BLOG POSTS ARE PRELIMINARY MATERIALS CIRCULATED TO STIMULATE DISCUSSION AND CRITICAL COMMENT. THE VIEWS EXPRESSED ARE THOSE OF THE INDIVIDUAL AUTHORS. WHILE BLOG POSTS BENEFIT FROM ACTIVE UHERO DISCUSSION, THEY HAVE NOT UNDERGONE FORMAL ACADEMIC PEER REVIEW.
By Philip Garboden and Isabelle Picciotto
Additional results for woman owned businesses: https://uhero.hawaii.edu/survey-results-for-woman-owned-businesses/
Three months ago, UHERO released findings from its initial survey of businesses in Hawaii. Now that the shelter-in-place order has been lifted and the kamaʻāina economy is open (at least for the moment), it seemed appropriate to consider what may have changed.
Thanks to our partnership with the Chamber of Commerce Hawaii, Kauai Chamber of Commerce, Kona-Kohala Chamber of Commerce, Hawaii Island Chamber of Commerce, Maui Chamber of Commerce, Japanese Chamber of Commerce Honolulu, Hawaii Farm Bureau, Hawaii Restaurant Association, and Retail Merchants of Hawaii we collected 464 responses from business owners across the state in late July 2020.
The topline findings are troubling. With the exception of jobs in information technology and other services, no industry category saw a meaningful increase from the devastating April 2020 job numbers. Most industries plateaued or continued to shed jobs including double-digit declines in education services, arts and entertainment, and manufacturing. More positively, the opening of the kamaʻāina economy seems to have halted the decline in food services, retail, and real estate, although there is no sign yet of significant recovery.
Consistent with previous work, the strong reliance of neighbor islands on tourism means that they remain more economically depressed than businesses on Oahu. Maui County in particular is the most adversely effected. Many businesses appear to be hanging on, but just barely. All but a quarter of businesses have needed to make staff cuts and other reductions, and roughly a third anticipate deeper cuts in the months to come. Depending on when the pandemic is brought under control and when the tourist economy can safely re-open, our data suggest that between 6% and 15% of businesses may need to close permanently.
Methods
Data were collected through a partnership with the business groups listed above who solicited participation through their membership lists. To correct for differences in industry response rates, we have reweighted responses at both the firm and the employment levels so that totals in our survey match those for each business sector as reported by the Bureau of Labor Statistics.
The margin of error for any subsample statistic can be quite large. This is particularly true for the estimates for Maui and Kauai Counties, where we had fewer responses. We caution, as always, about over-interpretation of differences. Any category representing fewer than five businesses has been redacted to preserve confidentiality.
While we can correct for bias in industry response rates, we cannot make adjustments for other unknowns. While our partners cover a vast range of business on Oahu, their memberships are certainly select in some ways. Many of the largest private employers would not be expected to complete an online survey, and thus our data does not include information on hospital systems, major transportation companies, and so forth. Based on our analysis, our sample also underrepresents the smallest businesses, likely sole proprietorships, who may not be connected to any formal business organization.
Finally, it is likely that business who are most frustrated by the State’s response may be more motivated to complete a survey, meaning that our sample may be pessimistically biased. Because the impact of the COVID downturn is disproportionate across industries, our reweighting corrects this to some degree, but not entirely. On the other hand, business that have already closed permanently may be underrepresented in our results.
Findings
Sharp Declines in Jobs in April, Few Permanent Gains Since
Overall, our data shows that businesses had reduced their staff by 28% of full-time jobs and 35% of part-time jobs between January and April 2020. Since then, there have been only slight recovery in each category (2% and 6%, respectively).
When the full-time jobs are disaggregated by salary a more complex pattern appears. Early on the pandemic, the lowest paying full-time jobs (those paying less than $30,000 annually) were more protected than those of middle-income workers earning between $30,000 and $100,000 per year. However, since that time, nearly all of the job losses have been among the lowest salary jobs, which dropped an additional 16% between April and July.
This pattern holds in each county (except Maui), but declines since April are larger on the neighbor islands than on Oahu. The data for Maui show dramatic losses in both the January to April and April to July periods in all salary categories. The severity of the reported drop in Maui County is likely partially explained by a particularly small and select sample in that County, but it nevertheless aligns with other data suggesting Maui to be the hardest hit county economically.
