Two years ago this month, Mayor Caldwell announced stay-at-home orders for Oahu and Governor Ige imposed a 14-day quarantine for travelers to Hawaii. Since then, our state has been grappling with the coronavirus pandemic, which now appears to be waning.
Throughout the pandemic, the concept of the “new normal” has been a hot topic. There was a shared feeling that we couldn’t get back to business as usual. The pandemic had changed our way of working, our way of living. But this acceptance of change was fundamentally reactive; the urgency of dealing with the current crisis makes it difficult to plan for the future.
As the pandemic slips away from our consciousness (to be replaced, no doubt, by the next crisis: Ukraine, anyone?), we are now able to look ahead and ask ourselves : what comes next for Hawaii? Here is a vision, a vision of the promise and peril of remote work.
Digital nomads and white collar outsourcing
The widespread adoption of remote work will reconfigure Hawaii. Two trends are at work: First, digital nomads will move here in greater numbers to take advantage of our climate, driving up housing prices. During this time, local businesses will become more comfortable with outsourcing work.
The first trend has been noticed. Major efforts are underway to capitalize on digital nomads, including a nonprofit, Movers and Shakas, founded to “attract, onboard, and retain key talent, especially returning kamaaina, to create a Hawaii more innovative, resilient and sustainable”.
The second trend was approached obliquely. Policymakers and educators have proposed training Hawaiian workers to take advantage of remote work opportunities. The Department of Business, Economic Development and Tourism and the University of Hawaii have partnered in workforce development initiatives to this end, offering digital readiness courses on college campuses. communities and rewarding participants with refurbished laptops.
Buried in the optimism surrounding these initiatives is an unspoken fear. To put it bluntly, for every remote job a local worker can take, there is a local job that can be offered to a remote worker.
It’s likely that the next few years will see a flow of jobs in and out of the state, and it’s not clear the outcome will favor Hawaii.
From Mililani to Bangalore
Local employers realized during the pandemic that they could maintain productivity without in-person operations. It’s just one step closer to realizing that their workers don’t need to be based in Mililani or Hawaii Kai. They could work from South Dakota or Bangalore.
If that seems unlikely, look at history. Detroit was once considered an invincible city. It was unthinkable that the American automobile industry could be supplanted by foreign competition. And yet it was. Today, Toyota and Honda are more popular in the United States than Chevrolet and Ford. And Detroit is a shadow of its former glory.
White-collar work could soon be as fungible as car manufacturing. In some ways, it already is. Clerical work, accounting, customer service – all of these can be outsourced. And where outsourcing isn’t practiced, companies often employ software-as-a-service providers like Salesforce, replacing technology with labor.
What does this mean for Hawaii?
This means we are put in a demolition position to both attract and retain jobs. Globalization is there, on our shores.
The new normal will put pressure on employers in Hawaii. Due to our state’s high cost of living, the salary needed to attract a resident worker exceeds the salary needed to retain a remote worker in Indiana (or India).
Not all jobs can be outsourced this way. White-collar jobs that require a keen understanding of local culture or politics will remain. But these jobs may be fewer than we imagined.
In certain cases of monopoly or oligopoly, the inhabitants will be salaried, protected within a powerful stronghold. Kamehameha schools, for example, are unique. And no company competes with Matson and Pasha Hawaii.
But many local businesses are in competition, with the world and with each other. They will face pressure to cut costs and over time this will lead to outsourcing or substitution of technology for labor.
This may sound alarmist, and it is. However, we can adapt. First, we must do whatever is necessary to reduce the cost of living in Hawaii. This will allow local employers to retain premises without paying a premium. Second, we must be realistic in our workforce development efforts. We should focus on industries and specialties where we have a natural competitive advantage. For example, our geographic location between Asia and North America makes Hawaii an ideal location for both tourism and international conventions.
Time seemed to slow down during the pandemic, but the world sped up all the time. We would do well to listen to the Red Queen, remembering what she said to Alice: “Now here, you see, you have to run as much as possible to stay in one place. If you want to go somewhere else, you have to run at least twice as fast as that!