Economists anticipate Hawaii’s shrinking population will decline further due to coronavirus

Seven weeks ago, Emma Daily bid aloha to Hawaii, her lifelong home, in search of work on the mainland after jobs disappeared on Oahu amid COVID-19.

The recent University of Hawaii digital cinema graduate quickly found work in Los Angeles, and she’s part of an unprecedented wave of local residents expected to flee the state’s badly damaged economy.

UH economists recently projected in a report that the state will see a net population loss of 19,000 over the next two years, which means an even bigger number of resident departures since that figure also takes into account the many people expected to move to Hawaii from other states and countries.

Such an exodus also could be worse under an alternate and more pessimistic UH forecast for the state economy recovering from coronavirus impacts.

“We’re talking continued population loss for the next several years,” said Carl Bonham, executive director of the University of Hawaii Economic Research Organization. “It completely depends on job prospects.”

UHERO projects that the number of nonfarm jobs in Hawaii will fall by 90,800 this year to 565,300 from 656,100 last year, and that by 2023 the job count will still be short of last year’s level by 29,200.

Bonham said Hawaii’s population already was in decline since 2017, surpassing historical precedent.

In the three years through 2019, the state’s population of roughly 1.4 million people dropped by about 12,000 people, according to a U.S. Census Bureau estimate that factors births, deaths, in-migration and out-migration.

UHERO said this decline was driven in part by fewer people moving to Hawaii in addition to local residents leaving largely for California, Nevada, Texas and Washington.

“The mainland has become a more attractive place to live for many Hawaii residents, while Hawaii has become less attractive for potential mainland in-migrants,” UHERO researchers James Mak and Justin Tyndall said in an August blog post.

Economic impact

Since statehood in 1959, Hawaii’s population had never contracted for two consecutive years until 2017 and 2018.

UHERO expects a further drop of about 2,000 people this year, followed by 19,000 over the next two years and then stabilization in 2023.

An acceleration of the recent moderate downward trend is alarming because 70% of the economy is typically driven by consumer spending. With fewer people in the state, economic production gets constrained.

“Basically, we end up with a drag on the overall economy,” Bonham said.

Eugene Tian, state economist with the Department of Business, Economic Development and Tourism, expressed the same view two years ago when commenting on the 2017-18 population decline.

“There will definitely be less spending consumption, and that will reduce economic growth,” he said.

However, Tian and other economists also note there can be side benefits of population loss, including an easing of housing costs and a reduction in the unemployment rate because fewer people remain in the workforce.

In search of jobs

One harder-to-assess impact of population loss is the demographic of talent in the workforce.

Bonham, who commented on the UHERO study Monday during a state House Select Committee on COVID-19 Economic and Financial Preparedness, said data suggests that people who leave Hawaii tend to be more educated and higher skilled on average. But he also said he expects more lower-skilled workers to leave during this recession because so many job losses are in the service industry with ties to tourism.

“So what we’re expecting is that the people who are going to be leaving are the people who can’t find work,” Bonham said. “It’s not people in (information technology), it’s not people in the higher end of the job skills. It’s really people who are very much service oriented, and the rest of the country recovers in those areas faster than we do.”

For Daily, who was born and raised in Honolulu and graduated from Punahou School before earning her digital cinema degree, COVID-19 impacts on the film industry led her to leave.

Daily, 26, said she had worked as a production assistant on the TV shows “Hawaii Five-0” and “Magnum P.I.” as well as commercials and film projects while in school. When she graduated in August, she was doing work for an audio-visual technology company, freelance digital video projects and some TV and film work — all of which dried up with the coronavirus outbreak and nonessential business shutdown orders.

“Everything immediately stopped,” she said. “Everything production-wise for film in Hawaii evaporated.”

With some uncertainty over being able to collect unemployment as she spent down savings, Daily opted to move to L.A. and found work within a couple of weeks.

Daily also said she discovered how much more food $50 buys at Trader Joe’s on the mainland compared with Hawaii grocery stores.

Asked if she envisions moving back to Hawaii, she replied: “I honestly don’t know.”