Hawai‘i, like the rest of the country, is feeling the effects of growing income inequality. Earnings for low- and middle-wage jobs have been stagnant since 1980, while only higher-income jobs are paying more. The graph below shows these trends for the U.S. and for Hawai‘i from 1980 to 2018.
Although the inequality in wage growth is similar for the U.S. and Hawai‘i, the gap between low- and median-wage workers and high-wage workers is even greater in Hawai‘i than in the U.S. as a whole. On average, the top 10 percent of wage earners in Hawai‘i saw their inflation-adjusted wages climb by over $12, while median-wage earners experienced only a $2.00 increase, and low-wage earners saw an increase of less than a dollar.
And public policies based on the concept of “trickle down” economic, like the Trump Administration’s Tax Cuts & Jobs Act of 2017, have excacerbated these problems over the past four decades. Despite numerous examples showing how these policies worsen inequality, wealthy business tycoons have funded lobbying efforts and the establishment of think tanks to push trickle-down economics into the forefront of economic policy.
Growing income inequality, especially substantial inequality, negatively affects us all. A 2014 study by the Organisation for Economic Co-operation and Development, reported in the Washington Post, found that rising inequality in the U.S. from 1990 to 2010 caused about a 5 percent drop in cumulative GDP per capita over that period. According to the study, “The main mechanism through which inequality affects growth is by undermining education opportunities for children from poor socio-economic backgrounds, lowering social mobility and hampering skills development.”
The Hass Institute at the University of California at Berkeley highlights six public policy initiatives that would address inequality:
- Increase the minimum wage.
- Expand the Earned Income Tax Credit.
- Build assets for working families.
- Invest in early childhood education.
- Make the tax code more progressive.
- End racial segregation.