Hawaii is the state lagging the farthest behind in the recovery of its labor force, a fact that perhaps should not come as a surprise. The terrible shocks of a global pandemic and the devastation of the 2023 Maui wildfires were severe departures from the norm.

But the norm itself already was an economy dominated by lower-paying service-industry jobs paired with high costs for housing and virtually every basic expense. The headwinds stirred by more recent events have compounded the challenges for businesses with positions to fill, with more of Hawaii’s employees heading elsewhere to live and work.

That’s the reality check issued by University of Hawaii economists, who have projected that the labor shortage is likely to persist for several years, weighing down economic growth.

That finding should define a number of considerations for state policymakers in the coming months, especially as the Legislature convenes for its 2025 session. These include where to draw the line between two essentials: managing the impact of economic activity on the islands’ environment and developing the revenue to underwrite Hawaii’s broad social needs.

The University of Hawaii Economic Research Organization (UHERO) on Friday released its third-quarter forecast, titled “Lagging Maui Recovery, Slower Speed Limit for Hawaii Growth,” presenting dim expectations for the local labor market.

Carl Bonham, UHERO executive director, recorded a video summary that’s posted with the forecast online (find the forecast link on the bottom left at uhero.hawaii.edu). in which he describes the report as “a story of two different economies.”

Maui is still struggling with the downturn following the August 2023 wildfires that killed 102 people and destroyed much of Lahaina, he said. The other counties, meanwhile, show economic conditions that “remain surprisingly strong,” Bonham said.

The Valley Isle itself should see some economic acceleration next year when reconstruction activity is expected to pick up steam, with permit applications and final permits for rebuilding the destroyed homes are increasing.

However, the county’s labor force is down 5% from levels preceding the fire. This contributes to a longer-range workforce problem, beyond the immediate recovery, because of the decline in the overall population across the state. Birth rates are down, residents are moving away, and few people are headed this way.

All of this is happening in a national election-year context in which the economy has been a leading concern. Last week’s cut in the federal benchmark interest rate was an indicator that inflation was easing, but whether this shift was sufficiently timely to turn things around is not yet clear.

Bonham rightly underscored that with a persistent labor shortage, business provides less fuel to the state’s tax base, which supports state priorities such as universal preschool.

Hawaii isn’t the only state having labor problems, which means employers must continue to find ways of making pay and benefits competitive. Encouraging in-migration in key areas such as health care and the visitor industry is critical to compensate for a homegrown worker shortage, an issue on which the administration and lawmakers should engage.

If there is worry about the revenue base, elected leaders also may need to monitor spending and tax policy, ensuring that tax relief is tightly focused on helping those who need it most.

Striking the right balance between growth targets and the sustainability to keep Hawaii livable remains the goal. And the UHERO forecast comes in time to provide some necessary guideposts for those elected in November.