Leaving Home is an Economic Indicator
Rory Flynn

We read a lot these days about monthly unemployment figures, the tourism slump, stagnant housing sales, bankruptcy filings, foreclosures, the pending layoffs of state workers, and other grim indicators of Hawaii’s current recession.  Far less is reported, however, about perhaps the most telling indicator of economic duress – people leaving Hawaii for good.

It is an elusive subject.  When people in huge numbers migrate between states, the demographic event itself is nearly invisible. People do not leave en masse, but one by one, or as couples with children in tow. At an airport, departing family members or friends look no different than other people. Their departures may elicit extra hugs and tears, but the emigrants in transit do not appear to be refugees.  No survey forms document their reasons for pulling up stakes and leaving Hawaii. Instead, we have anecdotal evidence and, eventually, the census to tell us what happened.  

During the decade of the 1990s, the census found that 118,201 more people left Hawaii to reside in the mainland U.S. than all the people who migrated to Hawaii from other states. The exodus of islanders to the mainland began as a trickle in 1990 and gained momentum as the decade progressed.  From 1995 to 2000, out-migrants totaled 201,293, a number greater than the population of the Big Island today. People leaving Hawaii outnumbered mainland immigrants (125,160) by 76,133.  A Census Bureau report released in 2003 stated that from 1995-2000, “among all states, the highest net out-migration rate was in Hawaii.”/1        

The calculation of “net domestic migration” (in-migration +/- out-migration) by demographers tells an important economic – and human – story.  During the early 90s, the Gulf War triggered a decline in visitor arrivals. Tourism rebounded within a year, but daily visitor spending remained flat for most of the decade.  The 90s also signaled the end of the Japanese “bubble.”  The go-go Nikkei stock market peaked in 1989 when interest rates were raised to stem the runaway escalation of Tokyo real estate values. In turn, Japanese investment in Hawaii ground to a halt.

In September 1992, U.S. News and World Report ranked Hawaii’s economy 51st in the nation among the 50 states and the District of Columbia. That dismal grade persisted throughout the 1990s. Bank of Hawaii economist Paul Brewbaker told state legislators in 1998 that “Hawaii’s economy will experience a 1998 indistinguishable from recent years: no growth, a mixed pattern of gains and losses across industries and another stagnant year for state government revenues.”/2 In 2001, a U.S. Commerce Department report said Hawaii registered the worst economic performance in the nation from 1992-1999.  During this period, while the national economy was growing at 4% annually, Hawaii’s economy declined on average by 0.3%.  The gross state product dropped from $39.1 billion to $38 billion. As the economy contracted, the migration of island people to the mainland swelled. Net domestic migration registered -2,033 in 1990-91 and mushroomed to -11,010 in 1992-93.  By 1998-99, the exodus turned into a stampede. That year, 20,112 more people left the state than arrived to establish residency.  In 1999, for the first time in memory, the state’s total population actually declined.

The pace of out-migration lessened after 2000 as the economy improved.  In 2004-05, departing residents outnumbered arrivals by only 1,058.  However, the exodus resumed two years later. In 2006-07, net migration was -11,849.  It dropped again the following year on the eve of the subprime fiasco that triggered the onset of the current recession in December 2007.  What is the flight of local people now?  Updated census figures will soon tell us. But past history is a guide. When Hawaii’s economy goes south, people fly east.

In fairness, not all departures from Hawaii result from economic hardship.  Many local students leave to attend colleges on the mainland.  Seniors are attracted to more affordable retirement meccas like Las Vegas.  Some who take flight are not native-born at all, but mainlanders who, after sampling life in Hawaii, return to their homes of origin. A transient military population adds to the count of mainland relocations, as Robert Schmitt, dean emeritus of state statistics, frequently pointed out.  But the correlation between the health of Hawaii’s economy and population loss is undeniable.  A recent state report that examined population projections concluded: “Domestic migration is strongly influenced by economic conditions in Hawaii, especially, difference[s] in economic conditions between Hawaii and the Mainland U.S.”/3

The Next Five Years

If past census reports are harbingers of what’s to come, can we expect another wave of population loss rivaling the exodus of the late 1990s?  Consider: Hawaii’s net domestic migration from 1985-1990 was -20,256. That was the result of 187,209 people leaving Hawaii, as compared to 166,953 incoming residents./4  The stunning net migration surge of 1995-2000 saw the departure of 201,293 Hawaii residents.  What will the next five-year increment of population loss total?  At present, we cannot say.  With unemployment in California above 12%, the grass may not look so green to islanders contemplating relocation to the West Coast.  But if another wave of population loss does occur, does it belong at the center of Hawaii’s political discussion?     

