High inflation and a slower economic recovery in the state slashed the real median household income in the state by about 9% — twice the national average.

At first glance, the latest census numbers seem to paint a fairly rosy picture of people’s finances in Hawaii. 

In 2022, the real median household income in Hawaii grew by 2.8%, meaning people’s wages grew faster than the rate of inflation and they had more spending power than the previous year. At the same time, real median incomes nationally dropped by 2.3%

But dig a little deeper, and a more complicated picture emerges. If people in Hawaii saw their income grow more than the nation as a whole in 2022, it may simply be because people in the state suffered such severe income drops during the pandemic. 

Between 2019 and 2022, the real median household income in Hawaii declined by 9.2%, nearly twice the national average. 

Yes, it really is harder to make ends meet in Hawaii these days.

Hawaii is No. 10 in terms of per-capita income in the U.S., even though we have the highest cost of living in the nation. 

Wage changes in the last three years have also exacerbated existing gender and racial inequality in the state.

Uneven Recovery

Wage data collected by the Census Bureau shows a slow but steady recovery from the pandemic that mirrors Hawaii's broader economic trajectory.

Chief state economist Eugene Tian said he doesn't expect Hawaii's economy, which is significantly dependent on tourism, to fully recover until 2026. Meanwhile, most of the American economy has already achieved a full rebound.

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The good news, Tian said, is that Hawaii had a lower rate of inflation last year than the nation as a whole.

"I think that's a good sign," he said.

Although Hawaii has been experiencing good economic growth in the last few years, data shows some big differences in terms of who is back on the path to financial security and who is not.

The real median wage for full-time male workers in Hawaii increased 6% between 2019 and 2022. For women, it dropped 1.5% according to data from the annual American Community Survey.

Because the ACS is a sampling of households -- rather than an accounting of everyone in the nation like the decennial census -- there can be larger margins of error and inconsistencies when looking at smaller population groups. However the trends the ACS points to are troubling.

In Honolulu County, the real median income for Asian households stayed nearly flat between 2019 and 2022, while Native Hawaiian and Pacific Islander households saw their real income decline by 15.2%. For white households, the figure was a 9% drop.

Looking at median household incomes as a measurement of economic stability is also complicated.

"Every now and then articles come out the news here saying 'Oh, Hawaii has like the fourth highest median household income in the country,' which makes everyone think we're doing so great," said Nicole Woo, director of research and economic policy at the Hawaii Children's Action Network. "Part of that is because we have some of the largest-size households in the nation."

For Tian, the large household sizes can be a good thing in terms of economic stability because people living together can pool their spending, particularly on housing -- which is one of the biggest contributors to Hawaii's high cost of living.

"We spend 40% of our income on housing," Tian said, pointing out that it's a much higher percentage than the average on the mainland.

Addressing The Gender Pay Gap

Hawaii, like the rest of the United States, has long struggled with closing the gender pay gap.

In 2019 -- which was the year that real median income peaked in most places in the country -- women in Hawaii earned 11% less than men on average. A year into the pandemic the wage gap had widened to 21%.

Improvements have been made in the last two years, but the gap is still larger than it was pre-pandemic.

One way the state is trying to address the inequity, which persists across employment fields, is by requiring large companies to include salary ranges in job postings.

The new law, which goes into effect next year, can help give people a better idea of what to negotiate for. And when new jobs are posted, existing employees will be able to see if they are getting paid what they are supposed to, said Younghee Overly, public policy chair for the American Association of University Women of Hawaii.

Lawyers are encouraging large companies in Hawaii to start getting ready for the law now by doing a pay analysis to look at not just gender pay gaps but also pay gaps by race.

"This is going to help," Overly said. "Not just from a gender perspective but a race perspective too."

AAUW of Hawaii worked for several years to get the pay equity bill passed in Hawaii. The organization is working with the Hawaii Children's Action Network to tackle two other issues that affect women in the workplace: child care and paid family leave.

"If we don't fix those problems, we're not going to fix gender pay gap problems," Overly said.

"Struggling To Get By" is part of our series on "Hawaii's Changing Economy" which is supported by a grant from the Hawaii Community Foundation as part of its CHANGE Framework project.

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