A federal holiday since 1894, Labor Day celebrates the American worker. This is also a day to celebrate Hawaii’s workers, and to assess conditions for employees in the islands.

Considering that Hawaii is emerging from the devastating effects of the COVID-19 pandemic and the all-but-complete economic shutdown it engendered, conditions aren’t that bad — but they’re not that good, either.

First, the encouraging news: Many, but not all, jobs have been restored that were lost during the pandemic, and many workers have re-entered the labor force. Because there are currently more jobs available than workers looking to fill them, employers are paying higher wages, though this applies largely to jobs at the lower end of the income scale. That is a bright spot for workers.

Jobs have continued to open up. The Department of Business, Economic Development & Tourism (DBEDT) reports that statewide, 26,050 civilian jobs were added in the first half of 2022 compared with the same period of 2021. The number of unemployed decreased by 16,850 over that period — a whopping 40.1%.

Hawaii’s earned income tax credit was made refundable this year, providing a small bonus to working families. And the minimum wage will rise to $12 in October, reaching $18 by 2028. In comparison to other states, Hawaii is union-friendly, with fewer roadblocks to organizing and a relatively high union membership. That provides a lift on wages and benefits that other employers must often match to be competitive.

Now, the caveats: Hawaii’s unemployment rate soared during the pandemic, and the state now has fewer jobs available per job-seeking worker than on the mainland: 1.5 per worker vs. 2 per worker nationwide, said University of Hawaii Economic Research Organization (UHERO) Executive Director Carl Bonham on the Star-Advertiser’s “Spotlight Hawaii” webcast.

In fact, there were more job openings per worker before the pandemic.

Inflation has outpaced wage increases for most of Hawaii’s workers, inflicting the equivalent of a 10% tax on workers, Bonham said.

The high cost of living and limited array of jobs in Hawaii has led to a steady exodus of younger workers, and the population is both aging and shrinking.

The shrinkage in Hawaii’s labor force doesn’t seem to be caused by a “great resignation,” though Bonham said fewer women and older workers have returned to the job market, and many Hawaii residents have been impacted by the effects of long COVID.

On a nationwide basis, most workers who left their jobs quit restaurant, bar and retail jobs, which are generally not paying the highest wages, to seek better opportunities. Bonham said Hawaii’s labor market would encourage similar behavior.

Remote working swept through Hawaii during the pandemic. An August 2021 DBEDT study showed that almost 40% of Hawaii’s employees worked remotely at some point during the COVID-19 pandemic, though numbers have dropped since then.

Betting that remote work is here to stay, DBEDT established a pilot Hawaii Remote Work Project to connect employers with employees. Remote work benefits the state if out-of-state employers send that pay to Hawaii residents. However, some observers warn that remote work also allows businesses to outsource jobs away from Hawaii.

Over the long term, it is incumbent on Hawaii — and a responsibility of the state’s leaders — to diversify its employment base, adding jobs that support resident workers and align with community needs. Bonham suggests that to be successful, these endeavors must be tied to Hawaii’s unique assets, including its central position in the Pacific.

Prospects include fields such as medicine, climate research and resilience, and international development — and educational programs can help.

Far more research and development on a statewide scale is needed before that diversification can be realized, Bonham cautions — and therefore, it’s imperative that our elected officials understand the urgency that this effort requires.