Population loss is a sensitive social issue because it is so ripe for populist or racial exploitation, pitting native-born against newcomers, kamaaina against malihini. Moreover, the sheer numbers of departing residents do not tell the whole story.  For many, leaving home is a consequence of educational pursuit, or falling in love, or wanderlust. Americans are a notoriously mobile people and the national narrative is an ongoing saga of population movement. From the 1960’s to the 80’s, the great American population shift was to the Sunbelt states. Nowadays, it is to the American South.  That said, there is a special poignancy attached to the developing diaspora of island people. Staying in touch with loved ones involves expensive travel. We shake our heads with wonder tinged with sadness as each new photo of “Signs of Hawaiian Life in the Universe” appears in the Honolulu Star-Bulletin.  There is a wrenching sense that lack of opportunity is driving the dispersal of Hawaii’s people.  

Don Pollock, a professor of communications at La Verne University in Los Angeles, left Hawaii in 1983, after earning his M.S.W. at the University of Hawaii and working for the Department of Health for four years.

“I left Hawaii to follow my passion,” he said.  His dream was a better paying career in film and TV production, coupled with an affordable housing market to raise a family.  He found it in Los Angeles, where he enrolled in USC’s film school and subsequently won awards from The American Film Institute, Alliance for Community Media, and the Broadcast Education Association. His daughter, now in college, hopes to be a sports broadcaster.

Pollock observes a vibrant Hawaiian subculture in Los Angeles.  He keeps abreast of Hawaii-fare restaurant openings, hula halau performances, and canoe club events.  At La Verne University, a year-end luau is a popular event. A two-day hoolaulea in San Dimas, he says, draws thousands of people, including island folks wearing t-shirts that say “I am not a Mexican.”

Pollock’s aloha for Hawaii runs deep. In 1997, he returned to shoot a documentary about agriculture on the Big Island after the Hamakua and Kau sugar plantations closed.  He returned again in 2008 to photograph the rebuilding of the Kohala Ditch.   

Would he return to Hawaii permanently?  “In a heartbeat,” Pollock said, before he demurred on second thought. He remains wary of Hawaii’s high cost-of-living.  That dilemma prevents many of his Hawaii-born students at La Verne University from returning home after graduation. Pollock calls it Hawaii’s “double-edged sword of low-paying jobs and high housing costs.”

Jim Tollefson, CEO of the Chamber of Commerce of Honolulu, tells a story that mirrors Pollock’s assessment.  He witnessed a survey of nine Hawaii high school students who were asked where they planned to be in ten years.  Each student said they would be somewhere other than Hawaii.  

“That's what I'm talking about,” Tollefson said. “We need to create an economic environment with a job base that will provide opportunities for the next generation.”/5

At present, prospects for a thriving job base for the next generation appear dim.  Hawaii’s 7.2% unemployment rate (September, 2009) looks a lot better than the national rate of 9.8%.  However, only four years ago, Hawaii’s unemployment rate — 2.8% in 2005 — was the lowest in the nation./6   Since December 2007, some 17,700 jobs have been lost in Hawaii./7

Most economic analysts now predict that U.S. unemployment will top 10% later this year and remain in double digits throughout much of 2010.    Unemployment in Hawaii likely will rise,
too, if Governor Lingle lays off state workers in lieu of pay cuts and/or a furlough plan.

