Hawaiians Paying a Painful Price for Paradise

A year ago, fed up with the high cost of living in Hawaii, investment adviser Robert W. Chamberlain picked up his “Places Rated Almanac” and shopped for a cheaper place to live.

He and his wife settled on Sewickley, Pa., a swank community near Pittsburgh where the Chamberlains now happily reside in double the house at half the price on half the salary.

“It wasn’t so much that we decided to move to Pennsylvania but decided that Hawaii didn’t have what we wanted any longer,” said the 40-year-old Chamberlain, one of a growing number of Hawaiian residents buying one-way tickets to the mainland.

The high cost of living and doing business in Hawaii has residents here worried that their Pacific outpost will become less of a home and more of a vacation destination as prices continue to drive away the middle class.

“Sad to say, I think the likely future for Hawaii is to become a Disneyland in the middle of the Pacific, a tourist destination where it’s impossible for anyone but the very wealthy to live,” said University of Hawaii professor Jim Dator, director of the Hawaii Research Center for Future Studies. “We’re already moving toward a two-tiered society: a small number of the very rich and large numbers of poor.”

At what price Paradise?

Try $1.45 for a gallon of regular unleaded gas, $6 for a box of cereal, $4.50 for a gallon of milk and $11 for a two-pound block of Velveeta. Try $980 a month for an 800-square-foot one-bedroom apartment and a quarter of a million dollars for a run-of-the-mill house.

“We’ve been banging the drums about this for the last year and a half,” noted Sam Slom, president of Small Business Hawaii, which represents 3,100 business owners in the state. “What we are observing is the wholesale exodus of the middle class and entrepreneurial people from this state.”

Hawaii has been a fairly expensive place to live for years, but Paradise has never come at such a premium: Since 1987, spurred by foreign investment and land speculators, housing prices have doubled. Last year, the median-priced single-family house on the island of Oahu--where the vast majority of the state’s 1.1 million residents lives--cost $352,000.

In the last couple of years, movers have reported a surge in traffic to the mainland--particularly to the Pacific Northwest and Las Vegas, a resort town long popular with Hawaiians.

There has also been an explosion in ohana units, housing additions occupied by extended family, especially adult children who cannot afford to live on their own. In some neighborhoods, practically every other house has a second-story going up.

In the next few weeks, 30-year-old Kevin Takaesu and his bride will move into the nearly finished second-story above his parents’ house in the Palisades in the hills overlooking Pearl City. Together, Takaesu, a sales supervisor for a bakery, and his wife, a secretary, earn an annual salary of $61,000, far short of the income they require to qualify for a mortgage.

So Takaesu and his parents got a home improvement loan to build the ohana (which in Hawaiian means “family”) unit. His monthly payment on that loan is less than $700, which makes it more affordable than the average rental apartment.

Although Hawaii continues to gain population, it has done so at a less rapid rate over the last decade, and state statistician Robert Schmitt has observed a steady drain of workers in the last five years as well as fewer mainlanders looking for jobs here.

“I suspect many would say the cost of living is too high here,” said Schmitt.

Indeed, there are more Hawaiians who hold multiple jobs than in any other state, and nearly half of the state’s civilian jobs are in tourism, historically a low-paying industry, he added.

Meanwhile, the so-called “Paradise Tax”--the differential between the cost of living in Hawaii and the mainland average--has risen to 34%, according to the Tax Foundation of Hawaii.

So expensive has Hawaii become that even Slom, who has lived here 32 years, plans to make a house-hunting trip to the East Coast later this month. “We do not own a home here, and both my wife and I work,” said Slom, 49. “We’ve tried seriously to get a home and we can’t afford it. Could we buy a house? Absolutely. Could we buy a house we like? Absolutely not.”

“What Hawaii was is not what Hawaii is today,” he added. “We’re going down a fork in the road right now. We can find order and identity for ourselves, or we can put everything up for sale.”

At the University of Hawaii, Dator said he believes that only an economic depression or an environmental catastrophe will forestall Hawaii’s transformation into a mega-resort, a place where only the rich and poor reside.

While Wendy Roylo Hee, a 36-year-old college administrator, hates paying an average of $50 a bag for groceries, she said her home state has so many amenities that she would never leave: the glorious sunsets, beaches, tropical climate and, most importantly, “the aunties, uncles, cousins are all here, and that’s something you can’t buy anywhere else.”

When she visits relatives in Los Angeles, Hee scours the discount outlets, relishing the wonderfully low clothing prices. She has been known to bring back to Hawaii 10 cases of ginseng cola, a type of soda she can’t find at home, and as many as a dozen Danish cakes.

“To stay here,” she said, “there are lots of things we do without. We don’t have cable TV or Nintendo and we don’t go out much. Hand-me-downs are a way of life for us, but that’s all right, it’s a way of coping. If there is a compelling reason for you to stay in Hawaii, you stay in Hawaii. If you don’t have a compelling reason, you’ll leave.”