At 40, Hawaii Struggles With a Midlife Crisis

Hawaii turns 40 this weekend, and like others that age it’s in a midlife crisis.

On Aug. 21, 1959, when President Eisenhower welcomed the islands as America’s 50th state, spirits were high and confident. Sugar was king, and a second boom industry, tourism, had just dawned with the arrival a few weeks earlier of the first commercial jetliner at Honolulu’s airport, an event that brought out lei-bearing crowds.

For the next three decades the economy underwent spectacular growth, but the honeymoon ended in the 1990s. A nine-year economic slump shows no clear signs of ending, and it is testing the unique institutions of the Aloha State.

“I think Hawaii is now searching,” said Leroy Laney, an economics professor at Hawaii Pacific University. “Certainly, given what Hawaii is used to since statehood, the last 10 years have been totally different, and the level of political discontent is growing.”

Asian Turmoil Impacts State

All three legs of Hawaii’s post-World War II economy--tourism, agriculture and the military--have shown weakness.

The recent Asian financial crisis has lowered visitor arrivals from that region, keeping Hawaii from America’s economic expansion. Last year, 6.7 million people visited the islands, a drop of nearly 2% from the year before, the Hawaii Visitors & Convention Bureau said. But the largest foreign segment--visitors from Japan--declined by nearly 10%.

Sugar and pineapple--generating $250 million at statehood--have slumped to $177 million as growers move operations to cheaper countries.

Today, most former cane fields grow subdivisions, and Honolulu’s signature pineapple cannery hosts a Signature Theatres multiplex. Farmers now plant coffee and macadamia nuts.

Statehood opened the door to a flood of mainland and foreign capital. By the late 1980s, Japanese investment in Hawaii properties caused real estate prices to surge.

But that wave washed out. Investors now unload properties for a fraction of their purchase prices, often losing millions.

Bankruptcies jumped 30% in 1998, and foreclosures 14%.

Young Hawaiians Often Jobless

June’s unemployment rate of 6.2% was well above the national figure, 4.5%. Gov. Ben Cayetano recently said the state budget will run a $124-million deficit within four years.

Voter discontent almost cost Cayetano his job in November. Then-Maui Mayor Linda Lingle, a Republican, came within 5,000 votes of ending the Democrats’ 36-year hold on the governorship.

Young Hawaiians looking for work voice disappointment.

“Most of my friends that have good jobs don’t live here,” said Chris Reed, 29, a University of Hawaii graduate business student. “As much as I would love to live here, it doesn’t seem like there’s a whole lot of possibilities.”

The tough times are hitting more than wallets. Some say the state’s famous “aloha spirit” is eroding, as the property-crime rate ranks fourth in the nation and letters to the editor complain of rudeness.

“Before statehood, people were nicer,” said Richard Ishida, 72, a retired Honolulu firefighter. “In those days, everybody was close-knit. Not today.”

Questions that were put aside during more prosperous years are getting a loud airing in today’s Hawaii, putting pressure on powerful institutions such as the Democratic Party and public employee labor unions, which have gained influence with the growth of state government. At the same time, few politicians publicly advocate scaling back social welfare programs that have given Hawaii a national reputation for compassion.

Kingdom, Republic, Territory, Then State

From the uneasy present, it’s hard to resist viewing 1959 as a more optimistic time.

Hawaii, which had been a kingdom and a republic, ended its 60-year status as a U.S. territory after its congressional delegate, John Burns, forged a deal with powerful Texas Democrats, Senate Majority Leader Lyndon Johnson and House Speaker Sam Rayburn. The statehood pact brought Hawaii into the Union but allowed Alaska to enter first.

Some Senate Dixiecrats assumed that Hawaii’s delegation would support civil rights, given the islands’ ethnic diversity. Staunch anti-communists worried that Hawaii’s militant labor unions were strongholds of the “Red Menace.”

“In granting statehood to Hawaii, we actually invite four Soviet agents to take seats in the U.S. Congress,” Rep. John Pillion (R-N.Y.) said on the House floor on March 11, 1959.