In fact, Hawaii’s unemployment picture is worse than is commonly reported. The official rate of unemployment is the “U3” percentage reported by the Bureau of Labor Statistics.  In July 2009, the U3 percentages for Hawaii were 7.3% statewide, 6.1% on Oahu, 10.4% on the Big Island, 9.8% on Kauai, 8.9% on Maui, 16.3% on Molokai, and 10.1% on Lanai.  A broader rating of unemployment called U6, however, counts all laid-off workers who have settled for part-time work or who have given up the job hunt altogether. In August, the U6 “underemployment” rate for the nation stood at 16.8%.  For the third quarter of 2008 through the second quarter of 2009, the U6 rate for Hawaii was 13.3%./8  

Jurgen Brauer, a professor of economics at Augusta State University, advocates rapt attention to the U6 rate.  “To me,” Brauer wrote, “U6 is a critically important number to gauge the severity of the economic downturn in the United States.” In February 2009, Brauer points out, the media reported only the 13.7 million “official” unemployed, not the U6 count of 24.7 million people out of work or working part-time with commensurate cuts in take-home pay, health care and retirement benefits.  “To say it provocatively,” Professor Brauer concluded, “the headline statistics are hiding nearly half of the unemployment and underemployment problem in the country.”/9

What, then, are Hawaii’s prospects for lowering unemployment? At a recent First Hawaiian Bank Maui Economic Outlook Forum, Leroy Laney predicted a “jobless recovery” with an
“L-shaped curve” — a quick drop followed by a slow, flat rebound. Ever hopeful, Laney told his audience that we have already gotten through the quick-drop portion.  

Fine.  But, if Laney is right and what lies ahead is a prolonged jobless recovery, past history suggests that we can expect more native population loss — a replay of the last five years of the 1990s.  

What to do?

Sticky vs. Magnetic

We can first wrap our heads around the problem.  That means first admitting we have a problem.  The title of this missive is intentional; we have to decide that out-migration is an economic indicator. Then we’ll have a benchmark to gauge our progress, or lack of it.  That sounds geeky and data-driven, but it’s important.  Scour any roster of economic indicators issued by Hawaii banks or DBEDT: You’ll find visitor arrivals and gross state product, papaya exports, and gobs of other statistics. But you won’t find “people leaving home.”  

Next, we have to decide that we like ourselves.  Not in any vainglorious way, and certainly not exclusively, but enough so that we make a point of keeping familiar faces familiar.  The Irish did it in the last two decades of the last century.  They raised their educational standards and performance, tackled alcoholism as a bad national habit, built the fastest growing economy in the European Union, stopped killing themselves, and gave the world U2 (the band, not the unemployment rate). With offers of citizenship, they even invited expatriate Irish writers and adventurous capitalists to join in the national revival.

How does a society proceed to foster a sustainable population?  There is a nifty paradigm for thinking about this question provided by the Pew Research Center, the folks who make a study of nearly everything. Pew issued a report in December 2008 titled “American Mobility: Who Moves? Who Stays Put? Where’s Home?”   

The Pew research team found Americans moving about in remarkable numbers.  Most of the inter-state migrations headed south (see map below).

The Pew study found that some states were “sticky” and retained people born there. Other states were “magnetic” and attracted migrants from other states.  Not surprisingly, the nation’s most “magnetic” state was Nevada; fully 86% of its current adult residents were born in another state. The “stickiest” state was Texas; 75.8% of the people born in the Lone Star state still live there.     

Hawaii ranked 26th among the 50 states for “stickiness,” with 57.3% of its population 18 years and older still living where they were born. The 2000 Census reported a similar “sticky” population count.  Of the total population, the Census said 57% were born in Hawaii, 23% were born in another state, 18% were foreign-born, and 2% were native but born outside the U.S.  

The “KS 2000 Census” of Native Hawaiians shown on the Kau Inoa website reveals a similar breakdown of population. Of the total Native Hawaiian population of 401,136, 239,632 (59.7%) lived in Hawaii and 161,504 (40.3%) resided in the continental United States.  

In the Pew study, Hawaii fell in the bottom tier of states (31st) for magnetism; 36% of island residents were born in other states. Again, the percentage of new residents coming to Hawaii is matched by in-migration occurring in many other states. It is part and parcel of the astonishing social mobility that distinguishes the American experience.

One conclusion that can be drawn from these numbers is that, expressed in percentages, the interstate movement of people from Hawaii is not at all dissimilar from that of other Americans moving about the country.  The difference is a matter of ethnic identity, culture and separate-ness. On the mainland, most relocated Americans integrate seamlessly into newly adopted communities. They are not seen organizing hoolauleas and sporting t-shirts insisting that they are not Mexicans.  Nor are they experiencing the kind of traumatic displacement that occurred in the late 90s when Hawaii led the nation in negative net domestic migration.

