Executive Summary

The Hawaiʻi Appleseed Center for Law & Economic Justice has compiled this report to illustrate the crisis facing those living in poverty in Hawaiʻi who are suffering severely as they bear the heaviest burden of the recession. Hawaiʻi Appleseed also proposes solutions to address the crisis by increasing revenue and implementing policies that strengthen our community. Hawaiʻi must take immediate, substantive action to prevent its residents from being driven deeper into poverty.

Crisis in Paradise

As the recession lingers, Hawaiʻi’s low-income residents are still struggling. The national backdrop is grim: the U.S. ranks low on international scales of social justice and income inequality. Here in Hawaiʻi, 131,982 residents live in poverty, including 41,230 children—14 percent of all of the state’s children.

These alarming figures fail to capture the true number of people who are struggling, given our extremely high cost of living and relatively low wages. A look at the economic data shows:

• Hawaiʻi taxpayers with incomes in the bottom 20 percent pay combined state taxes at almost twice the rate of the top 1 percent.

• Among all states, Hawaiʻi has the second highest number of millionaire households per capita, a figure which has grown 18.1 percent in just three years.

• Two-thirds of single adult families with one or two children are below the self-sufficiency level, while 18.5 percent of two-adult families with two children also fall below it.

• When unemployment almost tripled between November 2006 and November 2011, low-income workers were hit hardest.

• Hawaiʻi has the highest cost of living in the nation but the lowest average-adjusted income in the nation. Honolulu is the second-most expensive city in the nation after New York City.

• Hawaiʻi’s housing costs are the highest in the nation. Our median rent is 50 percent more than the national median and 75 percent of poor households spend more than half of their income on rent.

• A “thrifty food plan,” as defined by the U.S. Department of Agriculture, costs 61 percent more in Hawaiʻi than on the mainland. Enrollment in the Supplemental Nutrition Assistance Program (SNAP) has increased by 39 percent since 2007, while 15 percent of households don’t always know how they’ll get their next meal.

• Hawaiʻi has the third highest homelessness rate among the states, with an increase of 11 percent between 2010 and 2011. Of these homeless individuals, 42 percent are children.

• Between 2008 and 2010, the need for benefits spiked: There was a 13 percent increase in families receiving Temporary Assistance for Needy Families (TANF) and a 17 percent increase in the amount of time on assistance. The number of people receiving state medical assistance jumped 22 percent; and applications to federally-qualified health centers increased 62 percent.

• Hawaiʻi’s ratings in child wellbeing, particularly in health indicators, slipped significantly since the mid-2000s, while educational achievement continued to lag.

Increased Needs, Decreased Services

More Hawaiʻi families are on public benefits and stay on them longer, but a Hawaiʻi Appleseed Center survey found that social service organizations providing crucial safety net services faced funding cuts of 18.6 percent and were forced to reduce staff by 16 percent.

Social services programs hit by these cuts include early childhood and family, mental health and domestic violence programs. More devastating cuts are on the horizon.

Repairing the Safety Net

The state must swiftly implement revenue-raising measures and enact policies that will repair the social safety net. Doing so will save the state money in the longterm. Relief for those in poverty can also come through sound fiscal policies that protect and supplement their hard-earned income, such as a state earned income tax credit and an increase in the minimum wage.

For the more fortunate, we should introduce policies that ensure everyone pays their fair share in contribution to our community. Specific policy proposals include:

• Increase taxes on hard liquor, implement a tax on sugary beverages and collect taxes on inter-net sales.

• Tax all sources of income equally, including the pensions of wealthy retirees and income from capital gains.

• Increase federal funding by maximizing enrollment in federal programs such as SNAP.

• Invest in programs for young children, preventative care, justice reinvestment and drug treatment programs.

Conclusions

Ensuring fair and equal opportunity for all citizens must move to the forefront of our political and social dialogue. We must take a hard look at how our state is impacted by the struggle of people living in poverty.

To preserve our economic stability, human capital and longterm wellbeing, Hawaiʻi must restore its legacy of fairness. Should we fail to act now, this crisis may irreversibly damage our community as increasingly more people are dragged into poverty by inequitable policies and inefficient use of available resources.