Aggrieved stockbrokers and downward-pointing arrows make for dramatic images in newspapers and on television, but the crisis now rippling through the economy is writ most painfully on the faces of families struggling to make ends meet.
Here in Hawai’i, we were spared a direct hit from the subprime mortgage fiasco, but its effects are everywhere and increasingly apparent, from the loss of Aloha Airlines to layoffs at The Contemporary Museum to cutbacks this week at the already thin Honolulu Advertiser.
Honolulu Weekly looks at the toll thus far and searches for agencies and organizations offering relief.
Since the housing market began to unravel in late 2006, the subprime mortgage crisis has been at the forefront of discussions on how to mend an ever-worsening economy and help those who can’t afford to keep their houses.
And while Hawai’i has so far escaped the worst of the subprime fiasco, the Islands are far from unscathed from the fallout. Economic strain is squeezing residents to a breaking point, as more and more people are unable to pay their bills.
Nothing up but the rent
One of the portions of the population that has been largely ignored throughout the meltdown is the group that includes many of those who couldn’t afford to have mortgages–even risky ones–in the first place.
“There has been a quite dramatic increase in the number of people who need rental assistance,” said Salvation Army spokesman Daniel de Castro. “Just within the past year, it has gone up more than 100 percent. It’s significant and people are on the verge of being evicted. The souring economy is really affecting the people of Hawai’i.”
He said in September of last year, 51 renters had applied for assistance through the Salvation Army. In September of this year it increased to 110. In order to qualify for rental assistance, people have to be either homeless or have an eviction notice.
“A lot of folks are underemployed and more and more of them are simply unemployed,” de Castro said. “They have to keep up with utility bills, the cost of food and rent and eventually something’s gotta give. If you pay rent, you can’t eat and if you don’t pay rent so that you can eat you’re out on the streets. It’s really a hard choice.”
Anyone who rents can tell you that it always feels like it’s going up. But unlike the housing market, there are few entities that track rental trends. State agencies don’t comprehensively analyze that data, and even realtors say it’s tough to follow month-to-month averages. According to the National Low Income Housing Coalition, the fair market rent for a two-bedroom apartment in Hawai’i is $1,509. And while the state’s minimum wage rate–at $7.25–is slightly higher than the federal standard of $6.55, it still means that someone earning minimum wage must work 160 hours a week, 52 weeks a year, in order to pay fair-market rent and afford to live here while still keeping the recommended two-thirds of his or her income for savings and other expenses. Even in assessing the average wage for someone who rents housing in Honolulu–$12.42 an hour–that person would have to work 93 hours a week, 52 weeks a year to make ends meet.
Affordable housing advocates agree that amid the mortgage crisis, there has been too little attention paid to the needs of those who rent and the challenges they face.
“There is all this talk about keeping people in their home and bailing them out,” said Doran Porter, executive director of the Affordable Housing and Homeless Alliance in Hawai’i. “But I hear no one talking about helping people whose expenses have skyrocketed so that now they’re unable to meet their rental costs. It’s a critical time and people are on the edge of not being able to make payments, if they’re not already there.”
Watt the heck?
It’s not just the cost of renting but the cost of everything else that makes paying bills unmanageable for so many. Hawai’i drivers have finally seen some relief at the pump, where regular unleaded gasoline averages at $3.79 a gallon this week, but that’s still more than 50 cents above the average this time last year.
Energy costs are also among the slew of worsening economic burdens. Residents of Hawai’i pay nearly twice as much for electricity than the national average, but Hawai’i still receives among the least federal energy assistance of any state.
“It’s because we don’t use heat in Hawai’i that we get such a modest amount of energy assistance from the federal government,” said Lillian Koller, director of the Hawai’i Department of Human Services.
Of the more than $5 billion divvied up between states from the federal low-income heating assistance program known as LIHEAP Hawai’i was granted less than $200,000 in 2008.
And as personal and professional budgets dwindle, businesses continue to lay off workers or shut down operations altogether. In the past half a year, residents of Hawai’i have watched that list of ailing companies grow longer and longer: Aloha Airlines went under, Moloka’i Ranch closed, hundreds of Maui Land & Pineapple Co. employees were laid off, more than a dozen positions were cut at the Bishop Museum, Sea Life Park cut 20 percent of its staff, dozens of employees were laid off at The Honolulu Advertiser, Nordstrom, Hawai’i Medical Center, North Hawai’i Community Hospital and Kona Community Hospital, and the Moloka’i Times and the Weekly‘s sister publication Hawai’i Island Journal ceased publication. All of that along with the news this week that University of Hawai’i will have to find another way to finance its $100 million West O’ahu campus expansion.
Help is available
These are among the developments that led Gov. Linda Lingle to double the timeframe in which people can collect federally-funded unemployment benefits to 26 weeks. Hawai’i still has one of the lowest unemployment rates in the nation–at 4.2 percent in August compared to a national average of 6.1 percent–but the state’s unemployment rate is on the rise: It was just 2.7 percent this time last year. And many people who are economically strapped don’t realize the aid options from the state and from local non-profit agencies that are available to them.
The website for the Department of Labor and Industrial Relations includes comprehensive information on how to file an unemployment claim, who is eligible for food stamps, state-funded health insurance options, along with frequently asked questions about the various services–including confidential counseling–that the state provides.
The number of people enrolling in these kinds of assistance programs has gone up across the board. Koller said 108,000 people on O’ahu receive food stamps, which represents about 12 percent of the population.
“We really encourage people to apply,” said Koller. “At least $22 a month are available at a minimum and it can be much higher, typically around $76 a month.”
She said that while Hawai’i ranks among the state with the highest enrollment in the food stamp program, many people who are eligible to enroll hesitate.
“It’s a stigma issue,” said Koller. “You can be living at 130 percent above the federal poverty level and still qualify, but people don’t want to accept help with food. But it’s nutrition assistance. We want people to take advantage of it. Go get it.”
Some may now be more willing to accept help where they can get it, especially in the wake of the termination of Keiki Care, the state plan Lingle signed into law last year to ensure every child in Hawai’i had health insurance from birth until age 18. But as some state programs shut down, other organizations are stepping up to help. The Salvation Army is one of them. Starting last weekend, it began accepting donations at the Aloha Stadium Swap Meet as a way to handle increasing demand for used clothing as people can’t afford to buy new. But spokesman de Castro said the organization is facing its own troubles during the downturn.
“We can only give so much based on our resources,” de Castro said. “Charities nationwide are struggling to keep up with inflation. And even people who want to support us are giving less because they can’t afford as much. If the trend remains the same, even if donations stay the same, it won’t keep up with higher cost. We may be finding ourselves in the same situation as everybody else. We just hope we can still maintain the same services.”