As results from our previous survey showed, industries with the highest percent of revenue from tourists have suffered the direst consequences of the COVID pandemic. These include accommodations (96% tourism revenue), arts and entertainment (83% tourism), food services (47% tourism), and retail trade (54%). Small businesses in each of these industries suffered job losses of more than 40% between January and April 2020. Since that time, most of these industry sectors have plateaued. The exception appears to be arts and entertainment, which lost 50% of the remaining jobs since April (reducing the sector’s employment numbers to roughly 25% of their January level). Manufacturing and educational services, while not strongly hit by the COVID pandemic, both declined by more than 10% since April, suggesting that the impact on those sectors occurred with a greater lag. [1]
Revenue Remains Down for Most Businesses, Particularly in Maui and Kauai Counties
Despite the reopening of the kamaʻāina economy, business revenue remains significantly depressed. Only a quarter of businesses statewide reported no change in monthly revenue since January (with a trivial number, 2%, reporting an increase). Nearly 20% of businesses in the sample reported having no revenue at all and another 20% reported earning less than half their baseline monthly revenue in July. These numbers are slightly improved since our previous survey (when over 30% of businesses reported no revenue), but again suggest only a modest stabilizing effect in the kamaʻāina economy. This finding is consistent with other data on small business revenue.
As expected, counties with a larger proportion of businesses catering to kamaʻāina patrons showed less severe revenue losses. The revenue numbers are far worse on Kauai and Maui than in Honolulu and Hawaii counties, again with Maui sitting as an outlier. Businesses reporting no loss of revenue are highly concentrated on Oahu. Despite these revenue losses, most business remain open, with only 13% reporting that they have completely shut down. (This number is similar in each county except for Maui, where a third of respondents reported being shut down.) For those that are open, the vast majority have made adjustments, mostly for social distancing, although about 10% have switched to an alternative delivery mode.
PPP Loans Had Deep Penetration, Preserving Many Jobs
Over 70% of the businesses responding to the survey had received a PPP Loan, with little variation between Counties. Kauai has the fewest at 65% and Hawaii had the most at 77%.
In terms of jobs, the loans helped retain or rehire 60,000 part-time and 165,000 full-time employees. These numbers are not meant, of course, to replace any official statistics, but the figures in the survey fall in the ballpark of estimates made from other data sources. The number of employees rehired or retained is largely reflective of the size of each county.
Business Outlook is Pessimistic, Particularly in Light of the Quarantine Extension
With the exception of Maui, 40-50% of businesses who responded to the survey reported that their business is already open at full hours and staffing. The majority of the remainder, about a third of all businesses, reported that they will continually ramp up as tourism reopens. Maui again remains the outlier, with nearly half of all businesses reporting that they will need to ramp up slowly as tourism returns.
In terms of outlook, as noted above only 10-15% of businesses reported that their enterprise was not impacted in any way by the crisis. If tourism had opened on August one, 46% of businesses stated that no additional cuts would be needed, dropping to 30% if the quarantine remains in place until October 1st. The number of businesses statewide who reported that they would not survive the crisis rose from 6% to 17%, consistent with the increasingly necessary step of maintaining the quarantine through the end of September.
Conclusion
Several general conclusions can be drawn from this data. As we already knew, the initial shutdown was devastating to small and midsized businesses. Fortunately, many firms were able to stabilize due to the opening of the kamaʻāina economy, the availability of PPP loans, and myriad other small supports from government, philanthropy, and individuals.
Given the trajectory of the pandemic over the last few weeks, it is becoming increasingly evident that the State will delay the end of quarantine and may even temporary shut down aspects of the kamaʻāina economy. Both of these moves will hurt businesses, but so too would a public health catastrophe, making any apparent contradiction between public and economic health largely spurious.
What this data shows are the significant economic consequence of an epidemiological necessity that must be addressed. Despite current partisan bickering, it is likely that Federal Government may act to some degree, but it is impossible to predict what exactly that will look like. In the meantime, these survey results suggest that it is critical for the State to protect workers and support businesses until a robust and evidence-informed reopening plan can be implemented.