Should Hawaii make a special effort to become a “stickier” state and retain more of its
island-born citizens?  For the sake of argument, let’s say yes.

What then?

Aspirational vs. Ephemeral

Joel Kotkin is one of those pesky social analysts that invite us to encounter reality, whether or not it agrees with our worldview.  His book, The City: A Global History (2005) proposed that two very different types of cities and communities are found in the U.S. today. One he calls aspirational, the other ephemeral.

The classic (and successful) city, according to Kotkin, is aspirational.  Aspirational cities, he says, are invariably safe, sacred and busy.  They welcome families, the middle-class, merchants, industry, and religious faiths.  In short, they are places where people aspire to a better life. Kotkin today finds aspirational cities attracting new business and population growth in odd places like Fargo, North Dakota; Naples, Florida; and Boise, Idaho.

In contrast, the ephemeral city is glamorous, politically correct, a nexus for the arts, trendy restaurants and night life, and champions the New Urbanism.  Ephemeral cities are also expensive. They are more suited to singles than families. America’s premier ephemeral city may be San Francisco.  It is priced out of sight, has a stylish Green mayor, and is one of the most childless cities in America.  

Arguably, Hawaii is tilting toward the “ephemeral” model, as more second home buyers, empty nesters and green ideologues challenge various developments and initiatives (SuperFerry) that offend their sensibilities. The new ephemeral community has decidedly mixed feelings about tourism, although its members operate bed-and-breakfast establishments in many rural enclaves on the Neighbor Islands.

So we have come to a paradoxical moment.  The ethos of sustainability is all the rage, but we are sowing regulatory and litigious minefields for private enterprise to such a degree that we cannot furnish jobs to sustain our population.

It’s time to revisit the merits of an aspirational society, particularly if we want to stem the flight of local-born people.  This does not mean that we gut environmental and land use laws.  It means we make them workable. It means that we raise teaching standards and student performance in schools, streamline permitting, allow mixed-density developments, settle disputes amicably, and conduct more civil and gifted conversations.    

Forty years ago, in his State of the State speech, Governor John Burns cautioned against a “subtle inferiority of spirit” that pervaded Hawaii.  He roundly declared it “totally unwarranted” and a “social and psychological handicap in life.”  That numbing uncertainty about our abilities to direct our lives – and the direction of the state – still persists.  But there are promising signs that Hawaii’s people want to wrest control of their future.  The eco/social network of Kanu Hawaii is one example. The dogged efforts of the Hawaii Science & Technology Council is another.  

The challenge now is to call on newcomers to fully join a society, not to displace it.  For state and county leaders, it is a fight to keep Hawaii a viable home for its people and to rethink what opportunity means.  We are not fighting lunas nowadays, we are fighting ourselves. Once it made sense to eye the oligarchs of the Big Five warily.  However, those companies do not hold sway over Hawaii today. We do. We just elected a black/hapa (take your pick) keiki o ka aina President of the United States. Race is not the present-day determinant of opportunity, or its
nemesis. We may not be color-blind or without prejudice, but we have made great strides.

The Root of the Matter

The latest jobs report, along with the predictions of Alan Greenspan and others, points to a 10% national unemployment rate in 2010.  Already, 14 states show unemployment in double digits. With more losses in September, total job losses since the recession began in December 2007 topped eight million – or 5.8% of all jobs.  That percentage exceeds every decline since the end of WWII, when military production largely halted.  In earlier recessions, lost jobs were recovered within about a year.  Since 1991, however, recoveries have taken much longer (see table below).

Elsewhere in this inaugural issue of The Wave, William Bonvillian, an astute student of American history, points out that the days of the old cyclical recession are over.  

“This recession,” he says, “will be structural, like the last two. Whole sectors of the economy will disappear.  The last two landed hardest on manufacturing, the most vulnerable sector to low wage competition from abroad.  This one, led by the financial sector, has reached both manufacturing and services.  The lesson of the last two recessions was that we had to grow our way out of them.”

