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As the year comes to a hopefully uneventful close, I’d like to reflect on what it reveals about Hawaii’s persisting ethnic (not racial) inequality. The disastrous wildfires on Maui on Aug. 8 derailed the ongoing post-pandemic economic recovery and have impeded tourism, the state’s dominant industry, at least for now.

Tourism is also a major source of ethnic inequality through the low-wage jobs it creates that limit socioeconomic mobility among Hawaii’s Indigenous and ethnic minorities.

My assessment of the past year draws from data included in two reports on the state economy issued in mid-December: UHERO’s “” and the state Department of Business, Economic Development and Tourism’s “.”

Until the wildfires broke out in Lahaina and upcountry Maui, some signs had emerged that the island economy, at least the tourism industry, had reversed the downward trend since the Covid-19 outbreak in spring 2020. The annual number of visitors reached 9.2 million in 2022, which was almost 90% of the record high in 2019 (10.4 million), and their spending that year was $19.3 billion.

While I’m no advocate of a tourism-driven economy, I realize that more tourists does mean more spending and thus increased state and county tax revenues. These funds can then be appropriated for government services, including public education, and alleviating problems such as homelessness. 

With a state budget surplus of $1.9 billion, Gov. Josh Green made addressing the long-term need for affordable housing a major policy priority of his new administration a year ago. In his first State of the State speech, he proposed spending $1 billion on affordable housing and later issued an emergency proclamation on housing in order to build 50,000 new housing units, which was subsequently challenged by environmental groups.

The inherent dangers of depending predominantly on tourism are clearly evident in the aftermath of the Maui wildfires. They will result in diverting half a billion dollars in state funds to the economic resuscitation efforts that otherwise could have been used to mitigate persisting problems.

According to the DBEDT report, the wildfires had an immediate negative impact on the Maui County economy. Visitors arriving by air from August to October dropped by more than 50% in comparison to the same period the previous year. As a result, many tourism industry workers lost their jobs, such that the county unemployment rate in October rose to 7.1%, more than twice as high as the state figure.

Nonetheless, the UHERO report stated that tourism on Maui has been recuperating faster than expected, while the number of visitors to the rest of the state has attained “record levels” because some of them went to other islands, such as Kauai and Hawaii. As in the immediate post-pandemic period, this comeback is yet another indication of the resiliency of the tourist industry to recover on its own without requiring taxpayer-funded marketing agencies, such as the Hawaii Tourism Authority.

The UHERO report does note one positive economic outcome of the wildfires. Rebuilding homes and commercial establishments will further expand an “already hot construction industry,” although it adds that hiring and housing those workers on Maui will be challenging. Less optimistically, the report observes that visitor spending was “fairly soft” this year, and “real” (adjusted for inflation) spending will decline next year as the number of tourists will remain flat. 

The report hence concludes that job growth will be about 1% next year and that “Very slow population growth will mean only incremental job growth thereafter.”

However, according to the state’s chief economist, the state population has declined seven years in a row through 2022, when 15,000 islanders departed, and is expected to drop again this year and not increase until 2025. Continued population decreases, especially as a result of people leaving for the continental U.S., implies minimal or even negative job growth, which is not a very promising outlook for the local economy.

Thus, the DBEDT report predicts that not until 2025 will tourism fully recover, at least in terms of the annual number of arrivals. This forecast means that two years from now we will be back in the same place as before the Maui wildfires with a continued overdependence on the visitor industry and its primarily low-paying service and sales work as the mainstay of the economy. 

Borrowing from George Orwell’s “Animal Farm,” Hawaii’s economy results in some people being more equal than others. Most of those who have jobs created directly or indirectly by the tourist industry – which total about one-third of island jobs – are among the less equal, particularly in terms of income, while most of those who don’t have such jobs can be considered more equal.

More equal and less equal people reflect the entrenched ethnic inequality in Hawaii. As I have shown in my long-term studies on ethnic inequality, Hawaii is a highly unequal state according to indices such as income, wealth, education, occupation and home ownership.

Tourism has been the principal source of that inequality after it became the dominant industry in the 1960s. Through that decade, Chinese, Japanese and Koreans were able to enter the middle class, a collective process that has become much more difficult for other groups to follow. 

Together with systemic racism, tourism maintains ethnic inequality by limiting opportunities for socioeconomic mobility among the less equal groups — Filipinos, Native Hawaiians, Samoans and other ethnic minorities.

As evident from their very high proportion of both males and females in service work exceeding 30%, Filipinos are overrepresented as visitor industry workers, especially as housekeepers and maintenance and food service workers. At an estimated 40% of Lahaina’s population, they were especially impacted by the loss of their jobs and homes by the wildfires.

A DBEDT paper, “Native Hawaiians in Hawaii’s Tourism Sector – 2021 Update,” reported that at about 20% they are represented at parity in “tourism intensive industries” compared to their proportion of the state population. However, Native Hawaiians earn less ($36,000) than the average annual wage of all tourism workers ($38,750), and a higher percentage of them have a high school diploma rather than a college degree compared to other such workers.

Besides the ongoing threats to Hawaiian culture and the natural environment posed by the visitor industry, these factors may account for the anti-tourism campaign led by Kanaka Maoli that emerged after the Covid outbreak and the Lahaina wildfires.

While I hate to admit it, ethnic inequality, much like and because of tourism, will be here for at least another decade and very probably longer. Nonetheless, I’ll continue to work with my colleagues in the Hawaii Scholars for Education and Social Justice and UH Manoa Ethnic Studies against both. See you at the Legislature next year.