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Policy & Regulation

Hawaii Island Businesses Should Monitor Potential Housing Policy Shifts for Labor Cost Impacts

·6 min read·👀 Watch

Executive Summary

Hawaii Island Mayor Kimo Alameda's State of the County address highlighted ongoing concerns about housing shortages and affordability, signaling potential future policy changes that could impact business operating costs and labor availability. Businesses should anticipate evolving regulations and monitor housing market indicators.

  • Real Estate Owners: Potential for new development incentives or zoning changes.
  • Small Business Operators & Tourism Operators: Risk of increased labor costs and staffing challenges due to affordability issues.
  • Agriculture & Food Producers: Land use policies related to housing could affect agricultural land availability.
  • Healthcare Providers: Staffing stability may be impacted by housing costs in rural areas.
  • Action: Monitor local housing policy discussions and key affordability metrics.
👀

Watch & Prepare

Medium Priority

While no immediate action is required, ignoring potential policy shifts related to housing and affordability could lead to increased labor costs or difficulty attracting employees over time.

Monitor upcoming county council meetings and public hearings related to housing development, zoning, and affordability initiatives. Track median home prices and average rental costs on Hawaii Island through reports from organizations like the Hawaii Association of Realtors and the Department of Business, Economic Development & Tourism. If housing cost increases begin to outpace wage growth by more than 5% annually, or if specific restrictive zoning proposals emerge, businesses should proactively reassess staffing models and explore options for employee housing assistance.

Who's Affected
Real Estate OwnersSmall Business OperatorsTourism OperatorsAgriculture & Food ProducersHealthcare Providers
Ripple Effects
  • →Housing shortage → increased competition for limited rental units → higher rent costs for employees → pressure for wage increases for businesses
  • →Limited housing → difficulty attracting skilled labor → potential staff shortages in key sectors (healthcare, hospitality) → reduced service capacity
  • →Land use policies for housing → potential reduction in land available for agriculture → impact on local food production and supply chain
  • →Rising cost of living due to housing → decreased discretionary spending by residents → potential impact on local retail and service businesses
Stunning aerial shot of Waimea, HI showcasing the coastline and tropical scenery.
Photo by Josh Withers

Hawaii Island Businesses Should Monitor Potential Housing Policy Shifts for Labor Cost Impacts

Hawaii Island businesses should track emerging local government discussions and initiatives surrounding housing shortages and affordability, as these conversations signal potential future policy shifts that could influence labor availability and operating expenses.

The Change

In his recent State of the County address, Hawaii Island Mayor Kimo Alameda focused on the persistent challenges of housing shortages and homelessness on the Big Island. While the speech did not announce immediate policy changes, the emphasis on these issues indicates that they will remain a high priority for the mayor's office and the county council. This suggests a continued focus on exploring and potentially implementing measures aimed at increasing housing supply and improving affordability.

Who's Affected

Real Estate Owners: Developers and property owners should be aware that increased focus on housing affordability could lead to new incentives for affordable housing projects, potential zoning adjustments, or changes in property tax assessments. Developers may see new opportunities or regulatory hurdles depending on the specific policies enacted.

Small Business Operators: For businesses reliant on a local workforce, housing affordability is a critical factor. As housing costs on Hawaii Island continue to rise relative to wages, businesses may face increased pressure to offer higher compensation or benefits to attract and retain employees. This could lead to higher operating costs and impact profit margins.

Tourism Operators: While tourism brings revenue, it also contributes to the demand for housing and exacerbates cost-of-living issues for local workers. If housing remains unaffordable, hotels, tour companies, and other hospitality businesses could struggle to find and keep staff, potentially impacting service quality and operational capacity.

Agriculture & Food Producers: Land use is a key concern for agriculture. Policies aimed at increasing housing density or converting land for residential use could directly impact the availability of agricultural land. Furthermore, if farm laborers cannot afford to live near their workplaces, it could lead to increased transportation costs or labor shortages.

Healthcare Providers: Access to healthcare is closely linked to the availability of healthcare professionals. High housing costs can make it difficult for clinics and hospitals, especially in rural areas, to attract physicians, nurses, and support staff, potentially leading to staffing shortages and reduced access to care for residents.

Second-Order Effects

  • Housing Shortages → Increased Labor Costs → Reduced Business Margins: As housing becomes less affordable, businesses will likely face pressure to increase wages to attract and retain employees, directly impacting operational costs and potentially reducing profit margins for small businesses and tourism operators.
  • Limited Housing Supply → Rural Worker Departures → Strain on Local Services: If workers cannot find affordable housing in or near rural communities, they may be forced to seek employment elsewhere or endure long commutes, leading to labor gaps in essential services like healthcare and agriculture, and potentially increasing demand for public services for those facing longer commutes.

What to Do

Action: Monitor local policy discussions and economic indicators related to housing.

Real Estate Owners: Stay informed about upcoming zoning discussions and potential development incentives. Consider how proposed housing policies might affect land values and development pipelines.

Small Business Operators & Tourism Operators: Analyze your current staffing costs and labor availability. Begin scenario planning for potential wage increases over the next 1-3 years. Explore partnerships or initiatives that support employee housing.

Agriculture & Food Producers: Assess the potential impact of land use policy discussions on your current and future operational footprint. Understand how housing affordability might affect your recruitment of agricultural labor.

Healthcare Providers: Evaluate staffing retention strategies in light of rising housing costs. Consider proximity to potential workforce housing developments when planning for future recruitment.

All Businesses: Track the county's progress on housing initiatives and the outcomes of related public consultations. Key indicators to watch include average rental prices, median home prices, and local wage growth in comparison to the cost of living.

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