How will we grow out of the long slog we’re in now? We cannot stand still.  We either create new jobs or say our goodbyes at airports. The American continent certainly will accept us, but with each departure, Hawaii Nei seems less like home.  We need a game plan to stop the exodus.

Perhaps a story from our past points to the course and character needed today.  

In December 1940, during the darkest days of the Battle of Britain, President Roosevelt dispatched his trusted aide Harry Hopkins to meet with Prime Minister Winston Churchill.  Hopkins was an odd choice for a wartime emissary.  The son of an Indiana harrier and a social worker by training, Hopkins was best known as the architect of New Deal programs.  Arriving in London in January 1941, Hopkins appeared pale, gaunt and disheveled.  Quietly, he was fighting a losing battle with stomach cancer.  He looked like “an ill-fed horse at the end of a hard day,” one friend said.   

In their first meeting at 10 Downing Street, Churchill was unsure what to make of Hopkins.  Hopkins had no military background; he seemed ill-suited to assess Britain’s wartime situation.  To break the ice, the prime minister decided to regale Hopkins with stories about social progress.  Churchill recited statistics about indoor plumbing, electricity, and programs for pensioners and cottagers. Hopkins, growing impatient, interrupted his host.  “Mr. Churchill,” he said, “I don’t give a damn about your cottagers.  I’ve come here to find out how we can help you beat this fellow Hitler.” Churchill rose and said, “Mr. Hopkins, come with me.”  The two men departed to the prime minister’s study for the first of many long, productive chats.  

Hopkins’ trip, originally scheduled for ten days, lasted six weeks.  He toured factories in Scotland and beach defenses in Kent.  He huddled again with Churchill at Chequers.  He fast became a convert to the British cause.  At a dinner party on the eve of his departure to Washington, Hopkins proposed a toast. “I suppose you wish to know what I am going to say to President Roosevelt on my return,” he began.  “Well, I am going to quote to you one verse from the Book of Books … Whither thou goest, I will go and where thou lodgest I will lodge, thy people shall be my people, and thy God my God.”  Hopkins added, “Even to the end.”  Churchill wept.

Thus began, as they say, a beautiful friendship.  It cemented the Atlantic alliance, launched the Lend Lease program of aid to Britain, and earned Hopkins an honorary title.  Churchill, ever impressed by Hopkins’ ability to focus on the issue at hand, dubbed him “Lord Root of the Matter.”  

In Hawaii today, we sorely need leadership that gets to the root of the matter.  As we face another year of worsening unemployment, we need to focus squarely on private enterprise, public education and economic opportunity. With jobs, we stop the exodus.  Mindful of the flight of people leaving Hawaii, we also might sing again the old verses of fidelity, as a very pragmatic public servant did so gracefully years ago, to assure the people who came before us, and their children, that we will not abandon them.   

Rory Flynn is the communications director of SunFuels Hawaii on the Big Island.  A 31-year Hawaii resident, he previously worked for the Department of Veterans Affairs Vet Center program in Honolulu and the Legislative  Auditor’s Office of the Hawaii County Council.

___________

1/ Domestic Migration for Regions, Divisions and States: 1995 to 2000, U.S. Census Bureau Special Report (August 2003)

2/  Testimony of Paul H. Brewbaker before informational briefings of the House of Representatives Committee  on Finance (January 2, 1998) and the Senate Committee on Ways and Means (January 5, 1998)

3/ Population and Economic Projections for the State of Hawaii to 2035, State of Hawaii Department of Business, Economic Development & Tourism (January, 2008)

4/ Immigrants, Outmigrants, and Net Migration Between 1985 and 1990, Population Division, U.S. Bureau of the Census (October, 1995)

5/ “Isle regulations pose hurdles to do business,” Honolulu Advertiser (8/16/2009)

6/ “State and Regional Unemployment, 2005 Annual Aver-ages,” News Release, U.S. Department of Labor, DL 06-362

7/ Regional and State Employment and Unemployment Summary, U.S. Bureau of Labor Statistics (September, 2009)

8/ Alternative Measures of Labor Underutilization for States, Third Quarter of 2008 through Second Quarter of 2009 Averages, Bureau of Labor Statistics (August 10, 2009)

9/ Unemployment and Underemployment, Jurgen Brauer, James M. Hull College of Business, Augusta State University (March 2009)