Executive Summary

In 2012, Hawaiʻi Appleseed published The State of Poverty in Hawaiʻi, which highlighted the harsh economic reality faced by all too many families in our state. Four years later, we are revisiting the many indicators covered in our first report to see how Hawaiʻi’s low-income residents have fared as the economy appears to have stabilized. But who has been left behind by the recovery? What does Hawaiʻi’s low unemployment rate and high median income obscure about the real conditions for Hawaiʻi’s working families?

Nationally, public opinion may be split on issues of income and poverty, but a hard look at the facts in this report demonstrates how much our working families are struggling just to get by. Our progressive legacy shows that Hawaiʻi historically recognized that the well-being of our entire community is tied to that of our most vulnerable. But has this commitment eroded as we have prioritized other areas of economic growth?

This report is intended to remind the public and policymakers that far too many people have been left behind by our economy’s rebound. The connection between poverty, opportunity, and outcomes is clear, and the inability of Hawaiʻi’s families to make ends meet impacts every other area of their well-being. This report underscores the seriousness of poverty in our state and the need to make policies which increase opportunity for all.

We note that this report does not address many other serious social and economic justice issues facing specific populations, but Appleseed believes financial insecurity and poverty deeply worsen the inequities faced by specific groups, including Native Hawaiians, people with disabilities and the elderly, among many others. While this report does not delve into these disparities, economic disadvantage is an underlying theme for these groups, and this report intends to demonstrate its wide-ranging effects in our state.

Solutions

We know that it is possible to alleviate the impact of poverty and increase economic mobility. Some of the solutions will require a substantial investment on the part of the state, but they are solutions that we cannot afford to overlook. Our state spends significant sums on healthcare, human services and education, yet without addressing the fundamental problem of household financial insecurity, we will never see a full return on these important investments. The end of this report provides a brief sketch of a policy agenda to create economic opportunity for our entire community, including the following priority recommendations:

Increasing Income

• Stop taxing people in poverty by adjusting Hawaiʻi’s inequitable tax system. Hawaiʻi is the second worst state in the nation for taxing people in poverty. Low-income households pay taxes at nearly twice the rate of our highest income earners. Hawaiʻi needs to stop taxing people further into poverty by adopting reforms such as creating a state Earned Income Tax Credit, revising the Low-Income Household Renters Credit to account for 30 years of inflation since its last adjustment, and considering adjustments to the standard deduction and income tax schedules.

• Continue to increase the minimum wage. Hawaiʻi’s minimum wage does not come close to a living wage—the amount a person needs to afford life’s basic necessities. However, the floor on wages set by the minimum wage is important. After eight years with the minimum wage set at $7.25, Hawaiʻi increased the minimum wage by 50 cents in 2015, phasing in an increase to $10.10 by 2018. To avoid another long period of stagnation, Hawaiʻi should tie the minimum wage to changes in the consumer price index.

Reducing Homelessness and Addressing the Lack of Affordable Housing

• Utilize innovative housing models. Reducing housing development costs offers a way to increase the supply of affordable housing. State and county leaders need to adopt regulatory changes and subsidies to support the use of low-cost housing options such as micro-units, ADUs, and adaptive reuse of existing buildings.

• Create a shallow rental subsidy program. For many households struggling with homelessness, the issue is a purely financial one—they have a steady source of income, but it is simply not enough to cover all their expenses given Hawaiʻi’s high cost of living. Hawaiʻi needs to adopt and experiment with a shallow rent subsidy program that provides small subsidies to families who are just short of the income they need to avoid homelessness, helping many families with a relatively small amount of resources.

• Fund affordable housing development. The state should continue to increase funding for the Rental Housing Revolving Fund, one of Hawaiʻi’s primary means of funding affordable housing development.

• Expand Housing First. Housing First is an evidence-based approach that centers on providing people experiencing chronic homelessness with housing as quickly as possible to provide a stable environment in which to treat the issues underlying their homelessness. Housing First is relatively new to Hawaiʻi, and continued support is needed to refine and expand these programs.

• Adopt inclusionary zoning. Building luxury housing units is usually more profitable than building housing for the typical Hawaiʻi resident, so developers have little incentive to build affordable units. Inclusionary zoning requires developers to build affordable units along with market rate housing, and it is critical to ensuring adequate affordable housing for Hawaiʻi households.

Alleviating Hunger

• Adopt innovative school breakfast models. Hawaiʻi’s children are needlessly going hungry despite the availability of a federally-subsidized school breakfast program that offers low-income students free and reduced-price meals. Hawaiʻi ranks 46th in the nation in terms of participation in the breakfast program, with less than 45 percent of students who eat school lunch participating in breakfast. Hawaiʻi needs to adopt innovative breakfast service models such as Breakfast in the Classroom, which has been proven to increase participation rates. Doing so is associated with a host of benefits including improved attendance, well-being, and academic performance.

• Improve access to the Supplemental Nutritional Assistance Program (SNAP). SNAP (formerly known as food stamps) is one of the most important programs in the fight against hunger. Yet one in four eligible households in Hawaiʻi are not participating in the program. Simplifying the application process and increasing outreach will improve access to the program, ensuring that fewer families struggle with hunger, and bringing more dollars into the state to bolster our economy.

While the problem of poverty is daunting, these measures represent relatively simple changes that would have a dramatic impact on households who are struggling to make ends meet in Hawaiʻi. With enough political will and commitment of resources, our state can take action to alleviate poverty.