Hawaiʻi has a more even distribution of income than the nation overall, but the gap between upper-middle- and lower-middle-income earners is wider than some traditional measures of inequality suggest, according to a new (糖心视频ERO) analysis.
A published October 27 by 糖心视频ERO Professor Peter Fuleky and PhD candidate Vanessa Pepino examined how Hawaiʻi compares with other states using two measures of income inequality.
One measure, the Gini coefficient, considers the overall distribution of income. In 2024, Hawaiʻi scored 0.41, compared with 0.45 nationally. The lower score indicated a more even distribution of income, which the authors attributed in part to Hawaiʻi having fewer extremely high earners than states with major technology and finance industries.
A second measure compared incomes at the 80th and 20th percentiles, providing a closer look at the gap between upper-middle- and lower-middle-income earners. In Hawaiʻi, those at the 80th percentile earned about 2.8 times as much as those at the 20th percentile in 2024. That ratio narrowed from 3.2 in 2012.
The report explained that the two measures can tell different stories. Hawaiʻi’s relatively lower incomes at the very top of the distribution reduce its overall inequality score, while comparatively strong earnings among upper-middle-income households widen the gap between the 80th and 20th percentiles.
The narrowing income gap reflects several factors, including increases in the state’s minimum wage, relatively high unionization, government assistance and stronger labor markets that helped raise wages for lower-paid workers.
However, income inequality measures do not show how far household earnings go. Hawaiʻi remains one of the nation’s most expensive states, and the authors noted that high living costs can place a disproportionate burden on lower-income households.
“In Hawaiʻi, income is distributed more evenly than in most states, yet it still falls short for a large share of residents,” the authors wrote. “The more telling benchmark is not how residents’ incomes compare with one another, but how they compare with the cost of rent, groceries, utilities and health care. Those costs take a far bigger bite at the bottom of the income ladder than at the top. While the narrowing of the gap between high and low earners is an encouraging development for Hawaiʻi, it is not the same as a better standard of living. Closing the gap between earnings and living costs is the harder task still ahead.”
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