Hawaii was the 50th state to be admitted to the union on August 21, 1959. It is also the only state located outside continental North America. It is the 11th least populous and 8th smallest state in the union. Hawaii is inhabited by over 1.4 million residents, along with thousands of tourists and military personnel.
The Economy Of Hawaii
Tourism has been the largest industry in Hawaii since it achieved statehood in 1959. It accounts for about a fifth of the gross state product, though the state government has made efforts to diversify and reduce the dependency. Other core sectors of the economy are the service industry, fishing, education, agriculture, and defense. The unemployment rate is one of the lowest in the country. About 8.48% of millionaires in the United States are in Hawaii. The Department of Defense spends roughly 13 billion annually in the state.
Tourism is the largest economic sector in Hawaii. It accounts for approximately 21% of the state’s economy and generates over $16 billion in revenue. The state receives about 9 million visitors annually. Tourism largely remains constant throughout the year due to the mild weather of the islands. It peaks slightly when mainland United States experiences winter. The Japanese make up the largest group of international travelers due to the historical and economic ties with Hawaii, as well as geographical proximity. In 2019, about 1.6 million Japanese visited Hawaii. The state is increasingly becoming dependent on the tourism sector, and economists believe that the trend makes the economy susceptible to economic forces. The economy of the state suffered drastically during the financial recession of 2008 when 40% of hotels remain unoccupied, a level only seen after the 9/11 attacks. Tourism generates more than 200,000 jobs in Hawaii and contributes over $1.96 billion as tax.
The United States military is a critical part of the Hawaiian economy. The island is one of the few states that host the Air Force, Army, National Guard, Marines, and Coast Guard. Hawaii also hosts the US Pacific Command as well as other essential and strategic commands and bases. All these installations create jobs and contracts for local businesses. It is the second-largest economic sector in Hawaii after tourism, with an annual contribution of over $7.8 billion. Apart from civilian jobs, there are about 64,000 active duty personnel spread across the islands. Contractors receive military investments in ship repair, and building construction and maintenance.
In the 1970s, 80s, and early 90s, Hawaii was an agricultural powerhouse in the United States, supplying the country with pineapples, macadamia nuts, sugar, coffee, and milk. Although it plays a crucial role in the economy, it is a former shadow of what it was back then. Thousands of acres of fertile lands have been left unattended. Sugarcane and pineapple industries have closed down due to a shortage of raw materials after farmers disregarded agriculture for the more luxurious tourism sector. While sugarcane was the most produced product in the 1980s, it has since been replaced by corn and macadamia. Today, Hawaii spends about $3 billion annually to import 90% of the food it produced in the 1970s, including eggs and milk. Residents pay some of the highest prices for food in the country. Even the grain and fodder to feed the remaining two dairy farms on the island are imported. Should the supply line between the mainland and the island be cut off, millions of residents and tourists risk starvation.
Hawaii’s coral reefs are of tremendous value. They not only attract snorkelers and divers but also support the fishing industry. Although fishing plays a crucial part in the economy, it has declined significantly compared to the 1980s and early 1990s. Coastal development, harmful runoff, and overfishing have depleted over 75% of small-scale fisheries in the state. The situation is so bad that Hawaii imports over 63% of commercially sold seafood.
Manufacturing accounts for about 2% of Hawaii’s GDP and employs over 14,000 people. In 2018, the total output from the sector was estimated at $1.87 billion. The manufacturing sector was much stronger in the 70s and 80s when the state was a large-scale producer of sugarcane and pineapples. Today, the industry is dominated by oil refining and manufacture of steel products, cement, and chemicals. Most of these industries are dependent on imported raw materials. Besides cement, the state also produces other construction items such as bathroom fixtures and laminated wood beams.
Electricity in Hawaii is supplied by a few power companies operating diesel generators. Private institutions and military installations generate their electricity. Small dams produce a minuscule amount of hydroelectric power. The geothermal power plant constructed in the mid-1980s produces about a fifth of electricity on the island. In 2006, a wind farm was built on the island of Maui. Hawaii relies heavily on imported oil, but the state has set out plans to focus on renewable energy.
The Department of Tax is responsible for collecting taxes on the island. Tourists also pay hotel room tax and general excise tax. Most people and businesses attribute the high cost of living and unfriendly business climate to the enormous tax burden.