The newly created House Select Committee on COVID-19 Economic and Financial Preparedness heard a grim assessment Thursday morning of the near-term prospects for the Hawaii economy, and was also warned that unemployment claims are already beginning to increase.
The University of Hawaii Economic Research Organization issued a report this week that predicted the novel coronavirus pandemic would cause visitor arrivals to decline by more than 7% this year, and more than 6,000 jobs in Hawaii will be wiped out before employment begins to bounce back.
By comparison, the Sept. 11, 2001, attacks caused visitor arrivals to decline by 9.3% in 2001, and the onset of the Great Recession caused a 10.4% decline in visitor arrivals in 2008.
But University of Hawaii professor of economics Carl Bonham said Thursday morning it is clear UHERO’s projections earlier this week were too optimistic.
“How long this goes on, really, no one knows. The uncertainty is just enormous,” Bonham told the committee. With stock markets tanking again Thursday, “it looks like job losses of 1.5%, it looks like a recession for Hawaii, it looks like a recession for the U.S.”
Committee members proposed a number of steps that would boost economic activity and protect workers, including pumping extra money into construction of public works projects, and extending unemployment benefits for workers who are laid off in the economic slump and cannot find new jobs.
Scott Murakami, director of the state Department of Labor and Industrial Relations, told the committee that first-time unemployment claims have been on the rise since the beginning of the month, although it is too soon to tell whether the claims are being triggered by reduced work hours or perhaps by layoffs.
“It does appear to be an inflection point for us,” said Murakami, who said his office is making plans to ramp up as if the coronavirus will affect the labor market in much the same way as the 9/11 attacks did when there was a dramatic reduction in flights to Hawaii. DLIR is seeking an extra $4.2 million to hire an additional 28 workers to handle the increased unemployment claims, he said.
Hawaiian Airlines President and CEO Peter Ingram told his fellow committee members that “even before the rapid expansion of COVID-19 cases in the U.S., over the past several days demand from the U.S. mainland — Hawaii’s largest source of visitors by far — has slowed.”
Hawaiian’s book-load factor in March is running 7% to 8% lower than a year ago “and losing ground by the day,” he said. “The notion from a month ago that U.S. visitors might pick up slack for lagging Asia demand is not a plausible reality.”
Hawaiian already has cut back on its flights serving Asia, and “we are currently evaluating the need to adjust our North American schedule to better match supply and demand in the near term,” Ingram said. Hawaiian now has 7,500 workers and is one of the state’s largest private employers.
“Amid this gloom, I do believe that demand will return as health care authorities across the planet are able to bring the spread of the virus under control and traveler fear is diminished. I have no basis to project how long this will take,” Ingram said.
House Speaker Scott Saiki opened the first meeting of the committee Thursday morning with praise for the response by Gov. David Ige’s administration to the coronavirus, but a warning that the state needs to brace for the economic impacts.
“The House of Representatives created this committee to recommend actions that can be taken by all sectors to secure Hawaii’s economy and financial viability,” Saiki said to an audience in a third-floor hearing room in the state Capitol. “We all know that maintaining public confidence during a time like this is essential for Hawaii’s recovery. This committee demonstrates that we are all in this together and that we will be prepared.”
Ige told the committee he wants to move ahead quickly with “shovel-ready” construction projects to boost the local building industry, and Saiki told reporters after the meeting lawmakers do plan to inject extra funding into public works projects to quickly create jobs.
But Saiki said he could not say how much money that might involve or how many projects are ready to build. He said public school repair and maintenance projects would be a likely target for the extra funding.
Chris Tatum, president and CEO of the Hawaii Tourism Authority, expressed concern for employees at smaller companies — including tipped employees — who might not have access to paid sick leave.
“How can we support them and encourage them not to come to work when they’re sick?” Tatum asked. “There has to be an option for them so they don’t have to come to work and they can still support their families.” Bonham suggested that issue might be best addressed by the federal government, perhaps through federal block grants.
Peter Ho, co-chairman of the committee and chairman, president and CEO of Bank of Hawaii, said there needs to be an investment in tourism promotion and marketing once the immediate threat from the coronavirus passes, and Saiki agreed with that proposal.
Ige said he is working with the four county mayors to coordinate how community gatherings will be handled — meaning whether large gatherings should be limited or canceled — and Saiki told reporters he plans to meet with Senate President Ron Kouchi to discuss whether the Legislature should find ways to limit the number of people who gather at the Capitol for hearings or other events.
Kouchi announced Thursday the Senate will adopt “social distancing” measures as recommended by the federal Centers for Disease Control and Prevention, including postponing presentations on the Senate floor honoring members of the community.
Upcoming events at the Capitol will be reviewed on a case-by-case basis to determine whether they should be postponed, and legislators and staff have been asked to avoid physical greetings such as handshakes and hugs. Many offices have posted signs on office doors asking for the public’s cooperation with these practices, according to Kouchi.
Committee hearings will remain open, but the public is being urged to submit written testimony electronically and watch select hearings online to avoid spreading the virus.
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