The Great 2009-2010 Hawaii Brain Drain

Comment

Comment by John on September 12, 2010 at 10:47am

Johnson, while I think that a portion of Hawaii's reduced wages come from employers knowing that a certain group of people will not leave, I think another major element is the inability of employers to pay Valley/NY wages.

If Hawaii tech companies paid mid-level people $125k-$175k (the type of salary not uncommon in large mainland cities), most would go bankrupt.

I don't doubt some Hawaii owners are 'profit maximizing' but most simply can't afford to match mainland tech center pay scales.

A big issue behind this is that even if you are very talented in a specialized skill in Hawaii, it's a lot harder to put that specialized skill to use and to generate the type of value that you could in generally bigger mainland companies.

Comment by Brian on September 12, 2010 at 9:54am

Interesting you bring that up, because if you look at this whole discussion in terms of people emigrating from Hawaii to "seek a better life for their children" it certainly is about them leaving this "economic unit". I think your approach is a smart one; I would counter that the role of a nationstate as an economic unit is rather blurred nowadays. EU is a great example of this - ever since the individual countries gave up control over their currency - their central banks also lost control over fiscal policy/money supply. This of course is what spawned the whole Greece/etc debt crisis situation.

@Dan, when will be able to edit blog comments?! :)

Comment by Mark Boon on September 12, 2010 at 9:54am

I don't think a simple supply and demand mechanism can explain it fully. It's only part of the equation. A part that will not easily go away, for sure.

But there are also other components that influence a job-market (and the business environment, the two are joined at the hip). I've alluded in an earlier post to vicious and virtuous circles. Centers of excellence don't come into being by the usual forces of supply and demand. They come into being by a confluence of beneficial factors. It's hard to force it into happening, but by creating the right circumstances you can help chance quite a bit.

I believe the original idea of this thread was what can be done to improve the chances of Hawaii. Some of you only focus on the negative aspects of Hawaii, and often rightfully so. After all, it affects your daily life. But I find it hard to believe it's simply a lost cause not worth saving. It may be too late for a good number of you guys (and I detect a good amount of bitterness over it) but I don't believe for one bit that nothing can be done to improve the situation. If not for us, then for those that come after us.

Comment by Johnson Choi on September 12, 2010 at 9:53am

Let me explain it this way, if I left Hawaii and went to work in New York getting pay $12,000/month, when a Hawaii Company want to hire me back, they have to pay at least the same pay scale as New York to lure me back to the Island.

But if I never leave Hawaii and the same job could be less than US$5,000 monthly salary. One of the many reasons is there are a percentage of the Hawaii population for whatever reason will not leave. Employers know that this pool of employees are limiting themselves at their own option their own ability to acquire high paying jobs outside of the State of Hawaii. Given that fact, employer know that they could offer much less to acquire their services.

There is also another reason why the pay in Hawaii is lower. Using one of my client who was a CFO in Hawaii for more than 10 years, left 3 years ago as an example. She was a CFO for a service industry company. Service industry employees tends to get pay less. It is just the nature of things. When she relocated to San Francisco as a CFO for a large industrial company doing the same job, her pay went up 60% with an average of 22% year end bonus.

Hope the above have given you some insights.

Comment by Brian on September 12, 2010 at 9:48am

@Reichart, it's a real answer; it's just not a useful answer. I.e. it doesn't address the core issue of WHY there is not a good supply of jobs. It just tells me that there aren't any.. which is kinda like.. duh! For me at least :)

Comment by Brian on September 12, 2010 at 9:40am

@Reichart, I agree with most of your points. I don't necessarily agree that we are headed towards Soviet-style hyperinflation and a doomed economy. Lay people in the media tend to focus too much on raw unemployment numbers as an indicator of economic recovery. Unemployment is generally considered a "lagging" indicator of the economy. That is, companies will work employees harder and delay hiring even if their orders, etc increase. Now, there's a lot more to an economic recovery than that, but the BLS numbers actually do support thisl

Here you can see aggregate weekly hours from 2006 to present. The massive dip is of course the recession. Of course it doesn't shoot up but it is slowly recovering. Will that trend to continue? That's harder to say. If you then look at the unemployed 16+ for more than 15 weeks; you can see how unemployment lags hours (which is just a way of saying people's hours get cut before they get fired - it also has a bit to do with the fact that they have to be unemployed for more than 4 months to show up in this group - the shorter term measures spike earlier and recover earlier as you basically have those that get fired and then rehired, and those that remain unemployed for a long period of time).

You can look at all the BLS data here, I didn't pick & choose graphs to demonstrate a point. If you look at the other graphs they tell a similar story. Bottom line from my perspective is.. I think you'll learn more spending half an hour looking at the actual numbers than reading all the nonsensical blogs are listening to pundits on TV.

Comment by Johnson Choi on September 12, 2010 at 9:29am

Are you talking about the pay scale of Hawaii...i.e. 40 - 60% lower than San Francisco when the cost of living is almost the same?

Comment by Brian on September 12, 2010 at 9:21am

@Jake I asked that question about 40 posts ago and I haven't seen a real answer other than the classic supply vs demand.

Comment by Paul Graydon on September 12, 2010 at 6:34am

Reichart: The US actually produces more power through Nuclear methods than any other country, having over 100 nuclear power plants already. What they don't do is advertise that fact, and I wonder if many citizens are even aware of that fact. Sure it only equates to about 20% of the countries need, but they do exist.
France is seen as the world leader for Nuclear plants, and they're whom I'd imagine most countries would go to for assistance given their high percentage of power production being nuclear, and the country being less of a political hot potato.

Comment by Johnson Choi on September 12, 2010 at 4:16am

Hawaii has been lucky since Statehood until the Japanese bubble in the late 80s early 90s. During the same period, the big 5 Hawaii had who could chart our destiny disappeared except for the Matson, thanks primary to the Jones Act.

What happened since the early 90s was when China and Russia found out Government could not solve their economic problems, Hawaii went the opposite way, increasingly counting on the Government, both Federal and State to solve all problems.

It could be a blessing at first when Hawaii turned into a welfare State and Senator Inouye brought in a lot of Federal money. China's increasing economic and military strength and closing many military bases in Asia during the same period also help to bring in a lot of military dollars to Hawaii. Like any welfares, it will end.

When the Federal welfare money came is fast and easy, Hawaii lost the will to compete to improve our position in the world's economy.

During the same period, a large number of our citizen, especially the young and most educated left Hawaii, estimated to be more than 200,000. When our State lost most of our brightest and smartest citizen, our future, or the lack of it are written all over the wall, but no one seems to care.

I will stop here for now. I think it is important to know some of the reasons why we get here today.

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