| Business Outlook Assuming no new stimulus funding | ||
| Percent (if tourism reopens Aug. 1st) | Percent (if tourism reopens Oct. 1st) | |
| State of Hawaii | ||
| I anticipate more staff cuts and other reductions. | 28.86% | 34.57% |
| I do not believe my business will survive. | 5.95% | 16.84% |
| I have already made the reductions necessary to survive. | 46.13% | 30.60% |
| My business is not impacted by the crisis in a negative way. | 17.03% | 15.12% |
| Honolulu | ||
| I anticipate more staff cuts and other reductions. | 35.51% | 40.17% |
| I do not believe my business will survive. | 4.31% | 14.96% |
| I have already made the reductions necessary to survive. | 43.77% | 30.32% |
| My business is not impacted by the crisis in a negative way. | 14.30% | 12.57% |
| Hawaii | ||
| I anticipate more staff cuts and other reductions. | 19.29% | 29.10% |
| I do not believe my business will survive. | 4.72% | 16.28% |
| I have already made the reductions necessary to survive. | 49.02% | 28.51% |
| My business is not impacted by the crisis in a negative way. | 13.34% | 13.34% |
| Maui | ||
| I anticipate more staff cuts and other reductions. | 38.65% | 41.17% |
| I do not believe my business will survive. | 8.72% | 24.32% |
| I have already made the reductions necessary to survive. | 35.23% | 18.56% |
| My business is not impacted by the crisis in a negative way. | 17.41% | 15.95% |
| Kauai | ||
| I anticipate more staff cuts and other reductions. | 20.68% | 31.01% |
| I do not believe my business will survive. | 5.22% | 12.59% |
| I have already made the reductions necessary to survive. | 60.96% | 40.47% |
| My business is not impacted by the crisis in a negative way. | 13.14% | 11.87% |
| Change in Employment by Sector | |||
| Percent of Revenue from Tourism | % Change Jan to April | % Change April to July | |
| Accommodation | 95.73% | -88.49% | -3.65% |
| Administrative and support and waste management and remediation services | – | – | – |
| Arts, entertainment, and recreation | 83.15% | -56.12% | -53.61% |
| Construction | 26.00% | -8.02% | -2.38% |
| Educational services | 13.25% | -15.62% | -12.35% |
| Finance and insurance | 15.00% | 0.66% | 1.97% |
| Food services | 46.48% | -43.37% | 5.32% |
| Health care and social assistance | 6.50% | 0.00% | -0.29% |
| Industries not classified | 64.88% | -48.63% | -37.28% |
| Information | 15.00% | -44.21% | 20.75% |
| Management of companies and enterprises | 15.83% | -17.16% | -0.71% |
| Manufacturing | 41.00% | -7.14% | -13.23% |
| Other services (except public administration) | 43.34% | -28.81% | 11.08% |
| Professional, scientific, and technical services | 29.58% | -19.98% | 1.07% |
| Real estate and rental and leasing | 49.27% | -70.71% | -2.66% |
| Retail trade | 53.91% | -45.45% | -5.06% |
| Transportation and utilities | 24.45% | -12.44% | -5.29% |
| Wholesale trade | 53.92% | 5.41% | 0.85% |
| Change in Monthly Revenue January to July | |
| Percent | |
| State of Hawaii | |
| Down < 10% | 6.21% |
| Down 10-30% | 14.55% |
| Down 30-50% | 11.90% |
| Down 50-70% | 11.71% |
| Down 70-90% | 8.89% |
| Down 90-100% (essentially no revenue coming in) | 18.78% |
| Increase in revenue. | 2.06% |
| No change in revenue. | 24.84% |
| Honolulu | |
| Down < 10% | 3.77% |
| Down 10-30% | 16.87% |
| Down 30-50% | 10.19% |
| Down 50-70% | 10.51% |
| Down 70-90% | 6.54% |
| Down 90-100% (essentially no revenue coming in) | 12.03% |
| Increase in revenue. | 7.71% |
| No change in revenue. | 31.16% |
| Hawaii | |
| Down < 10% | 16.74% |
| Down 10-30% | 21.77% |
| Down 30-50% | 20.47% |
| Down 50-70% | 7.14% |
| Down 70-90% | 8.52% |
| Down 90-100% (essentially no revenue coming in) | 11.34% |
| Increase in revenue. | 2.08% |
| No change in revenue. | 11.38% |
| Maui | |
| Down < 10% | 5.80% |
| Down 10-30% | 1.58% |
| Down 30-50% | 15.64% |
| Down 50-70% | 5.93% |
| Down 70-90% | 6.07% |
| Down 90-100% (essentially no revenue coming in) | 62.02% |
