Demographic Shifts Pose Tremendous Risks For Kauai
The island鈥檚 population growth is largely a result of the island becoming home to more retirees.
Hawaii is shrinking.
According to recent reports from the state Department of Business, Economic Development and Tourism, the state鈥檚 population has decreased for the last three years. What鈥檚 even worse is who is leaving: working-age people.
Much of the decline is due to negative net migration on Oahu. Data supports the idea that this is also due, in part, to the deployment and relocation of military families.
This doesn鈥檛 hold true for the neighbor islands. For example, since 2011 Kauai has seen a moderate population increase.
The modest growth here shouldn鈥檛 mask the fact that there has been a significant net loss of a core component of Kauai鈥檚 workforce (residents from the ages of 40 to 59) and a significant net gain of people over 60.
Between 2010 and 2018, Kauai has seen a 1.85% decrease in residents from 0-29 years of age, a 1% increase in people 30-39, a 4.6% decrease for 40-59 year-olds, and 5.4% increase for people over 60 years of age.
DBEDT cites three primary sources for Kauai鈥檚 growth. Among new Kauai residents, 49% are transplants from the U.S. mainland, 30% are moving from other counties within Hawaii, and the remaining 21% are arrivals from other countries.
To put it simply, these demographic shifts pose risks for Kauai.
More Retirees Coming
Kauai鈥檚 population growth is largely a result of the island becoming home to more retirees. Data confirms talk frequently heard around corporate boardrooms.
There are fewer qualified employees available to hire because more people in the workforce are leaving the island.
The Kauai median household income has increased 20% over the last eight years, from $75,200 in 2011 to $90,000 in 2019.
Generally, this isn鈥檛 because we are making more money. DEBDT reports that average wages in 2019 actually decreased.
How can average household income go up while average wages have decreased?
The data suggest that wealthy retirees are replacing the working-age families that are departing. Many retirees are coming from areas such as Seattle and San Francisco where wages are much higher but home prices are similar to those on Kauai. Their retirement income is securely established and they can afford to pay significantly more than local families can to rent or buy a home.
Besides the effects on the workforce, Kauai feels the impact in the cost of housing. In 2011 the Kauai median home sale price was around $500,000. Currently it’s about $720,000, a 44% increase.
Rents have followed a similar but less aggressive climb, with a three-bedroom unit renting for an average of $1,800 in 2011 and $2,300 in 2019, a 22% increase.
Understanding a problem is the start for exploring solutions, yet addressing the shifts in population and affordability is at best daunting.
Limiting the number of people allowed to move here is clearly a non-starter. It is illegal under federal and state fair housing laws, so let’s stop bringing it up.
Having the state increase the minimum wage is probably only a temporary solution, as the housing supply wouldn鈥檛 change and demand would probably just cause further rent/housing price increases.
More housing inventory sounds like a straightforward solution. It could decrease competition, lowering rental and home prices, but only if we can produce enough units to exceed demand.
How do we do it? Start with reducing regulatory barriers for affordable housing development.
More housing inventory sounds like a straightforward solution.
There have been some great laws passed by the Kauai County Council, but we need far more.
Because the government cannot build the units we need, it can help facilitate a more supportive environment for housing developers. For starters, the counties can fix inclusionary housing ordinances. Second, plan and install the infrastructure, water and sewer, to allow for growth where we want it and need it.
If we don鈥檛 take action now, our demographic shift will continue to trend in a negative direction. Kauai and all of Hawaii will become the land of the wealthy, with no affordable place for our children and the generations that will follow them.
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