Fewer babies are being born in Hawaii than at any time in the past 10 years. At the same time, more people are leaving the state than moving here.

We know that fewer babies are being born in Hawaii and across the country. But does that mean the number of people here is declining? Not necessarily.

Immigration helps keep the U.S. population growing. And for a while, transplants moving to Hawaii did the same thing. But recently, that has begun to change.

A report from the University of Hawaii Economic Research Organization points out that the statewide population has now declined for two years in a row. Economist and UHERO Executive Director Carl Bonham says economic factors tipped us in the direction of decline.

“The U.S. economy is booming, while at the same time Hawaii has this relatively high cost of living. When you look at growth in employment and growth and income, we're near the very bottom [for] real income growth for the whole country,” Bonham told HPR.

So fewer babies are being born in Hawaii, and now in-migration isn’t keeping pace with people moving away.

It could be a statistical blip. The Hawaii Department of Business, Economic Development, and Tourism still projects positive, if tepid, population growth through 2045.

When a recession does inevitably hit the U.S. economy, Hawaii residents may slow their pace of mainland relocation. Addressing the shortage of affordable housing could also reverse the trend.

But what if it continues? At first glance, fewer people at the beach and on the road might not seem like such a bad thing. But with the surface level benefits of a smaller population come some deeper costs.

It will eventually mean a smaller labor force and fewer young workers to pay taxes. As the population becomes proportionally more aged, there will be a greater demand for health care, but fewer healthy people to offset the cost.

Andrew Mason, a population economist with the East West Center, says that shifts a greater share of the burden onto a fewer number of younger people.

“Rapid growth in the number of elderly is going to lead to an increase in Social Security and Medicare benefits. And there are fewer taxpayers to fund that.”

Mason went on to say that since a smaller number of taxpayers will be footing the bill, our labor force will need to be even more productive in the future. Mason says that will require better-educated workers, and in that area, there is some reason to be optimistic.

“There's an opportunity to really improve the education system without spending a lot more money. That means in the future we may not have so many workers, but they'll be a lot more educated and a lot more prepared to pay for Social Security and health care,” Mason said.

Education outcomes could theoretically improve under conditions of population decline because per-pupil expenditures will increase as the number of students decline. Mason says that is particularly beneficial because there will be pressure to spend more on health care as the population ages.

Even if the trend of overall population decline doesn’t bear out, and the state’s slow-growth projections prove accurate, the average age in Hawaii will continue to climb. Out-migration may slow down or cease, but all signs indicate the birthrate will continue to fall.

That means fewer people in future generations, each paying a relatively higher share of the cost to care for their predecessors.

This is the second of two parts on Hawaii's declining birthrate. Read Part I here.