Honolulu: Economy

Major Industries and Commercial Activity

Honolulu began its economic life in the mid-nineteenth century as a port for whalers; it was also a trade center for nations bordering the Pacific, dealing in such goods as sandalwood, whale oil, and fur. While markets for sandalwood and whale oil decreased, sugar and pineapple markets increased dramatically. In fact, the powerful sugar industry, owned mainly by Americans, engineered the downfall of Hawaii's last monarch and the islands' annexation by the United States. Today, one-fifth of the land in Honolulu County is zoned for agriculture, but fields are now giving way to new homes and commercial development. With the closure of sugar plantations, challenges arise to find the most productive use for these lands. Diversified agriculture has been on a steady upward trend. Aquaculture, which includes cultivated species of shellfish, finfish and algae, has grown in recent years. In 2002, Honolulu county had 30 aquaculture operations which produced $4.2 million in sales.

In addition to serving as the business and trading hub of the Hawaiian Islands, Honolulu is the transportation crossroads of the Pacific, connecting East with West. The city's recently expanded harbor facilities handle cargo for several international steamship companies, and a Foreign Trade Zone is based there. Other important elements of Honolulu's economic base include tourism, military defense, research and development, and manufacturing. With millions of visitors coming each year to enjoy Honolulu's climate and beaches, tourism contributes $10 billion annually to the local economy. Pearl Harbor Naval Shipyard, Marine Base Kaneohe, and Schofield Barracks Army base provide revenues that are unaffected by the normal business cycle. As the home of the University of Hawaii at Manoa, Honolulu is a center for research and development, especially in the areas of oceanography, astrophysics, geophysics, and biomedicine. The city and county of Honolulu also contains many commercial, industrial and retail properties.

Items and goods produced: jewelry, clothing, food and beverages, rubber products, construction materials, and electronics and computer equipment

Incentive Programs—New and Existing Companies

State programs

State programs available include direct financial incentives such as Industrial Development Bonds, a Capital Loan Program, the Urban Honolulu Enterprise Zone Program, customized industrial training, and investment of public funds in return for equity or ownership positions in private businesses. Also at the state level, tax incentives for technology-related companies are available through 2010 with the extension of Hawaii's Act 215 relating to capital investment.

Job training programs

The Hawaii Department of Labor and Industrial Relations oversees One-Stop Workforce Assistance Centers, a job placement and training system to help people find work and employers find suitable workers, and the Employment & Training Fund (ETF), a job skills upgrade program for current workers. Employers can receive customized training grants for their workplace or they can nominate a current worker for an established training course.

Development Projects

With available research centers at the University of Hawaii as well as the area's defense contracting industry, Honolulu is looking to diversify its economy in the following areas; alternate energies, astronomy and space sciences, defense-dual use technologies, diversified agriculture, information and communication technologies, life science-biotech, and marine sciences. The film and digital media industry is growing and is supported by the City and County Honolulu Film Office.

A private and local government-supported "Second City," Kapolei, is constructed in an area 20 miles from downtown Honolulu. The Kapolei region contains the state's largest industrial park and second busiest commercial harbor. New amenities to the area include shopping centers, golf courses, parks, and the Hawaiian Waters Adventures Park.

Hawaii is ranked first in investment money coming from Asia to finance real estate projects and other industries. In 2001, Hawaii received $9.95 billion in foreign investment from Asia.

A $300 million Waikiki Beach Walk redevelopment project will rejuvenate walkways, hotels, retail complexes and entertainment areas along one of the most visited beaches in Honolulu. A four-year $200 million renovation is planned for Honolulu International Airport.

Economic Development Information: The Office of Economic Development, 530 S. King Street, Honolulu, HI 96813; telephone (808)547-7878; fax (808)547-7808

Commercial Shipping

Honolulu's location in the mid-Pacific makes it a major stopover for trans-Pacific sea and air shipments. Honolulu Harbor has a highly successful Foreign Trade Zone and 10 major shipping companies serving the port. The harbor also has terminals for commercial fishing, cruise ships, and ferries.

Labor Force and Employment Outlook

Honolulu County's four major industry sectors are government; trade, transportation, and utilities; leisure and hospitality; and professional and business services. These four industries account for about two-thirds of the total employment in Honolulu County. Services and trade are considered the two largest growth industries for the County.

The following is a summary of data regarding the Honolulu metropolitan area labor force, 2004 annual averages.

Size of non-agricultural labor force: 428,800

Number of workers employed in . . .

construction and mining: 20,400

manufacturing: 12,000

trade, transportation and utilities: 79,300

information: 8,900

financial activities: 22,100

professional and business services: 57,200

leisure and hospitality: 60,500

educational and health services: 53,300

other services: 19,000

government: 95,700

Average hourly earnings of production workers employed in manufacturing: $13.66

Unemployment rate: 2.8% (January 2005)

Honolulu: Economy

Largest employers Number of employees
U.S. Government 91,850
City and County of Honolulu 11,350
Queen's Medical Center 3,000
Bank of Hawaii 2,500

Cost of Living

Because land is scarce and tourist development has driven up the cost of living, Hawaii is one of the top ranking states in housing costs. About 65 percent of housing in Honolulu is condominiums. The median single family home resale price in 2002 was $335,000. Housing rentals, fuel, and food costs are among the highest in the country. These conditions force many Hawaiians to work two or three jobs to survive, ranking it second in the nation for multiple part-time employment.

The following is a summary of data regarding key cost of living factors for the Honolulu area.

2004 (3rd Quarter) ACCRA Average House Price: $673,932

2004 (3rd Quarter) ACCRA Cost of Living Index: 168.2 (U.S. average = 100.0)

State income tax rate: Ranges from 1.4% to 8.25%

State sales tax rate: 4.0%

Local income tax rate: None

Local sales tax rate: Levied by state

Property tax rate: $3.75–$5.72 per $1,000 valuation (residential)

Economic Information: Chamber of Commerce of Hawaii, 1132 Bishop St. Suite 402, Honolulu, HI 96813; telephone (808)545-4300; fax (808)545-4369