Our Inconvenient Reality:
Hawai‘i’s Pending Workforce Dilemma
Michael Rota

[READER NOTE:  To view all Tables and Figures referenced in the text below, we encourage readers to download the PDF version of this article.]


At the start of a new year and the beginning of a new decade, it is a convenient time to assess where we have been and look ahead to where our current trajectory may be taking our community.  A few years ago I had the opportunity to head a state team that looked at a number of critical issues facing Hawai‘i’s workforce.  The National Governor’s Association provided technical assistance to our study team. This series draws upon data sources developed as part of that project.

Although we are all aware of the consequences that the current world-wide economic recession has had on jobs and investment — Hawai‘i’s unemployment rate has jumped from about 2.5% in fall 2007 to more than 7% in fall 2009 — I believe that few in our community are informed about the structural problems in our state that, if not addressed, will result in a shortage of qualified workers over the next decade and beyond.  To paraphrase Al Gore who warned of the perils of changes in the climate in his 2006 movie and book titled An Inconvenient Truth, I have chosen to name this series of articles Our Inconvenient Reality, since I believe that if we maintain our current course, the potential for harm to Hawai‘i’s economic future may be as great as that caused by climate change.

Our Recent Reality

Following statehood in 1959, the Hawai‘i economy saw nearly steady growth in both jobs and wages as the growth in construction that accompanied the growth in the visitor industry masked a major shift in types of jobs being developed in Hawai‘i from agriculture, federal government, and manufacturing, to services and retail sales.  This shift can be seen it Table 1 that compares the types of jobs by industry between 1962 and 2006.

The shift in the types of industries that compose our economy also effect the types of jobs and the education and training necessary to fill those jobs. A fundamental issue facing any economy, especially one located at least 2,500 miles from the mainland U.S., is whether it has access to a qualified workforce. At any point in time, a qualified workforce is comprised of a changing mix of new entrants who are filling jobs created due to the growth in the economy, or filling jobs vacancies created when individuals leave the workforce.  New entrants to the workforce come from either the resident population – typically from among young people who move from education to work, or from new arrivals to the community – typically through immigration from a foreign destination, or migration from another part of the state or nation.

This process is depicted in Figure 1.

According to the State Data Book, while the state Civilian Workforce grew from 216,195 in 1960 to 573,795 in 2000, an increase of 165%, the population of the state aged 16 and older grew only 136% to 950,055.  Interestingly, the number of individuals not in the workforce grew 142% during this same period, an indication of an aging population. 

One of the realities facing Hawai‘i is that the growth in the size of the Civilian Workforce has exceeded the growth in the civilian population, probably since 1852 with the importation of contract workers from China.  This process continued well into the twentieth Century with immigrant workers brought to Hawai‘i from Japan and the Philippines.  It appears, however, that this process is no longer a sustainable model for meeting our changing employment demand. Changing economic and demographic factors will cause us to make fundamental changes in our workforce preparation system if we are to be successful.  

Economic Factors

The change in the mix of jobs that resulted from the evolving mix of industries detailed in Table 1 has resulted in a dramatic decline in our Per Capita Personal Income relative to the rest of the nation.  Between 1960 and 1970 growth in living-wage construction jobs resulting from the dramatic growth in the visitor industry drove our Per Capita Personal Income to 125% of the national average as shown in Figure 2 below.

Unfortunately, as the construction boom went into decline, so did our Per Capita Personal Income relative to the rest of the country.  Between 1970 and 2000 we saw a decline from 125% to 95% of the national average. However, when our cost of living (estimated as 20% above the national average) is taken into consideration, we have a real purchasing power that is significantly below the national average.

This decline in purchasing power, coupled with a run-up in the cost of housing is detailed in Figure 3 (below).

While our current recession has resulted in a decline in the cost of housing, it has also resulted in a reduction in employment, hours worked, and annual incomes, and has also resulted in an increase in home foreclosures and a decline in home sales since the date of this figure.  Thus it is likely that the gap in home affordability will continue for the foreseeable future.  

Demographic Factors

While our long practice of meeting our workforce needs through immigration and migration, the data in Figure 4 (below) indicates it is no longer a sustainable mode for maintaining a high quality workforce.  While we can attract young people into the state, by age 30 we are a net exporter of talent across nearly all levels of education.

It is very likely that the inability of people to afford to buy into the housing market is a major contributor to this exodus. This emigration, as well as the fact that nearly 1,000 eighteen year olds leave the state each year for further education has adverse consequences on our ability to field a quality workforce in the future.

When these numbers are factored into population projections, Figure 5 (below), there is a projected decline in actual number of individuals aged 35 to 54 – the most productive part of our workforce, and a significant increase in the number of people aged 65 and older – many who will not likely be participants in our workforce.

In Summary

Major shifts in the world and U.S. economies have had a substantial impact in Hawai‘i.  These shifts have had a dramatic affect on the type of jobs, the level of personal income, and the quality of life. We have developed a service economy that has a significant number of jobs that are typically filled by first generation immigrants, but we no longer have the low cost housing and health care infrastructure once provided by the plantations to support that workforce.

Ironically, despite our current downturn, we still have jobs that are difficult to fill on a long-term basis, but we can no longer import our way out of our current and future workforce shortages.

In the next part of this series, I will talk about Our Pending Worker Supply Gap.

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Michael T. Rota became chancellor of Honolulu Community College in July, 2009.  He has more than 40 years of service in public education in Hawai‘i.  Prior to heading the Honolulu campus, he served as associate vice president for academic affairs for the University of Hawai‘i Community Colleges, where he was responsible for academic program planning, evaluation and assessment; course and program articulation; regional accreditation; federal higher education and workforce development issues, and collaboration with external agencies.  Rota has represented the UH System on the State Workforce Development Council since its inception in 1997 and is a member of the O‘ahu Workforce Investment Board. He led the state initiative on adult workforce development, one of eight statewide projects funded by the National Governors Association Policy Academy.