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Economist: Slow recovery will push residents to move

Population losses on Oahu will spread to the Neighbor Islands

Hawaii is forecast to have one of the slowest economic recoveries in the nation and is expected to experience a significant loss in residents, who will be moving to the Mainland in search of job opportunities, UH economists say.

While the state is on a phased path of reopening businesses, an optimistic prediction shows that the state’s population will still drop by 30,000 due to the ongoing pandemic.

“The population losses were already occurring on Oahu for the past several years but will likely spread to the Neighbor Islands,” said Carl Bonham, director of the Economic Research Organization at the University of Hawaii. “The reason for population decline is out-migration of workers who no longer have jobs, have exhausted UI (unemployment insurance) benefits and can find a job somewhere on the Mainland where, for example, tourism is recovering because they do not rely on air travel.”

Bonham told The Maui News on Thursday that Maui County and other Neighbor Island counties are likely to recover even slower “because their economies are even more reliant on tourism,” which remains shut down, as compared to Oahu.

“It is also possible that the greater reliance on Mainland visitors could be a drag on Maui County,” he said. Maui County’s top visitor pools are the West and East U.S.

In a “UHERO Forecast Project” published last week, Bonham and a team of University of Hawaii analysts predicted unemployment rates for Hawaii island, Kauai and Maui County to average more than 20 percent this year.

The number of workers on payrolls is estimated to plummet by more than 220,000 by mid-April statewide. More than half of these job losses are the direct result of the tourism shutdown with the remaining due to the COVID-19 emergency stay-at-home orders.

These numbers are anticipated to increase as bills, high costs of living, and other payments stack up.

“Maui County will also suffer through a slower recovery than the rest of the country,” he said.

Tourists may begin returning in late July at the earliest in UHERO forecasts and recovery still will be gradual statewide, according to the report. By 2022, there will be just over 8 million visitors to Hawaii, compared to the 10 million or more in 2019 (3 million in Maui County).

Bonham said that Hawaii’s reliance on air travel, which is dependent on an overall willingness to fly long hours from the Mainland through ongoing concerns of the virus, “will hinder our economy.”

Interisland travel without quarantine is slated to begin June 16, but out-of-state travelers are still subject to the mandatory 14-day self-isolation. Gov. David Ige has said that the quarantine on Mainland visitors will continue into July.

The statewide hotel occupancy rate will average just 63 percent in 2022, compared with 81 percent in 2019, according to the baseline forecast.

In the “pessimistic scenario,” experts see no significant tourism resumptions until the September through December months. Visitor arrivals would show an annual decline of 70 percent this year and remain significantly below the 2019 peak through the end of the forecast, the report says.

However, in either scenario, continued social distancing and safety protocols for businesses and air travel still may delay tourism from meeting 2019 peaks for the next five years.

* Dakota Grossman can be reached at dgrossman@mauinews.com.

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