued decline in jobs through August “because we assumed in that scenario that tourism wouldn’t reopen until the end of September.”

“In the coming months, we’ll see how Hawaii prepares for managing the risk of reopening tourism, but also managing the … reduction in job losses, the harm to health and society of having these very high unemployment rates,” Bonham said. “… At the end of this year and into January, when our extended unemployment benefits have expired, if you don’t have family ties in Hawaii and you were working in tourism here and your unemployment benefits run out, there’s actually nothing to keep you here.

“And even people who have deep family ties will be drawn to other parts of the country where tourists can drive to get to Vegas or to get to Orlando, and where businesses have reopened more rapidly.”

House Speaker Scott Saiki told reporters in an online forum afterward that his concerns are “twofold,” should Bonham’s prediction come to fruition.

“It’s always troubling when Hawaii residents feel they need to move out of state, away from their families and friends and parents and children. It’s always an unfortunate situation where it could be seen as involuntary,” Saiki said. “Secondly, it is unfortunate to lose a sizable number of people because our economy depends on a vibrant workforce. And the more people that you lose, then you lose a portion of … the abilities to generate and regenerate the economy in Hawaii.”

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Ho said Saiki and House Finance Director Sylvia Luke previously consulted with him about the possibility of a population decline, adding, “With all that’s transpired as a result of this crisis, that does nothing but to exacerbate something of a pre-existing condition.”

Email John Burnett at jburnett@hawaiitribune-herald.com.

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