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Union Power Ensures Hawaii Has Hefty Government Labor Force

THE GOVERNMENT SHARE: Teachers rally against pay cuts and benefit reforms in Honolulu in 2011. Three out of every 10 workers in Hawaii are employed by local, state or federal government. (AP Photo/Honolulu Star-Advertiser, Bruce Asato) Courtesy Watchdog.org

BY MALIA ZIMMERMAN- HONOLULU – Hawaii has more government workers as a percentage of all workers than every state in the union save Alaska, a new poll by Gallup shows.

Nearly three out of every 10 employees – or 27.8 percent of employed adults in Hawaii – work in a federal, state or local government agency, according to the survey. Hawaii falls behind the District of Columbia, at 29.2 percent, and Alaska,28 percent.

Driving the booming government payrolls are factors of geography, military strategy and the strength of unions here. Taxpayers in turn pay some of the highest rates in the country to support sprawling bureaucracies from the local level on up, and are on the hook for pension and health care debts for decades to come.

“The government and the public need to realize that desiring a program is like owning a pet,” Kalbert Young, the state director of Budget and Finance, said. “It should be entered into as a long-term commitment because it’s a relationship that cannot easily be stopped.”

Hawaii has about 65,000 state and local full-time employees, according to the most recent U.S. Census data, with a payroll of about $266 million. The state is home to more than 52,000 federal employees and retirees.

The high numbers are partly due to geography, said Young, who used to be finance director of Maui County.

That county has four islands in its jurisdiction, and there are duplicative positions on each.

“We have courts on every major island in the state,” Young said. “But we also have to have jails, prisons, probation officers, prosecutors, admin, etc. to support a multi-island court system.

“If this were a mainland state or if all the counties were contiguous, there would be opportunities of scale and efficiencies.”

Hawaii Island County, also known as the Big Island, is divided by massive unpopulated landscapes that break up two major population centers in Hilo and Kona. But the state also has areas that are rural and remote, boosting the cost of providing services to these pockets of people.

There are a number of federal workers in Hawaii, the farthest outpost of the U.S., and there is a need for military defense and a federal court system.

There are 10 military installations in Hawaii, supported by more than 57,000 enlisted and civilian employees.

“Just the fact that Hawaii is a strategic location for the military means that you would expect a higher concentration of military across all branches in Hawaii as opposed to, say, Idaho,” Young said.

Lowell Kalapa, president of the Tax Foundation of Hawaii, sees another factor at work: the strength of public employee unions.

Union leaders help get lawmakers elected, and lawmakers reward them with pay increases, benefits much more generous than in the private sector and job security.

“Organized labor is not going to let you downsize,” Kalapa said. “If a program or service gets cut, those employees are shifted somewhere else, not cut.”

Indeed, when former Gov. Linda Lingle cut the government workforce by 7 percent in 2009 and 10 percent in 2010 and furloughed others because of challenging economic times, the state’s public employees were in an uproar.

Agricultural inspectors claimed invasive species would take over the state. Teachers said students would not get an education. Product inspectors said consumers would be cheated, and tax department personnel said back taxes would not be collected in a timely manner, compounding state government’s financial woes.

Elected in 2010, Gov. Neil Abercrombie hiked taxes and fees to restore many of the cuts made by Lingle.

Abercrombie has called for the state budget to increase by 8 percent, then 11 percent, over the next two years. The state teachers’ union has demanded he go further by restoring cuts to teachers’ salaries and giving them a pay increase to boot.

Any increase would put pressure on taxes, already among the highest in the nation.

Among the states, Hawaii has the highest income tax and the highest taxes on gasoline – as well as an across-the-board excise tax of 4 percent to 4.5 percent on all goods and services, including medicine and food.

Lawmakers want more.

In the current session, they are proposing tax increases on everything from plastic bags, pensions, alcohol, sales of all goods and services, gasoline, oil, bottled drinks, sugar and cigarettes.

Some lawmakers want to legalize gambling and marijuana use and tax those activities at 15 percent.

Hawaii’s big government payroll means even more money needs to be set aside for retiree benefits.

Connecticut and Illinois are ranked worst in the nation when it comes to taxpayer burdens from unfunded liabilities, but Hawaii is close behind, coming in as the third worst “sinkhole” state, according to an analysis by the Institute for Truth in Accounting.

“Because pension and other retirement benefits are not immediately payable in cash, most of these compensation costs were ignored when calculating balanced budgets,” said Sheila Weinberg, founder and CEO of the institute. “Furthermore, the State has set aside only 31 cents to pay for each dollar of retirement benefits promised.”

The institute estimates that as of 2011, every taxpayer would have to pony up $38,300 to cover state workers’ retirement costs, an increase from $32,700 in 2010.

The state owes public workers more than $20 billion, and state officials estimate that figure will climb to $37 billion in the next 12 years unless lawmakers put into motion an aggressive plan to pay down the debt.

“Until you begin to address the generous benefits and the size of government, we will have this problem,” Kalapa said.

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3 Comments for “Union Power Ensures Hawaii Has Hefty Government Labor Force”

  1. The article states that "A recent poll by Gallup shows Hawaii has the third highest number of government employees in the nation, just behind Washington DC and Alaska". Is it the highest number of government employees or the highest percentage of government employees? California has 30 times as many people in Hawaii and it would be hard to imagine that Hawaii has more government employees than California (but I can easily see how Hawaii would have a higher percentage of government employees). I can imagine that another challenge is that after losing two senior Senators, Hawaii will probably see a drop in Federal funding which could put further pressure State funding. Federal funding in the past probably helped Hawaii finance a large government payroll.

  2. To the Unions: Thank you for your past contributions to workers lives. Unfortunately you are now the son of the guy who did all the good stuff who demands respect even though you just get in the way

  3. Malia Zimmerman, great job. thank goodness journalism is still alive; how refreshing.

    I am a 10 yr small business owner, a former administrator in state govt--omg govt waste and corruption is incredible here. the inbreeding of unions, politics and legal system in an island state increases our costs as well.

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