Hawaii tourism

Hawaii’s tourism industry is rebounding. But where are all the jobs?

As Hawaii’s tourism industry rebounds from a pandemic that ended the industry in 2020, one question continues to plague economists: where are all the jobs?

Passenger Arrivals in Hawaii averaged over 30,000 per day in Julyand August was just as strong, with 32,500 arrivals on average for the first four days of the month, according to the State Department of Business, Economic Development and Tourism. While milder than the normal summer rush, that’s still roughly equal to average arrivals for 2019, before the pandemic, when Hawaii had more than 10 million tourists.

Meanwhile, hotels reported 31,572 jobs in Hawaii in mid-2021, according to the American Hotel and Lodging Association. That’s up from the 2020 low of around 21,000, but still around 12,700 lower than in 2019, a drop of 29%.

Waikiki Beach was teeming with Hawaii with 628 cases of COVID-19 statewide.
Crowds of tourists swarmed Waikiki Beach on Friday as visitor numbers approach pre-pandemic levels. Cory Lum/Civil Beat/2021

And why hotel jobs haven’t caught up with visitor numbers?

“I don’t think anyone knows,” said Matt Insco, an economist with the US Department of Labor’s Bureau of Labor Statistics in San Francisco.

Carl Bonham, executive director of the University of Hawaii’s Economic Research Organization, was also puzzled.

Hawaii’s unemployment rate was 7.9% in June, a significant improvement from the 21.9% rate in May 2020, when Hawaii’s economy was largely shut down. But, says Bonham, that rate doesn’t take into account the underemployed — part-time workers who want full-time jobs, for example, and discouraged workers who have left the workforce altogether.

Counting those, Hawaii’s broader unemployment rate, known as U-6 unemployment, was 18.5% for the second quarter, which translates to about 120,000 workers, Bonham said. .

The U-6 unemployment rate, which includes underemployed workers, paints a much worse employment picture than Hawaii’s standard unemployment rate.

Meanwhile, employers say they are unable to find people to fill vacancies.

“It’s going to be several years before economists understand what happened to the labor market during this episode,” Bonham said.

Unemployment insurance assistance does not fully explain the problem

Meanwhile, there are oft-cited explanations that don’t actually seem to explain what’s going on.

Federal stimulus money, which provides $300 a week of extra unemployment insurance money to the unemployed, is one of the frequently cited causes for the sluggish jobs recovery. Some employers cite federal money as inducing people to stay away from work — and something driving what the BLS reports as a record number of job openings in the hospitality industry, including 1.2 million job openings. jobs in hotels and restaurants in May.

But a recent study refutes this idea.

To see if federal money was keeping workers out, Arindrajit Dubeeconomist from the University of Massachusetts-Amherst, looked at employment trends in 22 mostly red states that opted to cut federal payments ahead of the September deadlinewhen the money runs out in other states, including Hawaii.

If UI benefits kept people out of work, it should have encouraged more people to enter the labor market when the benefits disappeared. But, Dube reported, that didn’t happen.

“There was certainly no immediate increase in employment in the two to three weeks after pandemic unemployment insurance benefits expired,” he reported.

Another possible factor is that, despite high attendance in Hawaii, travelers from Asia have still not returned. This means there is no business for employers who cater to this market.

Domestic travel since March has been strong and actually topped 2019 in July and August, according to DBEDT. But trips to Asia have been almost non-existent. The result is that some businesses that welcome international visitors have been slower to reopen.

Take the Halekulani hotel. The iconic Waikiki property has been closed since April and has taken the opportunity to revamp its rooms and beachfront bar, House Without a Key. And although it offered continued medical coverage to all of its nearly 800 employees, the hotel does not plan to reopen until October. And even then, not all workers will return.

“For those who may not have an opportunity to return to work immediately, we continue to provide medical benefit coverage through the end of the year, December 31, 2021,” the company said in a statement..

Domestic travelers have been driving visitor arrivals to Hawaii since March, meaning continued challenges for businesses that cater to international travelers. Hawaii Department of Business, Economic Development and Tourism

Changes in hotel policies and procedures can also help reduce the need for workers. The automation of certain functions, which was already affecting staffing needs before COVID-19, seems to have accelerated during the pandemic. Features like apps that let customers check in themselves have led to a decreased need for office clerks, for example.

Beyond automation, hotels have pushed to let guests opt out of daily room cleaning, which has worried hotel workers’ unions who say the change is killing jobs for the legions of housekeepers who make up most of the workforce in large hotels.

Nonetheless, housekeeping jobs at Honolulu hotels rose steadily before the pandemic, peaking at 7,240 in May 2019 according to the BLS. Then came COVID-19, and jobs for 2020 fell to 5,230, down 28%.

The BLS does not yet have numbers for 2021, but UNITE HERE Local 5the union which represents hotel housekeepers, said hotels intentionally limit the need for housekeepers by discouraging guests from having rooms cleaned daily.

Kekoa McClellan, a Hawaiian spokesperson for the American Hotel and Lodging Association, said hoteliers were simply following CDC COVID-19 guidelines by limiting room cleaning, and he said cleaning protocols had created more work for hotels and increased the need for certain employees. But the union is not buying it.

A dozen people lined up outside the Louis Vuitton store on Kalakaua Avenue as people walked along the sidewalk.
Experts say it could be years before economists fully explain how COVID-19 has affected the labor market. Cory Lum/Civil Beat/2021

Gemma Weinstein, president of UNITE HERE in Hawaii, noted that guests can still have their rooms cleaned daily if they request it, but what has changed is that guests now have to request it.

Yet the situation is not so bad for the workers, simply because the workforce, for some reason, has become smaller.

Retirements and people leaving Hawaii — and its high cost of living — are almost certainly contributing to Hawaii’s labor shortage, Bonham said. Additionally, in a recent survey conducted by the Hawaii Chamber of Commerce, employers pointed to another factor that keeps workers on the bench: the need for childcare at a time when public schools were mostly closed.

Bonham notes that a BLS data source, known as Job vacancies and labor turnover, or JOLT data, indicates that employees who are part of the workforce appear to move from job to job, presumably seeking higher paying positions, with employers outbidding themselves to hire a relatively small number of workers.

“Wages are growing fastest in the leisure and hospitality industry,” said Insco, an economist with BLS in San Francisco.

Although the sample size for Hawaii is tiny, Bonham said the national trend almost surely applies here.

“Why should companies be the only ones to maximize their revenue? said Bonham. “It makes perfect sense.”

What is driving the dynamics of Hawaii’s hospitality workforce may soon become clearer. The reopening of public schools has freed up parents who were once stuck at home with children forced to learn remotely, meaning more people could soon re-enter the workforce. And the federal unemployment insurance stimulus is set to end in September.

But the difference it will make is far from clear, Bonham says, especially with the delta variant of COVID-19 driving Hawaii’s case count to record highs.

“I think all of those things are important,” he said. “None of them individually is what’s driving this.”

Hawaii’s Changing Economy» is supported by a grant from the Hawaii Community Foundation as part of its CHANGE Framework project.