Census data show importance of government relief in mitigating pandemic-related increases in poverty

HONOLULU, Hawaiʻi — Poverty has increased in the State of Hawaiʻi, according to the latest release of American Community Survey (ACS) state-level data released last Thursday, September 15 by the U.S. Census Bureau, which captured poverty data from 2021.

Across the country, most states saw worsening or stagnant poverty rates and incomes between 2019 and 2021—an anticipated result of the pandemic and its economic impact. However, the ACS data point to the critical importance of federal and state investments made during the COVID-19 pandemic in mitigating the severity of these adverse impacts. 

Between 2019 and 2021, poverty in Hawaiʻi increased slightly for both individuals and families by 1.9 percent and 1.6 percent respectively. That means 28,000 more individuals and 6,400 more families were living in poverty in 2021 than 2019. Meanwhile, households saw median incomes decrease by 3.6 percent, representing a loss of $3,200 in annual income. 

While poverty increased overall, Native Hawaiian and Pacific Islanders saw a 3.2 percent reduction in poverty over this time period, with 6,500 fewer individuals experiencing poverty in 2021 compared to 2019. This group was also the only racial group to see an increase in their wages, with a 16 percent rise in pay, translating to a gain of ​​$11,000 in annual income. 

Despite rising employment, median household income in Hawaiʻi was still $3,200 less on average in 2021 than it was before the pandemic, staying roughly the same as it was in 2020 due to the expiration of unemployment benefits and several months of high inflation that eroded wage gains.

Poverty and income data from the ACS do not directly reflect the value of relief programs (other than unemployment insurance), and therefore cannot be examined in isolation. In connection to the new state data, the bureau also released national data on September 13 which showed that government investments drove nationwide child poverty rates to historic lows in 2021. The dramatic, 46 percent drop in the national child poverty rate was due chiefly to the expansion of the Child Tax Credit (CTC) in 2021, which kept 5.3 million people above the annual poverty line. 

While the expanded CTC helped Hawaiʻi families weather the pandemic too, the credit was not enough to completely overcome our highest-in-the-nation cost of living. The poverty rate among Hawaiʻi keiki still increased between 2019 and 2021 by 1.2 percent, representing about 3,800 more children living in poverty. 

Overall, federal investments shielded many Hawaiʻi families from more severe hardship and helped shorten the country’s economic crisis. Hawaiʻi lawmakers made similarly influential policy choices when they enacted a permanent and refundable Earned Income Tax Credit (EITC) this past legislative session. 

In 2020, Hawaiʻi’s nonrefundable state EITC was claimed by 64,007 households. Native Hawaiian and Pacific Islanders—who earn less on average than Asians, Whites, and Hawaiʻi residents who identify as more than one race—account for the largest share of EITC recipients, signaling the program’s ability to increase racial equity by reducing disparities in household income. 

When the state credit becomes refundable beginning next year, the policy will not only put more money into the pockets of eligible families, but it will also better distribute the credit to the families that need it the most by ensuring that the lowest-income earners receive the full value of the credit in the form of a refund.

“The power of government investments in people and communities to reduce poverty and stimulate the economy cannot be overstated,” said Will White, Hawaiʻi Budget & Policy Center director. 

“Here in Hawaiʻi, the high cost of living requires a more robust social safety net that will ensure hardworking families can continue to drive our economy forward regardless of external factors like the COVID-19 pandemic,” he added. “Where federal government relief leaves gaps, the state can and should step in and close them by expanding programs like the EITC or creating a state level CTC.”

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The Hawaiʻi Budget & Policy Center is a program of the Hawaiʻi Appleseed Center for Law & Economic Justice. Our mission is to ensure that our state and local economic policies increase opportunity for all residents. We do this by analyzing and understanding the implications of tax and budget decisions and making sure that the public and policy-makers are informed through strategic communications, coalitions and key partners.