Report: Fundamentals of Hawaii’s economy would need to change to ease cost of living
HONOLULU, Hawaii (HawaiiNewsNow) - The governor and lawmakers say easing Hawaii’s high cost of living is a central objective of this legislative session.
But doing that won’t be easy.
In a recent write-up, the Economic Research Organization at the University of Hawaii notes that residents are unlikely to get much relief from the price of paradise ― barring changes to the fundamental factors that drive high costs in the islands and modest incomes.
The most recent government statistics show that the price of goods and services in Hawaii are more than 18% higher than the national average. (Rents alone are 50% higher than the average.)
And the cost of living is even higher in Honolulu.
Exacerbating the problem: Incomes in Hawaii aren’t nearly as high as in other locales with high prices.
In fact, UHERO notes, 2017 per capita personal income in Hawaii was only about 2.5% higher than the national average. That meant the purchasing power of Hawaii residents was the fourth lowest in the US.
In their legislative package, the governor and Democratic lawmakers have proposed boosting the minimum wage, increasing tax credits for working families and working over the next decade to set up a universal preschool program in the islands given the high cost of child care.
UHERO didn’t address the plan, but did say there is a chance that the gap between Hawaii’s high prices and the rest of the nation could narrow ever so slightly in the next few years.
The reason?
Hawaii’s shrinking population ― as people leave for the mainland ― and stagnant job growth are likely to mean that appreciation of rents and other costs “will be muted.”
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