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Q & A: What Do We Know About Income Inequality in Hawaii?

Posted December 9, 2011 | Categories: Q&A, Blog
1. There’s been so much controversy about income inequality lately. What do the numbers tell us about inequality in the US and Hawaii?

The income numbers tell a simple story: Income inequality in both the United States and Hawaii was stable from the end of WWII until the early 1980s and has been steadily increasing since then.

Let’s look at the United States first. From the end of WWII until 1977, the top 10 percent of US households received a little less than 35 percent of total income. By 2008, their share had increased to about 46 percent.

Now let’s look at the top 1 percent of households in the United States. From 1946-1982, the top 1 percent received about 9-11 percent of total income. By 2007, their share had increased to about 18 percent.

2. What about the share of the top 10 percent and 1 percent in Hawaii?

From 1945 to 1985, the top 10 percent of Hawaii households received about 30-32 percent of total income. By 2005, their share had increased to about 43 percent.

Now let’s look at the top 1 percent of households in Hawaii. In 1975, the top 1 percent received about 7 percent of total income. By 2005, their share had increased to about 20 percent.

The bottom line is that inequality in Hawaii is changing much like it is on the mainland: Inequality is growing rapidly and almost of all this is due to the huge increase in the share of income received by the top one percent.

3. So why the increase in income inequality in Hawaii?

One is the decline and virtual disappearance of the unionized sugar and pineapple sectors that paid pretty good wages to blue collar workers.

Another is the effect of globalization (international trade, migration, and investment flows) on the wage rates of workers with an average education.

Another is the effect of globalization (international trade, migration, and investment flows) on the wage rates of workers with an average education.

But the biggest culprits are probably the new digital technologies. Upper-income managers who have learned how to reshape organizations to use them effectively have reaped huge gains.

-- Sumner Lacroix

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