Policymakers and media outlets often point to Hawai\u02bbi\u2019s high cost of living when discussing why people flee the state for greener economic pastures. But a study by economists at the University of Hawai\u02bbi Economic Research Organization argues there\u2019s another, equally important factor: a lack of high-paying jobs.<\/p>\n
It\u2019s the combination of high prices and low wages \u2014 not just high costs alone \u2014 that makes Hawai\u02bbi a place where even middle-income people struggle to get by, the study reports, backed by a profusion of quantitative detail. Alarmingly, the report says, the situation is only getting worse, signaling a widening affordability gap between Hawai\u02bbi and other places.<\/p>\n
\u201c Beyond the price of paradise: Is Hawai\u2018i being left behind?<\/a> \u201d compares Hawai\u02bbi to prosperous, high-cost locales such as San Francisco, where many people feel they\u2019re being priced out by rising housing costs, gentrification and inequality, despite overall wage growth.<\/p>\n Instead of stopping there, UH professor Steven Bond-Smith and graduate research assistant Erich Schwartz show how Hawai\u02bbi\u2019s economy resembles that of the most economically distressed areas, where a lack of opportunity drives outmigration, despite low living costs. <\/p>\n The conclusion: Hawai\u02bbi\u2019s dubiously unique mix of low wages and scant opportunity make it more like West Virginia than San Francisco.<\/p>\n \u201cCrucially,\u201d the report says, \u201cthe combination of high prices and low incomes predicts as much outmigration as in some of the nation\u2019s most struggling cities, where low costs of living typically cushion economic disadvantages.\u201d<\/p>\n In essence, Hawai\u02bbi\u2019s economy is defined by a toxic economic brew combining the worst of both worlds: high costs and low incomes and opportunities. <\/p>\n Based on real per capita income alone, Hawai\u02bbi isn\u2019t that bad, about the U.S. average. But that changes when factoring in the state\u2019s cost of living <\/p>\n \u201cOur prices and incomes combined actually make us look more like Mississippi or Alabama or West Virginia,\u201d Bond-Smith said in an interview.<\/p>\n Bond-Smith describes those areas as \u201cleft behind\u201d because nothing has come in to replace previously thriving industries such as coal mining.<\/p>\n \u201cThat\u2019s exactly the same story really in Hawai\u2018i, if you look at tourism spending,\u201d he said. Adjusted for inflation, tourism spending peaked in 1989, with spending in 2019 about the same as it was three decades prior. <\/p>\n \u201cAnd so our tourism industry has basically stopped growing,\u201d he said, \u201cbut nothing else has emerged to support the lack of growth.\u201d<\/p>\n The Cost Of Hawai\u02bbi\u2019s Unaffordability<\/p>\n The report also notes the cost of outmigration<\/a> beyond usual observations that a stagnant or shrinking population threatens Hawai\u2018i\u2019s economic productivity<\/a> and stability, especially as people who stay here get older and retire. Native Hawaiians in particular have felt economic pressure to leave their ancestral homeland, the report notes. The same goes for people from long-time kama\u02bb\u0101ina families.<\/p>\n \u201cAs outmigration erodes the presence of both K\u0101naka Maoli and multi-generational kama\u02bb\u0101ina,\u201d the report says, \u201cit threatens not only cultural continuity but also the local networks and place-specific knowledge that have long underpinned the economy and community in Hawai\u02bbi.\u201d<\/p>\n A key takeaway is that policy responses to the affordability crisis are incomplete, focusing primarily on the price of paradise and not the other side of the equation.<\/p>\n State and local policymakers are well aware of the state\u2019s high cost of living. Particularly concerning housing, political leaders regularly adopt policies to develop homes to rent or sell at below-market rates. Gov. Josh Green\u2019s administration is building dozens of tiny home villages for homeless residents. And mayors and city councils are continually trying to curtail the use of homes as short-term vacation rentals to increase housing supply.<\/p>\n But Bond-Smith said policies to reduce costs won\u2019t solve the problem of stagnating or declining income that contributes to the affordability gap \u2014 and outmigration.<\/p>\n \u201cIf we resolve cost of living, if we make housing more affordable, all we\u2019re doing is kicking the can down the road, because that gap is going to continue to widen,\u201d he said. \u201cIn 10 to 15 years\u2019 time, people will be looking at the incomes they can earn in Hawai\u2018i and what that buys them.\u201d<\/p>\n Bond-Smith agrees that Hawai\u02bbi has lifestyle amenities that keep people here; others stay because of deep cultural roots or family ties. But he notes that such benefits haven\u2019t been enough to stop the flow of outmigration by people who no longer want to struggle with the affordability gap.<\/p>\n \u201cThese are people who\u2019ve decided the benefits that Hawaii has to offer,\u201d he said, \u201care no longer enough to get past that gap.\u201d<\/p>\n Report Offers Few Solutions<\/p>\n At 44 pages, the report offers a plethora of data supporting Bond-Smith\u2019s thesis that it\u2019s not merely the cost of living but a more complex affordability gap driving residents from Hawai\u02bbi. It offers few solutions, beyond promoting higher-value tourism and a broad suggestion to diversify the economy.<\/p>\n \u201cRevitalization will depend on strategic investment in infrastructure \u2014 broadly defined to include not just physical assets, but also digital connectivity, human capital, research and innovation capacity, and institutional support systems that enable new industries to emerge,\u201d the report says.<\/p>\n Bond-Smith said the purpose of the paper wasn\u2019t to drill down on such solutions but to address something \u201cwhere I think both politicians and the media have kind of got it wrong.\u201d<\/p>\n \u201cRather than just having the cost of living as being the number-one problem, I think actually the lack of growth is probably an even bigger, higher priority to address,\u201d he said. \u201cWe need to lift productivity, or value per person working in Hawai\u02bbi, and that\u2019s what allows people to be able to afford to continue living in Hawai\u2018i.\u201d<\/p>\n ___<\/p>\n \u201c Hawai\u02bbi\u2019s Changing Economy<\/a> \u201d is supported by a grant from the Hawai\u02bbi Community Foundation<\/a> as part of its work to build equity for all through the CHANGE Framework.<\/p>\n ___<\/p>\n