Wednesday, July 17, 2024
Hawai'i Free Press

Current Articles | Archives

Tuesday, January 21, 2020
Cost of Living: Hawaii Per Capita Income 4th-Lowest in USA
By UHERO @ 8:07 PM :: 3390 Views :: Hawaii Statistics, Cost of Living

Per capita personal income for Hawaii and the USbefore and after adjusting for the cost of living (2008 - 2017)

Little relief from Hawaii’s high cost of living

by Rachel Inafuku and Peter Fuleky, UHERO, January 21, 2020

Living in paradise comes at a cost. Hawaii is notorious for its combination of high costs of living and low incomes relative to these costs. These factors impose hardships on Hawaii families of modest-to-moderate income and prompt some to consider relocating to less-expensive mainland locales.

So how expensive is it to live in Hawaii compared with other states? The BEA produces regional price parities (RPP) that allow us to compare consumer buying power across the country. The most recent RPPs show that the price of consumer goods and services in Hawaii—including housing rents and imputed rents of homeowners—is more than 18% higher than the national average. Other high-price states include California and New York, with average prices 15-16% higher than the national average. As in most other high-priced areas, expensive housing is the main driver: Hawaii rents are more than 50% higher than the national average, and higher still in Honolulu. In contrast, the average price for goods in Hawaii is 11% above the national average.

The higher price of goods and services can be explained in part by the distance of Hawaii from mainland markets. Shipping costs are one component. But the physical distance from the mainland also raises the pricing power of local firms due to more limited competition. The high rents reflect the appeal of living in Hawaii, the restrictions and regulations facing developers, and, as we mentioned in our recent Construction Forecast report, building costs that are among the highest in the world. A significant portion of these costs are passed on to consumers.

Even though Hawaii prices are much higher than those across the country, our per capita personal income is only on par with the national average. In 2017, the prices of goods and services were 18.5% higher in Hawaii compared with the US overall, but per capita personal income in Hawaii was only 2.5% higher. As a result, after adjusting for Hawaii’s high prices, the purchasing power of income per person was the fourth lowest in the nation!

Why are RPP-adjusted incomes in Hawaii so low? Partly this reflects the mix of industries here, with a large number of jobs in lower-paying areas linked to tourism. It likely also reflects the same regional preferences that drive up costs: many Hawaii residents want to live here because of geographical and cultural amenities—including family ties—and are willing to accept a lower wage in order to do so.

In coming years, the gap between Hawaii’s high prices and prices nationally is likely to narrow to some degree. With a shrinking population and stagnant job growth, appreciation of rents and other costs will be muted, while they continue to mount across the country, particularly in coastal mainland cities. Having said that, the factors that drive our high costs and modest income are fundamental. We are unlikely to get much relief from the price of paradise.  


HNN: Report: Fundamentals of Hawaii’s economy would need to change to ease cost of living


TEXT "follow HawaiiFreePress" to 40404

Register to Vote


Aloha Pregnancy Care Center


Antonio Gramsci Reading List

A Place for Women in Waipio

Ballotpedia Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii


Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii ConCon Info

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federation of Republican Women

Hawaii History Blog

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Matters

Hawaii Military History

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Together


Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

July 4 in Hawaii

Land and Power in Hawaii

Lessons in Firearm Education

Lingle Years

Managed Care Matters -- Hawaii

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

National Parents Org Hawaii

NFIB Hawaii News

NRA-ILA Hawaii


OHA Lies

Opt Out Today

Patients Rights Council Hawaii

Practical Policy Institute of Hawaii

Pritchett Cartoons

Pro-GMO Hawaii

Rental by Owner Awareness Assn

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

School Choice in Hawaii

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii