Annex-A of GUILD’s study provides a high-level overview of emerging demographic, economic, employment, cultural, political, and social issues focused on national and regional trends but with links to similar trends in Hawaiʻi. This section, Annex-B, drills deeper into the Hawaiʻi trends to draw out assessments of how the University of Hawaiʻi is aligned with these trends and how they affect program development.
The state of Hawaiʻi has experienced a modest decline in total population for the last three years, going from 1.427 million in 2016 to an estimated 1.415 million in 2019, a 0.8% decline for the period. All of the decline is from Oʻahu. Since 2016, Oʻahu population declined 1.2% while population for the other three counties has increased (Hawaiʻi +1.4%; Kaua‘i +0.8%; and Maui +0.9%). Hawaiʻi ranks 40th among the states in population but 13th in population density.
The long-range forecast from the Hawaiʻi Department of Business Economic Development and Tourism projects the state population will reach 1.649 million in 2045. The forecast continues to project that population will increase at a faster rate on the Neighbor Islands than on Oʻahu. As a result, Honolulu’s share of the state’s total population will decline from 70.1% in 2010 to 65.9% in 2040. ii
| Year | Percent |
|---|---|
| 2010 | 70.1% |
| 2016 | 69.5% |
| 2020 | 68.9% |
| 2025 | 68.2% |
| 2030 | 67.4% |
| 2035 | 66.7% |
| 2040 | 65.9% |
Source: Hawaiʻi DBEDT Population Forecast
About 54% of the state’s residents were born in Hawaiʻi. The proportion of the population born abroad is 18%, and 7.6% of the resident population are non-citizens.
The size of Hawaiʻi's population is a key factor for enrollment in the University system. With sluggish population growth, enrollment will stagnate unless the University increases its “going rate” entering college, improves its programs to attract non-residents from the U.S. mainland and/or international markets, or taps into other non-traditional markets. Without enrollment growth, it will be difficult for the University to expand its programs and cover its overhead costs. The declining proportion of the state’s population on Oʻahu will create increasing demand for direct educational services on the Neighbor Islands as well as increased distance education programs emanating from the University’s Oʻahu campuses. The increasing proportion of the population on the Neighbor Islands will also increase the demand for and importance of programs directly related to their economies and workforce requirements.
Hawaiʻi’s population over the age of sixty-five is projected to increase by 40%, from 279.7K in 2020 to 392.7K in 2045. The proportion of persons aged 65+ in the population will increase from 19.1% in 2020 to 23.8% in 2045. Similarly, Hawaiʻi’s population over the age of eighty-five will more than double, from 42.0K in 2020 to 107.6K in 2045.
| Age group |
2020 group total (% of total population) |
2030 group total (% of total population) |
2040 group total (% of total population) |
2045 group total (% of total population) |
|---|---|---|---|---|
| 18-44 | 522,766 (45.3%) |
530,141 (43.3%) |
530,752 (41.2%) |
538,601 (41.0%) |
| 45-64 | 351,041 (27.9%) |
342,210 (27.9%) |
373,201 (29.0%) |
382,935 (29.1%) |
| 65+ | 279,686 (24.2%) |
352,240 (28.8%) |
383,735 (29.8%) |
392,683 (29.9%) |
| 85+ | 41,954 (3.6%) |
56,704 (4.6%) |
94,823 (7.4%) |
107,648 (8.2%) |
Source: Hawaiʻi Department of Business Economic Development and Tourism 2045 Series Report Table A-2. Hawaiʻi State Population Projection, Selected Components, 2010-2045
With the growing number of government and union retirees in the state, the financial impact of retirement benefits will be significant. As of 2018, the unfunded liability of the Hawaiʻi Employee’s Retirement System (the system for State and county workers) alone rose to $13.4 billion. The liability is forecast to increase to $14.2 billion, after which it will slowly improve with a projected surplus by 2043. In its paper “Charting a New Fiscal Course for Hawaiʻi,” the Hawaiʻi Executive Conference notes that “By 2022, over half of the State’s annual general fund will be allocated to funding retiree pensions and healthcare, debt service payments, and Medicaid. If tax revenues do not increase enough, a larger share of the budget will be required to satisfy these expenses. Eventually, these constitutionally protected obligations will crowd out other government services such as public education, public safety, health and social services, and environmental protection.”
The 150+% increase in the size of the elderly (age 85+) population by 2045 will drive a substantial increase in the need for eldercare, geriatric, and other medical services. The significant size of the population aged 65+ (392.7K) is also a potential source of adult learners who can benefit from lifelong learning and retraining programs both to extend their productivity in the workforce and to enhance their quality of life.
Hawaiʻi’s population is ethnically diverse and mixed. Those reporting ethnicity of “two or more races” make up 24% of the state’s population.
Enrollment in the UH system has proportionately fewer Caucasians and more Native Hawaiians/Part Hawaiians than their incidence in the population. 1
| Ethnicity | Percent |
|---|---|
| All Other | 18% |
| Caucasian | 19% |
| Chinese | 5% |
| Filipino | 13% |
| Hawaiian/Part Hawaiian | 23% |
| Japanese | 7% |
| Mixed | 14% |
| Pacific Islander | 3% |
Source: University of Hawaiʻi “Fast Facts” UH/">https://www.hawaii.edu/about-UH/
1 Note that the University of Hawaiʻi uses a “trumping” rule when counting students of Hawaiian ethnicity. Unlike the U.S. Census or other enumerations, UH will count a student as “Hawaiian” if Hawaiian is any part of their ancestry. This results in higher counts for Hawaiians than other data sources.
| Race/Ethnicity | Percent |
|---|---|
| American Indian/Alaska Native | 0.4% |
| Asian | 39.0% |
| Black or African American | 1.7% |
| Caucasian | 25.6% |
| Native Hawaiian/Other Pacific Islander | 10.2% |
| Two or more races | 23.1% |
Source: U.S. Census
Hawaiʻi’s ethnic diversity is unique among the states. The multi-ethnic racial mix and the in- migration of foreigners provide Hawaiʻi with its vibrant culture, but also pose challenges for the state’s educational systems. In 2017, 21.7% of Hawaiʻi’s adult (age 18+) population was foreign- born. Based on a 2011-2015 Census Data Set, about 25.3% of Hawaiʻi’s population aged 5+ (about 331.7K people) speak a language other than English at home. iii Over the last four years, international in-migration to Hawaiʻi has ranged from 4.4K to 9.6K annually, adding more presumably limited-English speakers to the population. In order to improve the percentage of incoming UH students who are “college ready” in terms of English proficiency, the Department of Education and the P-20 program need to address the language issues generated by Hawaiʻi’s diverse culture and foreign born populations.
Net migration (in-migration minus out-migration) has been negative for the last four years, contributing to the overall decline in Hawaiʻi’s population. The incidence of out-migration from Hawaiʻi to other places decreases with age and increases with education. For residents 18-24 (prime college age), the out-migration rate has been about 9.2% annually; out-migration reaches 5.4% for those with a Master’s degree or higher compared to only 1.8% for those with less than a high school education. iv The characteristics of the out-migration rates are one cause for a “brain drain” of higher educated professionals in the State.
| Segment | 2020 Estimate | 2030 Forecast | Percent Growth 2020-35 |
|---|---|---|---|
| State School Age (5-19) | 247,906 | 272,778 | 10.0% |
| Honolulu School Age | 166,546 | 179,429 | 7.7% |
| Hawaiʻi School Age | 37,099 | 45,202 | 21.8% |
| Kaua‘i School Age | 13,494 | 14,760 | 9.3% |
| Maui County School Age | 30,767 | 33,387 | 8.5% |
| Working Age Adults (25-64) | 568,793 | 593,885 | 4.4% |
| Military - Armed Forces | 46,455 | 46,455 | - |
| Military - Dependants | 60,392 | 60,392 | - |
Source: DBEDT Long Range Forecast
The school-aged population in Hawaiʻi is forecast to increase from 248K in 2020 to 272.8K in 2035 (+10.0%) and stabilize thereafter. Growth rates, however, vary by county, with higher rates of growth on the Neighbor Islands (Honolulu +7.7%, Hawaiʻi County +21.8%, Maui County +8.5%, and Kaua‘i +9.3%). The higher rates of growth on the Neighbor Islands indicate the need for expanding education programs outside of Honolulu or creating more opportunities for Neighbor Island residents to engage in Honolulu-based programs through distance learning.
The working age population for the state is forecast to increase from 568.8K in 2020 to 593.9K in 2035 (+4.4%) although the incidence of this age group in the total population is declining as the population ages. Hawaiʻi’s working age population was 40.7% of the total population in 2010 but is forecast to be 36.5% of the population in 2045. The declining proportion of working age residents means that proportionately fewer residents are supporting the social costs of an increasingly aging population. Without productivity increases, budget priorities will necessarily shift to health and social services potentially at the expense of education.
For adults aged 25-64 in Hawaiʻi, 45.8% have earned an associate degree or higher. This compares with 43.2% of the U.S. population aged 25-64 with an associate degree or higher (Hawaiʻi Index = 106). Educational attainment at the associate degree + level is not distributed evenly by county, with only the county of Honolulu exceeding the state average.
| % Age 25-64 Associate Degree or higher |
Index to State Average |
|
|---|---|---|
| State Average | 45.8% | 100 |
| Hawaiʻi County | 39.5% | 86.2 |
| Honolulu | 48.2% | 105.2 |
| Kauaʻi / Maui | 41.1% | 89.7 |
Source: ACS 1-Year Estimates - Public Use Microdata Sample 2018
Educational attainment has increased slowly but steadily over the last decade. Of the adult population (age 25+) in 2017, 32.9% have earned a bachelor’s degree, compared with 29.2% in 2007. Only 7.7% of the Adult 25+ population has not completed high school. v
Over 210K residents of Hawaiʻi have some college credits but have not completed a degree. This represents almost 15% of the total State population and is an opportunity for the University to promote degree completion programs.
For the 2017-18 school year, total enrollment for public schools in Hawaiʻi (not including Charter Schools) was 168,095, with 67.9% on Oʻahu, 14.0% in Hawaiʻi County, 12.6% in Maui County, and 5.5% on Kauaʻi. An additional 11,160 students are enrolled in Charter Schools.
K-12 private schools have 32,376 students enrolled, 15.2% of total K-12 enrollment for the State. Department, Charter, and Private School enrollment have remained relatively stable over the last three school years. Private school enrollment has declined from its peak (17.6% of total enrollment in 2009-10) to 15.8% of total enrollment in 2018-19. Probably related to the overall population decline for the City & County of Honolulu, enrollment on Oʻahu has shown modest enrollment declines in each of the last five school years.
In 2018, there were 11,370 High School completers in the Department of Education system, 6,236 (55%) of whom went on to college. vi| Number | Percent | |
|---|---|---|
| Total Completers (diploma or certificate of completion) | 11,370 | - |
| Nationwide College Enrollment | 6,236 | 54.8% |
| 2-year | - | 22% |
| 4-year | - | 33% |
| University of Hawaiʻi System College Enrollment | 3,805 | 33.5% |
| 2-year | - | 21% |
| 4-year | - | 12% |
Source: College and Career Readiness Indicators, Hawaiʻi P20
Only about 12% of DOE graduates entered a University of Hawaiʻi four-year program. Increasing the relatively low “going rate” of Hawaiʻi DOE students to the University of Hawaiʻi system is an opportunity for enrollment growth.
Educational assessment for Hawaiʻi’s public schools as measured by the National Assessment of Educational Progress (NAEP) lags national averages, and in some cases the lag is substantial. vii
| Subject | 2013 Hawaiʻi | 2013 Nation | 2015 Hawaiʻi | 2015 Nation | 2017 Hawaiʻi | 2017 Nation |
|---|---|---|---|---|---|---|
| Reading Grade 4 | 30% | 34% | 29% | 35% | 32% | 36% |
| Reading Grade 8 | 28% | 34% | 26% | 33% | 30% | 33% |
| Mathematics Grade 4 | 46% | 41% | 38% | 39% | 38% | 40% |
| Mathematics Grade 8 | 32% | 34% | 30% | 32% | 27% | 34% |
| Science Grade 4 | na | na | 30% | 37% | na | na |
| Science Grade 8 | na | na | 23% | 33% | na | na |
Source: 2018 Hawaiʻi Department of Education Data Book
The Department of Education’s summative English Language Arts/Literacy/Math assessment provides additional evidence of lagging public school performance. (Percentages for “Nearly Met” are not shown).
| Grade | Not Met | Met / Exceeded |
|---|---|---|
| 3 | 25% | 52% |
| 4 | 30% | 51% |
| 5 | 25% | 57% |
| 6 | 23% | 53% |
| 7 | 25% | 52% |
| 8 | 21% | 55% |
| 11 | 17% | 60% |
| Grade | Not Met | Met / Exceeded |
|---|---|---|
| 3 | 23% | 54% |
| 4 | 22% | 47% |
| 5 | 29% | 43% |
| 6 | 29% | 41% |
| 7 | 35% | 37% |
| 8 | 40% | 38% |
| 11 | 40% | 32% |
| Grade | Well-Below | Meets / Exceeds |
|---|---|---|
| 4 | 9% | 56% |
| 8 | 25% | 44% |
| HS | 26% | 35% |
Source: 2018 Hawaiʻi Department of Education Data Book
Of the 3,805 DOE students who enrolled at a University of Hawaiʻi campus, 19% were below college level in Math and 12% were below college level in English. viii Improving these scores can improve college readiness and potentially improve college success.
| Math Number (Percent) |
English Number (Percent) |
|
|---|---|---|
| College-level | 1,426 (37%) | 1,895 (50%) |
| Credit Earned in HS | 256 (7%) | 545 (14%) |
| Below College-level | 736 (19%) | 447 (12%) |
| Not Enrolled | 1,387 (36%) | 918 (24%) |
Source: P20 Data Exchange Partnership
Another indication of the challenges facing public K-12 education in Hawaiʻi is the relatively high percentage of students in the system with special needs. In fact, only 46% of Hawaiʻi public school students have no special needs. Thirty-five percent qualify as economically disadvantaged; 4% require special education; 2% are English Language Learners; 1% qualify as Section 504 (students with disabilities); and 12% have multiple special needs. One indicator of economic need is the prevalence of SNAP (Supplemental Nutritional Assistance Program). participants in Hawaiʻi. SNAP serviced 179K monthly clients in 2016 providing $490.3M in benefits. ix
High needs K-12 DOE students significantly under-perform compared to non-high need students in the DOE’s balanced assessment tests. x
| Need | Language Arts | Mathematics |
|---|---|---|
| Performance for High Need | 38% | 30% |
| Performance for Non-High Need | 72% | 59% |
Source: Hawaiʻi State Department of Education, Smarter Balanced Assessment 2019. Note: Achievement Gap is the difference in meeting achievement standard between high-needs students and non-high-needs students.
The prevalence of DOE students with needs and the resulting negative impacts on achievement point to the importance of working with DOE to support social programs that will lead to higher levels of K-12 academic achievement and readiness for college. Almost 8,000 Department students were enrolled in at least one Advanced Placement (AP) course. 4,560 AP tests scored 3 or higher (44% pass rate).
The four-year graduation rate for department schools was 84.4% in 2017-18, with a 12.6% dropout rate.
For Hawaiʻi public school graduates whose progress can be tracked, 44% earned a post- secondary degree or certificate within six years after high school; however, there is significant variance by race and ethnicity. xi
| 2011 Cohort % |
Asian % (index) |
Filipino % (index) |
Native Hawaiian % (index) |
Other % (index) |
Pacific Islander % (index) |
White % (index) |
|
|---|---|---|---|---|---|---|---|
| Stop out | 42% | 25% (60) |
36% (86) |
58 (138) |
47 (112) |
66 (157) |
39 (93) |
| Enrolled | 14% | 13% (93) |
17% (121) |
12% (86) |
15% (107) |
13% (93) |
17% (121) |
| Earned degree or certificate | 44% | 62% (141) |
47% (107) |
28% (64) |
38% (86) |
20% (45) |
44% (100) |
Source: Hawaiʻi P20 Data Portal. Note: Percentages based on cohort participants who have a post-secondary record.
Asians are far more likely than average (index = 141) to earn a degree or certificate within six years of high school graduation. Native Hawaiians (index = 64) and Pacific Islanders (index = 45) are far less likely to earn a degree or certificate in that time. Consistent with the University’s mission to support educational opportunities and quality of life for all of Hawaiʻi and with its emphasis on Native Hawaiians, research is needed to understand the reasons for the disparity in certificate and degree completion rates to address the issue. About 18% of DOE completers in 2018 participated in a dual credit program. Dual credit participants are high school completers who took at least one credit course from the University of Hawaiʻi while they were still enrolled in high school. Nine percent of completers earned six or more college credits while in high school.
Fifty-seven percent of completers (6,501) completed a High School Career and Technical Education (CTE) program. The number of CTE completers has increased 86% since 2013.
The DOE has organized programs around six career pathways:
The DOE career pathways are described as “an organizing tool for all educational levels— kindergarten through college—to provide a context for exploring career options and a framework for linking learning to the skills and knowledge needed for future success.” More specifically, for Career and Technical Education, they provide a sequence of courses to prepare students for the workplace. The Dual Credit Articulated Programs of Study (DCAPS) has been structured as a bridge between the DOE and UH units to allow DOE students who have successfully completed a CTE program to enter college with credit. xii
Of the 14,188 high school graduates (public and private) in 2017-18, 8,436 went on to college (59.5%). Of those who went to college, 3,608 went to an out-of-state institution (42.8%). The percentage of Hawaiʻi high school graduates going out-of-state declined after the 2008 financial crisis but has been increasing steadily since 2012. xiii
| 2002 | 33.6% |
|---|---|
| 2004 | 32.9% |
| 2006 | 36.6% |
| 2008 | 32.9% |
| 2010 | 31.9% |
| 2012 | 32.4% |
| 2014 | 38.0% |
| 2016 | 41.2% |
| 2018 | 42.8% |
UH IRAPO and IPEDS
With Hawaiʻi’s strategic location, the growing importance of the Indo-Pacific region in defense planning, and the stationing of more than 46,000 personnel and 60,000 dependents in the state, the military represents a relevant target population for the University. Other four-year institutions cater to this community, offering tailored programs to fit its special needs. Hawaiʻi Pacific University, for example, offers eight-week modules rather than fifteen- week semesters, a module length better suited to military schedules. It also offers bachelor and associate degrees on base at Camp Smith, Joint Base Hickam, Marine Corps Base Kāneʻohe, Pearl Harbor, Schofield Barracks, and Tripler Army Medical Center featuring courses such as business administration, computer science, criminal justice, homeland security and others of particular interest to military personnel. From its website, this is the description of HPU’s military approach:
“Military Campus Programs/Off-Campus Programs specialize in helping military service members, their families, Veterans, U.S. Department of Defense civilians, and other non- traditional students achieve their educational and professional goals. We provide an American education built on a liberal arts foundation recognizing the need for flexibility without sacrificing academic integrity. We use various traditional and distance learning course delivery methods to educate our students to live, work, and learn in an ever- changing global society. Our 8-week semesters are perfect for adult learners who cannot make the commitment of a 15-week term.” xiv
HPU also offers tuition reductions to active duty military, active reserves, and active national guard ($250 per undergraduate credit) and to dependent spouses and children of service personnel as well as civilian contractors working on military bases ($29/undergraduate credit hour).
Chaminade University also offers programs especially designed for military students. Its website describes the university as “a military-friendly experience” and describes itself as follows:
“At Chaminade, we’ve been helping service members map out their educational goals— and then achieve them—for more than 50 years. We’re proud to offer a rich catalog of courses specifically geared toward members of the military and their dependents. The best part? Take courses in the way that’s convenient to you—on base or online.” xv
Both Hawaiʻi Pacific University and Chaminade offer bachelor’s and associate degrees in subject areas of interest to military personnel including Criminology and Criminal Justice, Historical and Political Studies, Cybersecurity, Homeland Security, Supervisory Leadership and Public Administration. HPU also offers a master’s degree in Diplomacy and Military Studies.
Study.com xvi lists five schools in Hawaiʻi as “military friendly”: Kapiʻolani Community College, Leeward Community College, University of Hawaiʻi West Oʻahu, Hawaiʻi Pacific University, and Chaminade. The “military friendly” designation is based on an evaluation using public data and responses from a proprietary survey. The UH “military friendly” campuses each have support services for veterans and military students which include assistance in navigating the application for benefits and evaluation of prior learning for transfer credits.
Providers of online programs, including Southern New Hampshire University, Arizona State and others, as well as for-profit providers, actively market to military personnel in Hawaiʻi.
Hawaiʻi’s Gross Domestic Product (GDP) totaled $97.3B in 2019, up 2.05% from 2018. Real (inflation adjusted) GDP growth has been generally modest since the end of the 2008 financial crisis and has lagged U.S. growth levels.
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Hawaiʻi | -1.7% | -2.3% | 1.7% | -0.4% | 2.0% | 1.2% | 1.3% | 5.2% | 1.8% | 1.6% | 3.0% | 2.1% |
| U.S. | -0.1% | -2.5% | 2.6% | 1.6% | 2.2% | 1.8% | 2.5% | 2.9% | 1.6% | 2.4% | 2.9% | 2.3% |
The State had forecast real growth in Gross Domestic Product (GDP) at a modest 1.3% annually over the next three years; however, that forecast will be dramatically downgraded as a result of the impact of the COVID-19 pandemic. Projected recovery is not yet well understood but slow economic growth will inevitably put pressure on State budgets and limit the University’s flexibility in initiating new or expanded programs.
Hawaiʻi’s median household income in 2019 was $80,212, 26.4% higher than the U.S. average ($75,500). The higher median income is offset by Hawaiʻi’s high cost of living. The cost of living in Honolulu is third highest in the U.S., trailing only New York City (Manhattan) xviii and San Francisco according to Kiplinger.com. 8.8% of Hawaiʻi’s population was below the poverty level in 2018, compared with 13.1% for the U.S. In 2017, only 3.8% of Hawaiʻi residents did not have health insurance, a rate second only to Massachusetts and well below the national average of 8.7%.
In 2019, the State had about half a million housing units, of which about 58% were owner- occupied (not rentals). The following table shows 2018 median sales prices for single family homes and condominiums by county:
| State Total | Oʻahu | Hawaiʻi | Kauaʻi | Maui | |
|---|---|---|---|---|---|
| Single Family homes | $689,000 | $790,000 | $360,000 | $699,500 | $710,000 |
| Condominium | $430,000 | $421,000 | $350,000 | $461,000 | $500,000 |
Source: Locations Research xix
Rent in Hawaiʻi accounts for about a third (33.2%) of household income; monthly owner costs for homeowners averaged about a quarter of household income (25.5%). xx
| 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | |
|---|---|---|---|---|---|---|---|---|---|
| State | -0.71 | 0.12 | 0.44 | -1.36 | 3.6 | 3.69 | 1.15 | 1.56 | 2.37 |
| U.S. | 1.48 | 2.79 | 2.41 | -0.77 | 3.41 | 3.86 | 0.80 | 2.23 |
Source: University of Hawaiʻi Economic Research Office data portal from U.S. Dept. of Commerce Bureau of Economic Analysis
Real (inflation adjusted for 2018 dollars) per capita personal income for the state of Hawaiʻi was $55,920 in 2018, compared to the U.S. average of $48,980 (+14%) xxi which is offset by the state’s high cost of living (+88%xxii above the national average by some measures). Oʻahu has the highest per capita personal income at $60,578, followed by Kauaʻi at $50,220, Maui $49,864, and Hawaiʻi Island $43,139.
Between 2010 and 2013 Hawaiʻi’s growth in real per capita personal income significantly lagged the U.S. growth rate. Following three years of relative parity, the U.S. again significantly outpaced Hawaiʻi in real per capita personal income growth in 2017 (2.23% vs, Hawaiʻi’s 1.56%). Maui had the strongest rate of per capita personal income growth in 2018 at 3.42%, followed by Honolulu (3.03%), Hawaiʻi (2.58%) and Kauaʻi (1.74%).
For 2018, the median family income for the state of Hawaiʻi was $95,450, an increase of 4.36% over the previous year. Since 2010, the median family income has risen 25.4%.
The Honolulu Consumer Price Index (inflation rate) was 1.63% in 2019, a -0.2% change from 2018. The U.S. rate for the same period was 2.3%.
Historically, outside of recessions, the unemployment rate in Hawaiʻi has been very low and generally lower than the U.S. average. In 2019, the unemployment rate for the State was 2.71%, a slight (+0.21 percentage point) change versus 2018. With Hawaiʻi’s dependence on tourism, unemployment is extremely sensitive to external events. The current COVID-19 pandemic has had a significant impact with unemployment spiking to more than 20%. For perspective, following the 2008 financial crisis, visitor arrivals dropped -10.4% in 2008 and -4.4% in 2009 before finally beginning to recover in 2010. The 2003 SARS impact caused a 0.1% drop in visitors that year in a relatively short, “V shaped” pattern.Given the severity of the pandemic’s impact on employment, the State’s Department of Business Economic Development and Tourism is suggesting that full recovery will take years, not months, and unemployment will remain high. However, the unemployment impact of the pandemic will vary by economic sector. While tourism will recover slowly, other sectors such as healthcare, the military, and government contracting will be relatively unaffected and the strong demand for skilled workers that these sectors experienced before the outbreak of the pandemic will likely continue.
Local events also affect economic results and employment by county. The 2018 Kīlauea eruption on Hawaiʻi island and the Kauaʻi floods of the same year affected those local economies.
The economy of Hawaiʻi has long been concentrated in a few industries – from Sandalwood and whaling in the earliest days of the kingdom, through the plantation era of big sugar and pine, to today’s concentration in tourism and the military. This concentration persists despite ongoing efforts for diversification.
