Hawaiʻi may increasingly resemble economically distressed “left-behind” regions—not because of rising prices, but because incomes and productivity have lagged for decades, according to a new analysis released February 19, by the University of Hawaiʻi Economic Research Organization (UHERO). “Left-behind” regions are areas where slow growth and limited opportunity leave incomes and productivity lagging behind the national average, often affecting residents’ economic mobility and overall opportunity.
The analysis builds on a February 1 UHERO report, “Beyond the Price of Paradise: Is Hawaiʻi Being Left Behind?” Also authored by Steven Bond-Smith and Erich Schwartz, it highlights new comparisons showing how the state ranks when income is adjusted for cost of living.
Using a price-adjusted measure of GDP per capita, the researchers found that once purchasing power is considered, Hawaiʻi’s real income per person has barely grown since the early 1990s and has steadily diverged from the national average. The February 19 analysis also compares Hawaiʻi to federal benchmarks used to define economic distress. When incomes are adjusted for local prices and compared across states, Hawaiʻi’s relative position drops sharply—placing it closer to slower-growth states than to high-income, high-cost metro areas such as Seattle or Boston.
Tourism, the state’s dominant industry, boomed in the decades after statehood but has largely plateaued since the late 1980s. Without sustained expansion in its economic backbone, broader growth has remained weak. The authors argue that Hawaiʻi’s high cost of living may mask deeper structural problems.
“What distinguishes Hawaiʻi is not only that it is expensive,” the researchers wrote. “It is that incomes and productivity have not kept up, and this has persisted for decades.”
The findings reinforce conclusions from the February 1 report that the state’s challenges stem less from rising prices than from long-term stagnation in productivity and per capita growth. The researchers warn that without diversification beyond tourism and stronger productivity gains, Hawaiʻi risks continued economic stagnation and outmigration.
See the UHERO website for the entire analysis.
UHERO is housed in UH Mānoa’s College of Social Sciences.