Congressional approval came the next day.

High-Tech Aspirations

For years, Hawaiian economic and political life had centered on the plantations, where immigrant workers powered mills and canneries, toiling almost as indentured servants.

The so-called “Big Five” companies--Alexander & Baldwin Inc., Amfac Inc., C. Brewer & Co. Ltd., Castle & Cooke Inc. and Theo H. Davies & Co. Ltd.--controlled life in the fields and in the Territorial Legislature. As Republicans, company patriarchs opposed statehood, fearing a loss of power and arguing that taxes to run the new state government would be high. Washington paid for territorial government.

But the International Longshoremen’s & Warehousemen’s Union infiltrated the fields by night, often passing union cards underneath bathroom stalls.

Union-backed Democrats routed Republicans from the Territorial Legislature in 1954 and have controlled state politics ever since.

“It was a very easy transition for [the union] to make in engaging the rank-and-file members that statehood would extend political democracy to them,” said Ah Quon McElrath, 83, a former plantation labor organizer now on the University of Hawaii Board of Regents. “The workers understood they needed all the help they could get.”

At the same time, economic realities were changing.

A Qantas Boeing 707 touched down at Honolulu International Airport on June 30, 1959, introducing jet travel to Hawaii. Visitors numbered 243,000 that year, and passed 1 million in 1967.

Today, tourism is an $11-billion industry employing more than 180,000 people.

But that dependency on visitor spending has left the state more vulnerable to outside events such as the 1991 Gulf War and the Asian financial crisis.

Now state officials tout efforts to diversify the economy and make Hawaii the high technology, health care, education and retirement center of the Pacific. Most haven’t yet reached fruition.

That fragile balancing of Hawaii’s sun-splashed identity and its high-tech aspirations leaves this 40-year-old state struggling to find its niche.

“We are part of a world community, but how we retain that place in the world community is one of the questions in the future that we must decide,” McElrath said.

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Ben DiPietro, Bruce Dunford and Ron Staton contributed to this report.

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Hawaii’s Road to Statehood

Chronology of important events in Hawaii’s quest for statehood:

1849: Whig newspaper, the Northern Journal of Lowville, N.Y., advocates annexation and statehood for the Hawaiian Islands.

1854: King Kamehameha III secretly negotiates with President Pierce’s administration for annexation and statehood, but king dies that year.

1893: White businessmen and lawyers overthrow Queen Lili’uokalani to create republic and immediately seek annexation and statehood.

1898: Hawaii is annexed under a joint resolution of Congress and two years later is organized as a territory.

1903: The Territorial Legislature begins an almost annual practice of passing resolutions supporting statehood.

1919: Hawaii’s nonvoting delegate to Congress, Prince Jonah Kuhio Kalanianaole, introduces a statehood bill, but it dies in committee.

1934: The Jones-Costigen Sugar Act treats Hawaii sugar exports as foreign and subject to a quota system, increasing calls in Hawaii for statehood.

1937: After hearings in Hawaii, joint congressional committee recommends plebiscite on statehood.

1940: Island residents vote 2-1 for statehood in plebiscite.

1941: Japanese attack Pearl Harbor, bringing martial law to Hawaii until 1944.

1946: President Truman calls for Hawaii statehood.

1947: House passes statehood bill 196-133, but Senate takes no action.

1950: Hawaii ratifies a state constitution.

1952: A combined Hawaii-Alaska statehood bill dies in committee.

1953: House passes statehood bill for third time, but Senate again postpones action.

1954: Senate passes joint Hawaii-Alaska statehood bill, but House leadership refuses to accept it.

1957: Hawaii Delegate John Burns goes along with strategy of Senate Majority Leader Lyndon Johnson and House Speaker Sam Rayburn to schedule Alaska statehood bill in 1958 and Hawaii statehood bill in 1959.

1959: On March 11, Senate approves Hawaii statehood 76-15. On March 12, House concurs 329-89. On June 27, Hawaii voters ratify statehood. On Aug. 21, President Eisenhower signs statehood proclamation.