In today’s state economy, the lack of diversification is evident in the dominance of the visitor industry. A 2017 study by the University of Hawaiʻi Economic Research Organization (UHERO) found that while the typical U.S. state has ten strong “traded clusters” of industries, Hawaiʻi has only three. Of those, Hospitality and Tourism was dominant with 55,000 jobs while the other two (Water Transportation and Jewelry/Precious Metals) which together accounted for fewer than 4,000 workers. xxiii
“Traded industries” are those that export goods and services outside of their region to other regions and countries. “Local industries” are those that primarily buy and sell to local buyers.
Broadly stated, traded industries bring benefits into a region while local industries recirculate economic benefits within a region. In Hawaiʻi, apart from Hospitality and Tourism, many of the state’s jobs are in sectors that are “local industries,” that is, industries that do not draw significant revenue into the state. Two of the top three employment NAIC codes in Hawaiʻi are “local industries”: Government and Health Care & Social Services. Together, they account for almost 259K jobs, or about 35% of the workforce.Efforts to diversify Hawaiʻi’s economy are hampered by longstanding challenges including remote location, high cost of land, high cost of shipping, and relatively small size.
In interviews, respondents noted that Hawaiʻi has well-established organizations and frameworks supporting currently identified economic sectors (Hawaiʻi Technology Development Center, DBEDT’s Creative Industries, Incubators, and Hawaiʻi Tourism Authority), but has not successfully capitalized on new and emerging sectors or significantly expanded the impact of the existing organizations.
In 2019, the civilian labor force in Hawaiʻi totaled 736,248, and (pre-pandemic) was forecast to grow to 768,720 in 2029 (+4.4%). xxiv
Government (including education) accounts for the largest number of jobs in the state, followed by Accommodations/Food Services and Health Care and Social Assistance. These three categories account for about 50% of all jobs in the state in 2019.
| 2019 | 2029 | 2019 % | |
|---|---|---|---|
| Health Care and Social Assistance | 73,787 | 85,532 | 10.0% |
| Retail Trade | 72,263 | 74,675 | 9.8% |
| Administration, Support, Waste Management and Remediation | 49,062 | 48,296 | 6.7% | Construction | 37,032 | 38,372 | 5.0% | Transportation and Warehousing | 30,152 | 31,565 | 4.1% | Other Services (except Public) | 28,733 | 30,774 | 3.9% | Professional, Scientific, and Technical Services | 24,970 | 25,579 | 3.4% | Educational Services | 18,909 | 18,909 | 2.6% | Wholesale Trade | 17,752 | 17,462 | 2.4% | Finance and Insurance | 16,358 | 16,575 | 2.2% | Arts, Entertainment, and Recreation | 13,267 | 14,271 | 1.8% | Manufacturing | 14,211 | 13,645 | 1.9% | Real Estate and Rental and Leasing | 13,010 | 13,212 | 1.8% |
Source: Hawaiʻi Career Explorer based on Economic Modeling Specialists Intl (EMSI) data
In terms of growth, Health Care and Social Assistance sector is projected to increase employment by almost 16% over the next 10 years.
| Sector | Growth | Health Care and Social Assistance | 15.9% | Arts, Entertainment, and Recreation | 7.6% | Accommodation and Food Services | 7.4% | Other Services (except Public) | 7.1% | Transportation and Warehousing | 4.7% | Management of Companies and Enterprises | 4.5% | Information | 3.9% | Construction | 3.6% | Retail Trade | 3.3% | Utilities | 2.5% | Professional, Scientific, and Technical Services | 2.4% | Government | 2.3% | Real Estate and Rental and Leasing | 1.6% | Finance and Insurance | 1.3% | Educational Services | 0.0% | Administrative, Support, Waste Management and Remediation | -1.6% | Wholesale Trade | -1.6% | Manufacturing | -4.0% | Crop and Animal Production | -4.2% | Mining, Quarrying, and Oil/Gas Extraction | -22.1% |
|---|
Source: Hawaiʻi Career Explorer based on Economic Modeling Specialists Intl (EMSI) data
The Hawaiʻi Department of Labor and Industrial Relations publishes a list of currently-available “hot jobs” that are identified according to criteria of earnings capacity and educational requirements. In particular, “Hot jobs have highest total annual openings, positive jobs created annually, above average annual growth rate over 0.8%, and above average median annual wage over $42,480. Total annual openings include openings created by transfers and exits, new jobs created annually, annual growth rate, and base year employment are based on short-term employment forecasts from first quarter 2018 to first quarter 2020.” Excerpts from the latest report, from May 2019, depicting the “hot jobs” that require an Associate degree or higher, are shown in appendix 7.
