Nonprofit gives Hawaii 'F' as place for business

Local leaders say the report misrepresents the state's quality of life, crime rate and energy consumption

Local economists are downplaying a report that found Hawaii, with the nation's lowest unemployment rate, lacks quality jobs and the economic diversity needed to sustain growth.

The 2006 Report Card for the States was released yesterday by the Corporation for Enterprise Development.

It gave Hawaii an "F" as a place to do business and to make investments, despite last year's average unemployment rate of 2.8 percent.

Among the report's key findings was that isle residents are the most likely to work part time because of the limited availability of good-paying, full-time jobs.

"The state does seem to have a problem with people wanting to work full time, but then taking part-time employment," said Beadsie Woo, senior economist for CFED, a Washington, D.C.-based nonprofit, nonpartisan organization that works to expand economic opportunities for low-income residents.

"It might be multiple part-time jobs, but it's definitely not a single part-time job," Woo said.

Tom Smyth, senior adviser for the state Department of Business, Economic Development and Tourism, challenged the report, saying Hawaii and its unique island economy can't be compared with mainland states.

"There's a skew there," Smyth said.

As an example, Smyth said that while Hawaii has the nation's highest energy and fuel costs, its residents drive less and don't rely on heaters or air conditioners as much.

"They don't take into account that we use the least of something which costs very much," he said.

Smyth also disputed other findings, including data showing Hawaii ranking 49th for high crime and 50th in voter turnout.

He said military personnel, which the report counts as residing in Hawaii, actually vote in their home states.

Major crimes, he said, have dropped, but small robberies will always be present as long as tourists are around.

"You rob the tourists because that's where all the money is," Smyth said.

Bank of Hawaii chief economist Paul Brewbaker also found problems with the report.

He said it failed to consider the fact that islanders have "the opportunity to go swimming after work in the middle of February."

"They define quality incorrectly," he said. "If you surf, you don't want to go to work at 8 in the morning ... there's a lot of people that want to work part time."

Woo said Hawaii needs to diversify its tourism economy by providing incentives to family-owned businesses so they can thrive and expand. The CFED ranked the state 47th in industrial diversity.

"You have a pretty talented work force," said Woo, noting that the state has an educated population that ranked ninth in high school graduation.

"The question is, 'How can these people be employed in jobs that both create family financial security but also broader economic growth?'" she asked.

Brewbaker, however, said Hawaii is in a good economic situation: a tourism leader that is slowly cultivating growing sectors, such as high technology.

"It is a bad thing to be a small economy in the global context trying to do everything," he said. "It's good to specialize."

Among other results, the report ranked Hawaii 40th in long-term employment growth, 25th in average pay and 16th in annual pay growth.

The organization gave Hawaii failing grades in six areas, including quality of life, business competition, job creation, capital investments, infrastructure, and housing and energy costs.

The state got only one "A." It placed fourth in the nation for resource efficiency, which covered natural resource preservation, renewable energy use, high recycling rates and low toxic emissions.