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 typical corporate bs jargon. Translation:
“We heard some of you complaining about money. We’ve heard this complaint quite a bit lately and we got worried you guys will start quitting, so we looked at a bunch of stats for our state/locality to see what other people are making. We’re pretty sure you’re not gonna quit with these new ranges because no one else really pays better than these ranges, and we doubt you’re gonna move ACROSS THE OCEAN just for a job. We bet you don’t have the money to live if you wanted to either. Be happy we’re not paying you less “
To oppress the indigenous/local land bound (surfs, “renters”, “wage slaves”, ect.) as a way to keep them from becoming too wealthy and making sure all those rich owners of capital on the main land maintain the status quo and keep it cheap enough so even the (upper) middle class can still afford to visit and stay at the ridiculously wealth people’s winter homes, “hotels”, there is even different levels of class grouped by room type there if you’ve had the benefit of staying at one. They even have a global concierge service called the “gold keys”. Many things may have changed since the dark ages, but some are still the same.
Tl;dr “cost of labor” is the amount they pay the lower classes to maintain the status quo, feeding you just enough so your hungry enough to keep coming back for more.
George Carlin – “Forget the politicians. The politicians are put there to give you the idea you have freedom of choice. You don’t. You have no choice. You have owners. They own you. They own everything. They own all the important land, they own and control the corporations that’ve long since bought and paid for, the senate, the congress, the state houses, the city halls, they got the judges in their back pocket, and they own all the big media companies so they control just about all of the news and the information you get to hear. They got you by the balls. They spend billions of dollars every year lobbying to get what they want. Well, we know what they want. They want more for themselves and less for everybody else. But I’ll tell you what they don’t want. They don’t want a population of citizens capable of critical thinking. They don’t want well informed, well educated people capable of critical thinking. They’re not interested in that. That doesn’t help them.”
“It’s a big club, and you ain’t in it”
Business owner here.
Cost of labor, or the amount of money it costs a company to pay its workers, may sound like a pretty straightforward concept. But employees are often surprised to learn that it can cost the company a *lot* more to employ them than the amount they see on their pay check.
I personally run a union shop. The employees are paid well, a little over $50/hour. If 10 years ago you asked me how much it costs a company to pay someone $50/hr, I would have told you $400.
Now that I manage finances, I can tell you that a full-package employee at $50/hr has an *actual, direct* cost of about $950. The majority of that is hidden in insurance policies and government taxes or fees.
So your boss was probably talking about an expense that has gotten out of hand, that is directly tied to the amount of hours the company has to pay its employees for.
What industry are you speaking of specifically? I think because Hawaii is such a tourist destination, you are seeing a lot of service jobs with potentially lower salaries because cost of goods are already so high.
Im sure other industries like healthcare or real estate development or civil engineering could still be pretty lucrative or comparable to mainland
On the contrary, certain jobs like servers may actually make a bit more here in Hawaii due to tips being a percentage of the cost of items. That’s why a lot of the well paid jobs in Hawaii revolve around service and tourism.
Cost of labor is usually looked at from a geographic standpoint so in your area, it’s generally the pay that people accept for the work compared to the national average
Hawaii has a higher supply of labor than demand for it. Therefore the cost of labor (wages) are low.
Labor cost is total dollar spent on Labor as a percent of the whole revenue the company makes. There will be lots of answers but it boils down to this basically:
Total revenue-spending (Product cost+Labor cost+other costs) =profits
In Hawaii, many products need to come from mainland, this makes costs higher. Labor cost is lower by necessity. Other costs are things like taxes, property costs, rental costs, utilities, etc. all those other costs are higher as well, especially real estate/rental.
So with higher product cost, higher other costs, the only way to keep prices down and profit up is to keep labor low. It’s really the only one you have control over. Also people who want to live in nice areas will work for less sometimes.
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