| Increase in revenue. | 2.41% |
| No change in revenue. | 0.54% |
| Kauai | |
| Down < 10% | 7.19% |
| Down 10-30% | 24.61% |
| Down 30-50% | 6.11% |
| Down 50-70% | 24.14% |
| Down 70-90% | 13.32% |
| Down 90-100% (essentially no revenue coming in) | 23.71% |
| No change in revenue. | 0.91% |
| Current State of Business | |
| Percent | |
| State of Hawaii | |
| My business has remained open, but with adjustments made for social distancing | 65.52% |
| My business has switched to another service delivery mode (curb-side pickup, online retail, zoom, etc.) | 11.41% |
| My business is completely shut down | 13.48% |
| My business required no adjustments | 8.61% |
| Honolulu | |
| My business has remained open, but with adjustments made for social distancing | 68.53% |
| My business has switched to another service delivery mode (curb-side pickup, online retail, zoom, etc.) | 14.34% |
| My business is completely shut down | 10.11% |
| My business required no adjustments | 7.02% |
| Hawaii | |
| My business has remained open, but with adjustments made for social distancing | 70.17% |
| My business has switched to another service delivery mode (curb-side pickup, online retail, zoom, etc.) | 9.52% |
| My business is completely shut down | 10.25% |
| My business required no adjustments | 10.06% |
| Maui | |
| My business has remained open, but with adjustments made for social distancing | 44.22% |
| My business has switched to another service delivery mode (curb-side pickup, online retail, zoom, etc.) | 0.78% |
| My business is completely shut down | 35.51% |
| My business required no adjustments | 19.49% |
| Kauai | |
| My business has remained open, but with adjustments made for social distancing | 69.36% |
| My business has switched to another service delivery mode (curb-side pickup, online retail, zoom, etc.) | 6.63% |
| My business is completely shut down | 12.81% |
| My business required no adjustments | 11.20% |
| Other Sources of Emergency Funding Sources of funding with fewer than 5 respondents are excluded | |
| Other Type of Funding | Count |
| State of Hawaii | |
| Bank loan (e.g. business line of credit, payroll loan) | 2,948 |
| Bank loan (e.g. business line of credit, payroll loan), Personal funds | 1,851 |
| Bank loan (e.g. business line of credit, payroll loan), Personal funds, County loan or grant | 905 |
| County loan or grant | 835 |
| EIDL | 879 |
| None | 17,072 |
| Personal funds | 5,903 |
| Personal funds, County loan or grant | 1,453 |
| Personal funds, Sale of business assets | 733 |
| Honolulu | |
| Bank loan (e.g. business line of credit, payroll loan) | 1,736 |
| Bank loan (e.g. business line of credit, payroll loan), Personal funds | 1,315 |
| None | 9,905 |
| Personal funds | 3,261 |
| Personal funds, County loan or grant | 1,406 |
| Hawaii | |
| Bank loan (e.g. business line of credit, payroll loan) | 415 |
| None | 1,925 |
| Personal funds | 461 |
| Maui | |
| Bank loan (e.g. business line of credit, payroll loan), Personal funds | 786 |
| None | 1,952 |
| Personal funds | 364 |
| Kauai | |
| Bank loan (e.g. business line of credit, payroll loan) | 260 |
| None | 824 |
| Personal funds | 354 |
| Percentage of Jobs Lost by Job Type and Salary Range | ||
| Percent Change in Category, Jan to April 2020 | Percent Change in Category, April to July 2020 | |
| Honolulu | ||
| Full-time | -25.44% | -0.22% |
| Part-time | -22.99% | -11.06% |
| Honolulu – Full-time Salary Range | ||
| <$30k Salary | -9.09% | -5.77% |
| $30k – $50k | -28.02% | 0.74% |
| $50k – $100k | -26.01% | -0.81% |
| $100k – $200k | -8.30% | -2.95% |
| Hawaii | ||
| Full-time | -25.87% | -0.44% |
| Part-time | -46.33% | 23.54% |
| Hawaii – Full-time Salary Range | ||
| <$30k Salary | 8.18% | -9.41% |
| $30k – $50k | -33.91% | 5.36% |
| $50k – $100k | -30.17% | -1.08% |
| $100k – $200k | -8.89% | -2.93% |
| Maui | ||
| Full-time | -40.75% | -31.71% |
| Part-time | -48.53% | -29.83% |
| Maui – Full-time Salary Range | ||
