Military Spending

The reach of military dollars in Hawaii is far greater than you think. But can it protect us from a recession?

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In 2001, Hoana Medical Inc., a spinoff of Oceanit, unveiled the LifeBed, a hospital bedding system that could read vital signs without any physical contact, reminiscent of Dr. McCoy’s sick-bay bed in Star Trek. It can detect changes in heart rate even when a physician or nurse is not nearby. In effect, nurses can monitor a number of patients from a centralized location, even if patients are in different rooms.

LifeBed is now a commercially viable product, but it never would have gotten there without a federally funded research grant. Its original customer? NASA? No, try the U.S. Army.

According to Hoana’s Web site, “The LifeBed system proved itself in Medevac helicopters where it was able to accurately detect patients’ heart and respiratory rates through full body armor in spite of the extreme background noise and vibration.”

LifeBed’s success shows that in places like Hawaii military dollars go to more than instruments of war.

“Many people look at the military as the military, but in reality it’s made up of several components,” says Jim Tollefson, president and CEO of the Chamber of Commerce of Hawaii. “[It’s] not just military commanders, but it’s made up of several components that has everything from technology resources that we gain from, crosses over at Barking Sands in Kauai to the money spent at a filling station in Wahiawa. It’s across the board.”

The state’s numbers tell the same story. According to the state of Hawaii’s Department of Business, Economic Development and Tourism’s (DBEDT’s) 2002 study that examined how military spending circulates in the local economy, for every $1 billion in military expenditures, more than $1.5 billion of business is created in new business. In addition, the military creates more than 18,000 jobs locally and the state and local businesses benefit from nearly $1 billion paid in wages to military personnel and its civilian workforce can spend locally.

But the state receives far more than $1 billion in military spending: Department of Defense Hawaii expenditures, which include payroll, procurement contracts and grants, reached $6.1 billion in FY 2006, ranking Hawaii 25th among the 50 states and Washington, D.C. The total is up from $5.6 billion in FY 2005 and $3.3 billion in FY 1996. More than half of those totals go towards payroll of military personnel and civilians employed by the DoD. The rest goes directly to local businesses in the form of procurement contracts or research grants.

Just how much is that? “I can tell you military spending accounts for about 23 percent of the total Oahu economy, and tourism is around 30 percent,” says Lawrence Boyd, labor economist at the University of Hawaii West Oahu.

‘A great partner’

Think about the company you work for or perhaps run. What outside services do you need? You pay the electric bill to make sure you have power. You need a property manager and maintenance crew to maintain upkeep. If you’re planning a renovation, you hire a general contractor. You allocate funds to purchase equipment and supplies. If you’re having an event, you hire a catering company.