Hawaii’s Economic Recovery Is a Mixed Bag

August 18, 2020
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Author: Jay Denton

Hawaii’s labor market was one of the tightest in the country prior to COVID-19. From 2016 to 2019, the unemployment rate averaged a miniscule 2.7%, but all of that changed once the pandemic hit.

Hawaii's lack of tourism has negatively impacted hotels, bars, and restaurants.

The state’s unemployment rate ballooned to 23.8% in April before retreating to 14.4% in June. As with other major markets, some industries have been more resilient than others.

Hawaii unemployment

It is no surprise that the lack of tourism has weighed on certain types of businesses for the islands. As of June, employment for restaurants and bars was down 43.0% from February, roughly twice the U.S. average decline. Accommodations, which includes hotels and other types of lodging, was off approximately 60.0% in June from pre-pandemic levels, fairly in line with the national average.

Hawaii tourism will face challenges, even as the broader U.S. economy begins to rebound. California, a prime draw for domestic travel, has some of the highest unemployment rates in the country. Logistics of getting to the islands could pose challenges as well, with airlines and cruise companies determining future schedules in the face of rapidly declining revenues.

Still, there are bright spots for the Aloha State. Several industries remained within earshot, or ahead, of employment levels from the pre-pandemic period. Construction of buildings and specialty trades, such as electrical and plumbing, have held up well. The construction sector will likely need the broader economy to bounce back to keep that momentum, but for now it is healthy. Some other industries that have displayed resilience are finance and insurance, grocery stores, department stores, and general merchandise. Those industries were roughly +/- 2% from the pre-pandemic employment levels.

Interestingly, the nursing and residential care facilities sector has also stayed relatively intact from a labor market perspective, while the national benchmark has declined five months in a row. Local government for Hawaii has also held its own, while the U.S. totals have been impacted significantly.

Businesses focused on selling to, or supplying talent for, the latter set of industries are likely finding more success because of the continued demand for those jobs, despite the disruption caused by COVID-19.

For more about Hawaii's recovery, listen to ThinkWhy's interview with Hawaii Public Radio.

ThinkWhy continuously monitors and forecasts labor data at all levels, measuring impact to MSAs, industries, occupations, businesses and salaries across the U.S.