Economic hardship in the islands isn’t just your imagination. Numbers back up the perception — Hawaii has been pounded by the recession.

Over the last two years, according to a new U.S. Census report, Hawaii had the nation’s largest percentage drop in median income and biggest percentage spike in poverty rate.

The report shows Hawaii’s median household income dropped by more than 13 percent while the poverty rate jumped by 67 percent from 2007 to 2009, since the Great Recession hit in 2008.

The report [pdf], released Thursday, included information about income, poverty and health insurance coverage. Among other things, it reveals that Hawaii’s median household income in 2009 was $55,649, down nearly $6,000 from the 2008 mark of $61,521, which was itself down from the 2007 level of $64,022, the peak before the recession hit.

The national median household income dropped less than $500, from $50,233 to $49,777, between 2007 and 2009. In the same period, Hawaii household income plunged from 4th to 8th to 13th highest in the nation, with the average Hawaii household making less in 2009 than it did in 2004.

Hawaii’s 13.1 percent decrease from 2007 was the worst in the nation, with only Georgia (10.9 percent) and Arkansas (10.4 percent) also reaching double digits.

Hawaii Median Household Income

Year Median Income Change
2009 $55,649 -9.5%
2008 $61,521 -3.9%
2007 $64,022 +5.9%
2006 $60,470 +1.5%
2005 $59,586 +5.9%
2004 $56,242 +8.5%
2003 $51,834 +9.6%
2002 $47,303 -0.3%
2001 $47,439 -8.0%
2000 $51,546 +15.8%

Source: Civil Beat analsys of U.S. Census Bureau data [xls]

The drop in income was even more pronounced for those at the bottom.

The percent of Hawaii persons in poverty — those living with income less than the poverty line — has soared from 7.5 percent in 2007 — the second lowest in the nation that year behind New Hampshire — to 9.9 percent in 2008 (11th lowest) and now 12.5 percent in 2009 (21st lowest). There are 156,000 people living below the poverty line in Hawaii.

The poverty line for a single, unrelated person is $10,956 in annual income [xls]. For a family of four, the poverty line is $21,954.

Hawaii’s 66.7 percent increase in poverty rate from 2007 to 2009 is by far the country’s largest, with only Alaska (53.9 percent) and South Dakota (50 percent) poverty rates going up by as much as half.

States With 10 Largest Poverty Rate Increases

State 2009 Rate 2007 Rate Pct Increase
Hawaii 12.5 7.5 66.7%
Alaska 11.7 7.6 53.9%
South Dakota 14.1 9.4 50.0%
Arizona 21.2 14.3 48.3%
Idaho 13.7 9.9 38.4%
New Mexico 19.3 14.0 37.9%
Arkansas 18.9 13.8 37.0%
Rhode Island 13.0 9.5 36.8%
Indiana 16.1 11.8 36.4%
Georgia 18.4 13.6 35.3%
United States 14.3 12.5 14.4%

Source: Civil Beat analsys of U.S. Census Bureau data [xls]

While these two metrics might lead you to believe that Hawaii has felt the pinch perhaps more than any other state, economist Paul Brewbaker says that by many other measures, that’s simply not the case: the hole never got as deep and we’ve gotten out of it quicker.

“There’s an array of indicators that say that it didn’t get that bad in Hawaii, and when it did, it was on the neighbor islands,” he said. He pointed to positive metrics like unemployment rate, job growth and housing prices, which have all started to rebound in earnest in recent months, particularly on Oahu. “You go through the list and you’re like, ‘Wow, we’re so lucky we’re here.’ … The broad pattern (is) really instructive.”

Asked about the income drop and poverty bump, Brewbaker said, “One should be thinking about the differential impact of the recession experience on certain households that are at the lower end of the distribution to begin with and for which the character of this recession was particularly punishing.”

When previous bubbles burst in Hawaii, struggling citizens always had the option of leaving the state for greener grass in Las Vegas or California to find work. This time around, with the rest of the country lagging Hawaii in unemployment, there was nowhere for struggling residents to go.

Hawaii still finds itself in the top of half of states in both median household income and poverty rate by virtue of having been in a good position before the recession hit. If the economic growth Brewbaker describes continues, life in Hawaii could once again become an economic paradise.

DISCUSSION Have you felt the pinch over the past two years? Join the conversation.

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