| <$30k Salary | -39.39% | -20.42% |
| $30k – $50k | -45.70% | -43.24% |
| $50k – $100k | -48.72% | -23.44% |
| $100k – $200k | -45.85% | -40.83% |
| Kauai | ||
| Full-time | -36.72% | -3.37% |
| Part-time | -67.89% | -15.80% |
| Kauai – Full-time Salary Range | ||
| <$30k Salary | -59.15% | 11.18% |
| $30k – $50k | -43.31% | 2.40% |
| $50k – $100k | -21.15% | -13.94% |
| $100k – $200k | -6.16% | -2.93% |
| Percent Change in Category, Jan to April 2020 | Percent Change in Category, April to July 2020 | ||
| Full-time | -27.58% | -1.56% | |
| Part-time | -35.05% | -5.58% | |
| Full-time Salary Range | |||
| <$30k Salary | -17.62% | -16.04% | |
| $30k – $50k | -30.53% | -0.56% | |
| $50k – $100k | -27.56% | -5.00% | |
| $100k – $200k | -9.34% | -2.53% | |
| Plan When Shutdown is Lifted With trans-Pacific tourism opening in August | |
| Percent | |
| State of Hawaii | |
| I am already at full hours and staffing | 44.45% |
| I will open, but with a reduced staff as tourism ramps up | 34.59% |
| I will remain closed indefinitely | 2.18% |
| I will remain closed while tourism ramps up | 6.15% |
| I will return to normal business hours and staffing immediately | 2.84% |
| I will return to normal business hours and staffing in early August | 6.77% |
| Honolulu | |
| I am already at full hours and staffing | 49.15% |
| I will open, but with a reduced staff as tourism ramps up | 33.76% |
| I will remain closed indefinitely | 0.96% |
| I will remain closed while tourism ramps up | 4.76% |
| I will return to normal business hours and staffing immediately | 3.60% |
| I will return to normal business hours and staffing in early August | 5.50% |
| Hawaii | |
| I am already at full hours and staffing | 39.70% |
| I will open, but with a reduced staff as tourism ramps up | 33.83% |
| I will remain closed indefinitely | 1.44% |
| I will remain closed while tourism ramps up | 4.05% |
| I will return to normal business hours and staffing immediately | 0.88% |
| I will return to normal business hours and staffing in early August | 17.90% |
| Maui | |
| I am already at full hours and staffing | 15.21% |
| I will open, but with a reduced staff as tourism ramps up | 53.02% |
| I will remain closed indefinitely | 7.68% |
| I will remain closed while tourism ramps up | 7.61% |
| I will return to normal business hours and staffing immediately | 4.69% |
| I will return to normal business hours and staffing in early August | 3.17% |
| Kauai | |
| I am already at full hours and staffing | 37.90% |
| I will open, but with a reduced staff as tourism ramps up | 37.33% |
| I will remain closed indefinitely | 0.00% |
| I will remain closed while tourism ramps up | 11.96% |
| I will return to normal business hours and staffing in early August | 11.27% |
| Number of Jobs that were retained or rehired Because of PPP loan | |||
| Jobs Rehired | Jobs Retained | ||
| State of Hawaii | |||
| 19,440 | 40,561 | Part-time | |
| 37,432 | 128,320 | Full-time | |
| Honolulu | |||
| 16,390 | 32,690 | Part-time | |
| 26,034 | 91,592 | Full-time | |
| Hawaii | |||
| 2,109 | 8,638 | Part-time | |
| 8,211 | 14,472 | Full-time | |
| Maui | |||
| 1,205 | 4,013 | Part-time | |
| 7,350 | 5,418 | Full-time | |
| Kauai | |||
| 2,065 | 2,012 | Part-time | |
| 746 | 3,521 | Full-time | |
| Number of Businesses that Received a PPP (Payroll Protection Program) Loan | ||
| County | Received PPP Loan | % Received PPP Loan |
| State of Hawaii | 30,537 | 70.50% |
| Honolulu | 19,054 | 71.78% |
| Hawaii | 3,783 | 76.85% |
| Maui | 3,199 | 65.81% |
| Kauai | 1,444 | 65.28% |
1 Note that due to the nature of the businesses in our sample, these data are not always consistent with the data reported by the Bureau of Labor Statistics (BLS) over the same periods. For example, according to the BLS, retail trade jobs statewide only declined by 13% between January and April, and total non-farm employment fell by only 110,000 between over the same period.