Maui’s forecast ‘as good as it gets,’ says economist

Job numbers, though, are a bit deceiving after HC&S shutdown

Maui Brewing Co. President/CEO Garrett Marrero (from left) gets a laugh out of wife and company Vice President/COO Melanie Oxley and Jane Sawyer, district director of the U.S. Small Business Administration’s Hawaii District Office, during his speech Wednesday afternoon at the King Kamehameha Golf Club. Marrero and Oxley were named this year’s 2017 Small Business Persons of the Year for Hawaii award and were honored at the Maui Chamber of Commerce’s 2017 annual Maui Small Business Administration Awards and Economic Update Luncheon. The Maui News / MATTHEW THAYER photo

WAIKAPU — On the surface, it seems that the more than 600 workers who lost their jobs with the closure of Hawaiian Commercial & Sugar last year have been absorbed by the labor market with Maui unemployment rates below 3 percent and falling, a University of Hawaii economist said Wednesday.

The data, however, don’t tell the entire story, said Carl Bonham, executive director of University of Hawaii’s Economic Research Organization, speaking at the Maui Chamber of Commerce’s 2017 annual Maui Small Business Administration Awards and Economic Update Luncheon.

The former sugar workers may have jobs, but they may not be earning union-level wages. He also questioned the breadth of the data collection.

“(I) don’t want to be a constant pessimist, (but) what we’ve seen historically in Hawaii, when you shut down a plantation, agriculture, you don’t get a recovery anywhere near what was there before,” said Bonham, who is also a professor of economics at UH-Manoa.

There may be an uptick in diversified agriculture, but those businesses will not replace the jobs and wages lost by the closure of a large sugar plantation, like HC&S, he told the audience at the King Kamehameha Golf Club.

Carl Bonham of the University of Hawaii Economic Research Organization delivers an update Wednesday on how the closure of Hawaiian Commercial & Sugar has affected the labor market. He said unemployment on Maui remains low and the labor force appears to have absorbed the more than 600 workers who lost their jobs. However, he noted that the new jobs likely pay less and questioned the statistical collection of data. The Maui News / MATTHEW THAYER photo

As for his forecast of the Maui economy, Bonham said, “this is as good as it gets.”

Growth over the long term will not come from tourism, the No. 1 industry in the state and county, said Bonham. Though recent tourism reports show record-breaking numbers of visitors and increased spending by them, Bonham pointed out that spending data would naturally rise with inflation.

Long-term economic growth will have to come from technology industries and small businesses and their exports. This includes “small businesses who will export their beer . . . all over the world,” Bonham said, referring to Kihei-based Maui Brewing Co., whose owners Garrett Marrero and Melanie Oxley were honored at the luncheon by the U.S. Small Business Administration as the 2017 Small Business Persons of the Year for Hawaii.

Maui Brewing Co. exports beer to 20 states and 13 countries.

Large-scale agriculture was part of the three-legged economy of Hawaii of years back, the other two legs being tourism and the military. But the large-scale agriculture leg officially disappeared in December when HC&S, the last sugar plantation in the state with a 145-year history, shut down.

Its parent company, Alexander & Baldwin, cited $30 million in losses from its agribusiness sector in 2015 with more projected losses going forward. A&B officials said in December that there would be 14 workers remaining from a more than 600-member HC&S workforce.

Maui Chamber of Commerce President Pamela Tumpap agreed with Bonham’s comments that paychecks for former HC&S laborers likely will be less than than the $19 to $20 an hour they earned. As these workers have integrated into the workforce, Tumpap said they are encountering wages that are considerably lower.

“We are finding a significant gap,” she said.

This is why March’s 2.8 percent unemployment rate is deceiving with regard to the loss of jobs at HC&S. Bonham noted that there was an uptick in state labor department unemployment statistics from 2.6 percent in December to 3.3 percent in January. Since then, though, there has been a decline to 2.9 percent in February and 2.8 percent in March. (The data is not adjusted for seasonal hiring, such as during the holidays and the summer.)

The data may be deceiving because there are no statistics available on agricultural jobs; statisticians at the state Department of Agriculture were laid off during the Great Recession in the late 2000s, Bonham said.

* Melissa Tanji can be reached at mtanji@mauinews.com.


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