The Island Economy at a Crossroads

Patricia Yu ()
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Patricia Yu: University of Hawai‘i - West Oʻahu, Economics

Chapter 1 in Economic Development in Hawai‘i, 2026, pp 1-15 from Springer

Abstract: Abstract This chapter explores the structural contradictions embedded in Hawai‘i’s economy, a place often seen as an island paradise on the surface yet marked by pervasive economic precarity. It begins by unpacking Hawai‘i’s paradox: despite strong tourism revenue, low unemployment, and global recognition for quality of life, nearly one-third of households struggle to afford basic needs. This includes the ALICE population, which remains trapped between poverty thresholds and living-wage requirements, particularly among Native Hawaiians, renters, and young families. Underemployment, stagnant wages, and outmigration are symptoms of deeper systemic issues. Drawing on labor statistics, cost-of-living indices, and policy frameworks, this chapter presents a grounded analysis of labor force participation, housing challenges, and the gap between wages and expenses. It then shifts to explore how geographic isolation both constrains and inspires Hawai‘i’s economic model. It examines ongoing efforts in renewable energy, food security, and circular economic innovations. The vulnerabilities of tourism dependence are analyzed, especially in light of COVID-19 and environmental pressures, such as the West Maui wildfires. Alternative paths such as regenerative tourism, economic diversification through creative and blue economy sectors, and remote work infrastructure are critically evaluated. Human capital is positioned as Hawai‘i’s most underleveraged asset, with policy recommendations to reverse brain drain and invest in workforce equity. This chapter concludes with a call to redefine economic competition for Hawai‘i as a commitment to shared prosperity rooted in local values, resilience, and aloha, rather than a race for growth.

Keywords: Hawai‘i economy; ALICE households; Underemployment; Brain drain; Cost of living; Tourism dependence; Regenerative tourism; Economic diversification; Renewable energy; Circular economy; Workforce development; Remote work; Housing affordability; Sustainable development; Equity and resilience (search for similar items in EconPapers)
Date: 2026
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DOI: 10.1007/978-3-032-15689-1_1

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