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 easier to hire workers for lower wages in Hawaii, because If they don’t like what you’re paying, it’s not like there’s a lot of other higher paying jobs in Hawaii, Or easy to move to another state where there are. Unless you’re lucky enough to get into civil service or healthcare you’re basically flipping burgers for tourists or making up rooms for tourists. Due to the remote location there’s not a big manufacturing or technology industry.
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