I live in Hawaii and recently heard my large, Hawaii-based employer use the term “cost of labor” when explaining how they derived the organization’s new salary ranges. It’s no surprise that jobs and companies in Hawaii generally pay less than equivalent jobs/companies on the mainland. But when I asked my employer on an all-company call to explain what cost of labor actually is and why Hawaii employers can pay so much less than companies on the mainland, the answer the consultant provided was largely a non-answer.
Can someone explain to me like I’m 5, why is Hawaii’s cost of labor so low compared to the mainland?
(Edit: for clarification, cost of living and cost of labor are different terms, and I’m wondering why the cost of labor in Hawaii Is so disproportionate to the cost of living compared to parts of the mainland that also have high costs of living, such as much of California, NYC, Washington, and so on. The disparity between these two terms seems much more significant in Hawaii)
In: Economics
It’s like that in San Diego too. Think of it like a “universal perk” that everybody gets by living (and hence working) there. Since you’re getting this perk, which is something that has a significant real world value (people pay lots of money to just visit) it will naturally be a consideration when people are considering which job to take.
In other words, some people would rather earn 30% less and work in Hawaii than earn 30% more and work in, say, North Dakota.
Latest Answers