Executive Summary

If we work hard and play by the rules, we should be able to afford a decent life and a roof over our heads. Our earnings should provide security for our families, and our children should have the opportunity to stay and thrive in Hawaiʻi. The COVID-19 crisis has made it all too clear that Hawaiʻi’s seeming prosperity was built on an economic model that failed too many working families. When more than 200,000 people suddenly lost their jobs, many had no savings and were left at the mercy of unemployment payments, public assistance, and private charity.

The economic fragility of hard-working families that is so apparent now has been building for a long time. When we look back over the past 40 years, we see how an already hard-to-afford life in Hawaiʻi moved even further out of reach for many residents. This change was driven largely by stagnant wages for low- and middle-income households coupled with rapidly rising rental housing costs. Even before coronavirus-related unemployment and business closures, Hawaiʻi’s people were feeling these pressures. 

A 2019 survey of state residents reported that:

• 74% worried about housing costs;

• 71% worried about cost of living;

• 72% support a minimum wage hike;

• 67% think the gap between the rich and poor in Hawaiʻi is widening; and

• 66% of those aged 18–34 considered leaving the state or had a household member who left.

An examination of the data makes it clear why people feel the way they do. For the past 40 years, wages have not kept up with rising costs for most Hawaiʻi workers.

Between 1980 and 2018, the hourly pay for low-wage workers increased by only 98 cents. Middle-income workers gained only $2.17 per hour. In comparison, earnings for high-income workers increased by $12.13 per hour. 

Between 1980 and 2018, in inflation-adjusted figures, low-wage workers gained just $2,000 in annual wages, while skyrocketing rents added $8,100 to the yearly cost for a fair-market one-bedroom apartment. By 2018, diverging trends in earnings and housing costs resulted in a $6,100 net loss of economic wellbeing. 

For working families with young children, a household’s biggest expense after rent is childcare and private preschool. The average cost for care for a preschooler in Honolulu takes up 44 percent of a low-wage worker’s full-time earnings.

Largely due to Hawaiʻi’s general excise tax, low-income families pay a larger percentage of their income in state taxes than do households in the top tax brackets.