In 2018, 6.9% of employed people in Hawaiʻi held more than one job, compared to 5.0% nationally. Hawaiʻi ranks tenth among the states for multiple job holders. xxv
A table at appendix 5 shows job counts and job growth broken out by the amount of education typically required for the top twenty job descriptions. Healthcare, education, and business dominate the list. A full analysis of all job descriptions can be found on the U.S. Department of Labor website. For Hawaiʻi, these are the most numerous projected jobs requiring a degree:
Doctoral or Professional Degree:
Prior to the pandemic, the job market in Hawaiʻi was very tight. One measure of the gap between occupational demand and the availability of qualified workers is to view the ratio of advertised openings to applicants for occupations. The table below shows the ratio for the top advertised occupations in the state in November 2019. xxvi
| Occupation | Job Openings |
Potential Candidates |
Candidates Per Job Opening |
|---|---|---|---|
| Registered Nurses | 798 | 149 | 0.19 |
| Retail Salespersons | 575 | 371 | 0.65 |
| Customer Service Representatives | 418 | 721 | 1.72 |
| Security Guards | 293 | 238 | 0.81 |
| Cashiers | 240 | 441 | 1.84 |
| Food Preparation and Serving Workers, Including Fast Food | 237 | 99 | 0.42 |
| Physicians and Surgeons, All Other | 213 | 16 | 0.08 |
| First-Line Supervisor of Food Preparation and Serving Workers | 199 | 59 | 0.3 |
| First-Line Supervisors of Retail Sales Workers | 198 | 183 | 0.92 |
| Counter Attendants, Cafeteria, Food Concession, and Coffee Shop | 182 | 60 | 0.33 |
Source: Hawaiʻi Unified State Plan in Federal Review – Workforce Investment Opportunity Act
With rapid changes in technology affecting key growth sectors, an emerging imperative is to upgrade the educational attainment of Hawaiʻi’s population to better prepare workers for the jobs of the future. One path toward this objective is the development of more online degree completion programs designed to attract working adults. UH Mānoa increased the number of online degree completion programs over the last five years with the addition of online bachelor’s degrees in Economics, Sociology, Psychology, and Women’s Studies. To better address the scheduling needs of working adults, the campus has joined the UH System pilot of 5-week terms for online degree programs. An early example is the professionally accredited Bachelor of Social Work degree, which is now being offered online through the innovative 5- week terms, with its first cohort beginning in Fall 2019.
The characteristics of the Hawaiʻi economy differ substantially from most states. One key defining characteristic is the dominance of the visitor industry, which features a large number of service sector jobs. The lack of a significant manufacturing sector, the large federal and military presence, the dominance of small businesses and other unique characteristics provide a unique environment for economic planning.
Federal Government spending is a significant contributor to Hawaiʻi’s economy (second only to tourism) and, on a per capita basis, Federal spending in Hawaiʻi far exceeds the national average. xxvii Defense spending accounted for approximately 7.3% of Hawaiʻi’s GDP in 2017. Future Federal commitments to Hawaiʻi are potentially related to strategic and political decisions regarding projects such as the expansion of military bases, future development of the Pearl Harbor Naval Shipyard, deployment of the proposed “Space Force,” and other initiatives.
| Federal Per Capita $ | U.S. Average | Hawaiʻi | Hawaiʻi Index to National |
|---|---|---|---|
| Contracts | $834 | $1,261 | 151 |
| Salaries/Wages | $414 | $3,292 | 795 |
| Retirement Benefits | $174 | $367 | 210 |
| Non-Retirement Benefits | $44 | $83 | 188 |
| Grants | $18 | $89 | 494 |
Source: Hawaiʻi State Data Book 2018
Tourism is Hawaiʻi’s largest industry accounting for about 17% of the state’s GDP and approximately 230,000 jobs in 2019. Tourism has grown from modest beginnings catering to the very rich in the “boat days” era, through the development of mass tourism attracting the middle class with arrival of statehood and jet travel, and spread through the Neighbor Islands with the development of master planned resorts in the 1990s.
The United Nations World Tourism Organization (UNWTO) reported 1.4 billion international visitor arrivals in 2018, up 5% from the previous year. That, in turn, generated an estimated $1.7 trillion in tourism exports and was the ninth consecutive year of tourism growth. The Asia and Pacific Region was the fastest growing geographic area, with 7.3% growth in arrivals driven by expanding economies, a growing middle class, urbanization and significant investment in aircraft and facilities. Prior to the coronavirus pandemic, the UNWTO global forecast estimated global growth in arrivals averaging 3.3% annually through 2030, with a projected 1.8 billion international arrivals by that year. According to the World Travel and Tourism Council (WTTC), the sector accounts for more than 10% of global GDP and jobs.
Tourism is, however, a fragile industry easily impacted by events as has been the case with the 9/11 terrorist attacks, the SARS virus in 2003, the 2008 financial crisis and, currently, the pandemic crisis, which is developing as the most dramatic disruption of the industry since World War II. In March 2020, UNWTO issued a statement suggesting that international tourism would fall by 20% to 30% in 2020 due to the impact of the pandemic and the associated travel restrictions. That would translate to a loss of between $300 billion and $450 billion in global receipts. xxviii
Even with dramatic events, like the 9/11 attacks, global tourism ultimately recovered and regained its growth momentum, but the short-to-medium term shocks can be significant.
Tourism in Hawaiʻi is a mature industry and, despite the growing number of visitor arrivals in the years before COVID-19, its share of the state’s GDP was about 17% in 2019 compared with 25% two decades ago. The underlying economic issue for Hawaiʻi tourism is stagnant or declining real visitor spending driven by decreases in per-person-per-day visitor spending. Measured in 2019 dollars, inflation adjusted visitor spending is about equal to spending levels in the late 1980s. In 2018, the industry generated 2.1 billion in tax revenues and supported 217K jobs.
| Year | Real Annual Visitor $ | Visitor Arrivals |
|---|---|---|
| 2010 | $13,147.9 | 6,916.89 |
| 2011 | $13,899.3 | 7,174.40 |
| 2012 | $16,019.4 | 7,867.14 |
| 2013 | $15,915.9 | 8,003.47 |
| 2014 | $16,188.1 | 8,196.34 |
| 2015 | $16,168.4 | 8,563.02 |
| 2016 | $16,721.5 | 8,821.80 |
| 2017 | $17,207.2 | 9,277.61 |
| 2018 | $17,748.4 | 9,761.45 |
| 2019 | $17,702.2 | 10,282.16 |
Spending in $2019 Dollars
Source: University of Hawaiʻi Economic Research Office (UHERO) data portal
Resident frustration with the growth of tourism volume and its negative impacts has resulted in an erosion of resident attitudes and support for tourism. In a Hawaiʻi Tourism Authority survey of resident attitudes, the percentage of people who believe that there are “more benefits than problems” associated with tourism has declined from a high of 80% in 2010 to 58% in 2019. The recently published (2020) Hawaiʻi Tourism Strategic plan calls for rebalancing its priorities to place more emphasis on “tourism management” relative to tourism promotion.
