Hawaii – Population Decline

Picture of downtown Honolulu

By: T. Jeffersonian

The Hawaii population has been in decline since before the Coronavirus pandemic
began. From 2009-2019, Hawaii had fewer babies born with each passing year. This birth rate decline is not unique to Hawaii but rather is seen United States wide. Coronavirus itself has further reduced the American birth rate. In June 2020, the Brookings Institute forecast that the pandemic and associated recession would result in 300,000 to 500,000 fewer American births in 2021.

We know that fewer babies are being born in Hawaii and across the country; but does this mean the number of people here in Hawaii is declining? Long term, not necessarily. Immigration helps keep the U.S. population growing. For a while prior to 2017, transplants moving to Hawaii did just that, however, beginning with 2017, an average 3,000 Hawaii residents per year left the state and were not replenished by migration. The U.S. Department of Labor shows this is not a new trend, as Hawaii saw a net migration of 61,700.

Hawaii residents moved to the mainland from 2013 to 2019. This delta was largely refilled by migration. Migration to Hawaii in recent years, however, has not kept pace with the exodus and birth rate declines. According to U.S. Census Bureau data, Hawaii showed a net population loss of 8,866 fewer residents between 2010 and 2020 with a decline of 4,721 residents seen in 2020 alone. Historically, Hawaii’s recessions cause residents to slow the pace of mainland relocations, but this was not seen in 2020 when exodus numbers jumped considerably due to the pandemic and the recession.

Beyond, lack of migration and birth rate decline, economist and the University of Hawaii Economic Research Organization (UHERO) Executive Director Carl Bonham says economic factors tipped Hawaii further in the direction of population decline. Bonham described the pre-coronavirus U.S. economy as booming, while at the same time Hawaii has this relatively high cost of living that continues to rise. When Hawaii is viewed in terms of growth in employment and income, the state is near the very bottom for real income growth across the entire country. Hawaii is simply too expensive in which to live.

Is Hawaii’s population decline such a bad thing? At first glance, fewer people at the
beach and on the road might not seem like such a bad thing; however, surface level benefits of a smaller population come with some deeper costs. Hawaii’s population decline eventually means a smaller labor force and fewer young workers to pay taxes. As the population becomes proportionally more aged, there will be a greater demand for health care, but fewer healthy young people to shoulder the costs. An aging population having fewer young people to replenish it, shifts a greater share of the burden onto the fewer number of younger working people. Rapid growth in the number of elderlies will lead to an increase in Social Security and Medicare benefits being paid out. Once again, there will be fewer Hawaii taxpayers around to fund that
shift. Since a smaller number of taxpayers will be footing the bill, the Hawaii labor force will need to be even more productive in the future. This will require better-educated workers, and in that area, there is some reason to be optimistic despite the population decline.

Fewer Hawaii students present an opportunity to really improve the education system
without spending a lot more money. That means in the future Hawaii may not have so many workers, but those workers that we do have will be a lot better educated and a lot more prepared to pay more for Social Security and health care. Per-pupil school expenditures will increase as the number of students decline. This is particularly beneficial because more highly educated workers tend to make more income, which equates to more income taxes collected to cover more health care as the overall population ages. Even if the Hawaii population decline ends, the average age in Hawaii will continue to climb. The exodus itself could slow down or cease, but all signs indicate the birthrate will continue to fall. All of this means fewer Hawaii residents in future generations, with each one, regardless their tax brackets, paying a higher share of the cost to care for their aging predecessors.

As the Hawaii state government continues to raise taxes on the wealthiest income earners, Hawaii residents will continue to leave the state. The taxes on the wealthy, will adversely trickle down throughout the still declining number of lower-income taxpayers. These adverse effects will be seen in more expensive goods and services sold to offset the higher tax rates. Hawaii is isolated and not business friendly.

Americans, fearing a coronavirus pandemic relapse or a future pandemic, who could otherwise potentially migrate from the mainland to Hawaii, will be even more hesitant to isolate themselves here entirely. Americans seeking to recover from the pandemic will also be turned off by Hawaii’s high taxes, high cost of living, and fewer available jobs. At present decline and given historical state governance methodologies, Hawaii will shoot its own fish in a barrel by raising taxes on the state’s remaining and aging

Without transformative economic change, the paradise that once was Hawaii is
destined to become a dead, deserted fiscal wasteland. The Hawaii government is highly encouraged to make Hawaii worth the risk of migration by immediately employing all known available legislation that will make this state business friendly and increase the state’s available revenue streams. We must not shift the state’s entire fiscal burdens onto the shoulders of our decreasing number of taxpayers. We will fiscally destroy them alongside this fiscally dying state. We owe generations past, present, and future much better than taking them all down through continued applications of deficit increasing, socialist tax and spend policies.