Coronavirus Impact on Hawaii’s Economy

Nya Crea
Nya Crea

On 31 December 2019, WHO was informed of instances of pneumonia of unknown cause in Wuhan City, China. A novel coronavirus was identified as the cause by Chinese experts on 7 January 2020 and was temporarily named “2019-nCoV”. The rapidly evolving situation of COVID-19 seems to have made the entire world pause for a moment. Things have been changing extremely rapidly and knowing the facts is pivotal to being properly prepared and protecting one’s self and loved ones.

The spread of the coronavirus (COVID 19) disrupted economic activities and negatively impacted developed countries financially. Due to the entwined nature of transportation and the economy, the disease has become harder to curb. In states like Hawaii where tourism is part of their iconic brand, the pandemic has led to travel restrictions and a downward slope in tourists visits in past months.

The fact that Hawaii is an isolated chain of islands only accessible by plane made it easier to flatten the COVID 19 curve. Thus, while states like Texas and Florida witnessed high spikes, the governor of Hawaii, David Ige, simply issued a policy restricting tourism to protect its citizens. The quarantine, along with other extensive travel restrictions implemented around the world, effectively stopped travel to Hawaii.
Photo of empty waikiki beach during the lockdown by Marco Garcia

Since the islands depend on air transport and ships to bring in goods, there is limited access to supplies. In contrast to the rest of the states in the United States, Hawaii does not have interstate travelling big rigs that aid transportation.

According to statistics, Hawaii visitor arrivals were down 73.8% in 2020 compared to 2019 levels in the year-end data released by Hawaii Tourism Authority. Visitor arrivals were severely impacted by Coronavirus and related travel restrictions throughout the year.

Flight cancellations due to COVID-19 began in late February, and in late March, the state instituted a 14-day mandatory quarantine for arriving travellers, which remained in place for much of the year. People who break quarantine are subject to arrest and a fine of up to $5,000. Hawaii has been strict in enforcing the rules arresting nearly 200 people, visitors and residents, since March.

On October 15 2020, the state launched a pre-travel testing program, giving passengers arriving in Hawaii the option to bypass the quarantine with a negative COVID-19 test taken no more than three days prior to travel.

But the combined forces of a state-wide shutdown and sudden respite in the tourism industry has devastated the economy. At least 150,000 workers in the state of 1.5 million people were out of work in May. The unemployment rate was 23.5%, more than 10% higher than the national rate. About $7bn has been siphoned into Hawaii’s economy in the course of recent months from the federal government’s emergency stimulus programs.

Local businesses have also suffered as a result of the two full lockdowns imposed by the government when there was a surge in the spread of the virus. The Trump administration put in place the Coronavirus Aid, Relief, and Economy Security act (CARES) in response to the economic fallout caused by the virus.

Many businesses were being sustained by federal benefits from the CARES act which has long since run out. A portion of Hawaii’s CARES money went to hiring and training unemployed residents to work in conservation. Among the programs that qualified were Kupu Hawaii, which teaches local youth about land preservation; the Aloha Aina Workforce Program on Kauai, which gave agricultural roles to two dozen workers who lost their jobs due to COVID-19; and a partnership with the Maui Nui Marine Resource Council.

In order to make up for the huge shortfall caused by the pandemic, the governor has announced that pay cuts for local and state workers are inevitable. A professor of economics at the University of Hawaii said that the only way the state can bounce back from this economic downturn is federal aid from the government.