Dramatic changes in tourism both globally and in Hawaiʻi offer the University an opportunity to reorient its travel and hospitality programs to take a leadership role in emerging trends.
| Company size | Hawaiʻi Employment % |
Hawaiʻi Payroll % |
Emp. Index to National |
Payroll Index to National |
|---|---|---|---|---|
| 1 to 4 employees | 5.6% | 6.6% | 100.4 | 120.7 |
| 5 to 9 employees | 8.0% | 7.1% | 107.0 | 121.8 |
| 10 to 19 employees | 11.0% | 9.7% | 105.1 | 116.0 |
| 20 to 49 employees | 17.3% | 15.7% | 103.3 | 113.5 |
| 50 to 99 employees | 14.8% | 13.5% | 115.0 | 117.3 |
| 100 to 249 employees | 15.3% | 15.5% | 96.1 | 98.6 |
| 250 to 499 employees | 9.3% | 9.7% | 99.1 | 90.7 |
| 500 to 999 employees | 8.0% | 8.6% | 116.6 | 97.8 |
| 1,000 employees or more | 10.7% | 13.8% | 72.9 | 69.0 |
Source: U.S. Census (based on NAICS codes)
With the demise of Hawaiʻi’s last sugar plantation in 2016, large scale agriculture is no longer a dominant part of Hawaiʻi’s economy. With significant acreage across the state zoned for agricultural operations, diversified agriculture has been a focus for development. xxx However, at present, these diversified agricultural crops are a tiny portion of the GDP.
| Crop | 2017 Value of crop sales ($000) |
|---|---|
| Vegetables, ginger root, and melon | $46,620 |
| Coffee | $43,774 |
| Macadamia nuts (in shell) | $53,900 |
| Taro | $2,580 |
| Seed crops | $120,800 |
| Flowers and nursery products | $77,550 |
Data for pineapple not disclosed. Source: Hawaiʻi State Data Book 2018
A decade ago, the largest growing activity in Hawaiʻi agriculture was seed corn research, which represented about one-third of the value of all crops grown in the state in 2008-09. From a peak of $242 million generated by the seed industry in 2012, estimated value fell to $120.8 million in 2017. The decline was due to strong community opposition to genetic modification of food; the use of pesticides in cultivation; industry consolidations; new technologies; and competition from other warm weather growing areas. xxxi
Other large-scale crops considered for development include industrial hemp and breadfruit.
Smaller volume and “boutique” crops capitalize on Hawaiʻi’s global brand and include macadamia nuts, Kona coffee, anthuriums, protea, cacao, vanilla, noni, and lavender. Value added products include candies, cooking oils, bath products, jams and jellies, alcohol, cookies and confections, juices, and others. The Hawaiʻi Department of Agriculture supports these crops with a “Grown in Hawaiʻi” branding program. The University of Hawaiʻi supports local agriculture through its culinary arts programs and the Food Innovation Center at Maui College. The tropical agriculture and agroecology programs at UH Mānoa and Hilo, and the culinary and agricultural programs at the community colleges support agriculture in Hawaiʻi both through agricultural research and practices and food science.
With land, shipping, labor, and other costs that are higher than elsewhere for agricultural producers, Hawaiʻi has not been able to compete with commodity crops on the world markets. Hawaiʻi crops that can successfully compete on the world market are those that are high value per cubic meter, unique to Hawaiʻi or can be effectively branded as Hawaiian products. The University of Hawaiʻi can contribute to the successful market development of diversified agricultural products. As an example, CTAHR (the UH College of Tropical Agriculture and Human Relations) has hybridized and propagated varieties of anthuriums since the 1930s. xxxii Anthuriums are high value, low-cubic-weight and volume products that are now associated with Hawaiʻi. With the development of unique (and patent-able) varieties, Hawaiʻi can effectively compete with other anthurium growing regions such as the Netherlands and the Caribbean.
Other crops that fit the profile (high value, low cubic-weight, and brandable) include coffee (Kona and other specialty varieties), cacao, vanilla, lavender, and other floriculture products (ginger, protea, orchids, and heliconia).
Although agriculture is very local, there does not appear to be a strong statewide vision or plan for strengthening the sector, something UH (especially with a strong academic “cluster”) may be positioned to undertake.
In Hawaiʻi’s economic planning, the state and each county have identified industries to target growth and development based on natural resources, geography, and other assets. The DBEDT Hawaiʻi’s Targeted and Emerging Industries 2018 Update Report identified 4 groups of targeted industries, according to the following criteria:
Transitioning
Base-Growth
Declining
Emerging
DBEDT’s key observations from the updated examination of the portfolio include:
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