Winner and Still Champ! Oh, No!!

by Tom Yamachika, Interim President, Tax Foundation of Hawaii

For four years in a row now, personal finance site MoneyRates.com has used data from the Bureau of Labor Statistics, C2ER, and the Gallup-Healthway Well-Being Index to come up with the Best and Worst States to Make a Living. The results of this study were reported by Forbes, Business Insider, MSN, the Motley Fool, and other news sites. MoneyRates.com stated:

The old saying "nice place to visit but I wouldn't want to live there" seems to sum up employment conditions in Hawaii, which has been ranked as the worst state for making a living in all four years of this study. The primary problem is that a cost of living more than 50 percent higher than the norm makes it very difficult to make a decent living, and wages in the state are not nearly high enough to compensate. On top of that, employees surveyed for the Gallup-Healthways study gave the state very low grades for its work environment.

Winner…and still champ! And if that isn’t enough, CNBC did a separate study ranking the best and worst states in which to do business. There, Rhode Island was the winner of the worst state to do business, but we came in second worst after taking the top banana slot last year:

Hawaii finishes 49th overall, which matches the Aloha State's rankings in our Cost of Doing Business, Workforce and Cost of Living categories. But Hawaii does improve on last year's last-place overall ranking. And it still has the best quality of life. Last year's 50th-place ranking prompted some soul-searching in the business community and helped push new initiatives to make the business climate as attractive as the actual climate.

CNBC also mentioned the quality of our transportation infrastructure, or, more particularly, the lack thereof, as a part of its rankings.

There, we narrowly missed being winner and still champ yet again.

What’s it going to take for us to stop winning these contests and garnering this wonderful national publicity for the wrong reasons?

One of the factors prominently mentioned in both studies is the cost of living. Many people accept it because we are in the middle of the Pacific Ocean, 2,500 miles from the West Coast ports that so much of our stuff ships through. There is a limited amount of real estate on the islands, so there is competition for how it is used, putting intense pressure on farmers, home renters and buyers. According to a September 4, 2013, article in Honolulu Civil Beat, our cost of electricity is the highest in the nation. Perhaps these prices are fueled by high taxes on the bunker fuel that is burned to make most of that electricity. We have the nation’s highest prices for gasoline, partly due to state and county gasoline taxes as well as our ubiquitous GET. Our food prices are 70% more than the national average.

Policymakers, can we start dealing with some of these issues? If we are going to blame transportation costs for the high prices in the markets, can we perhaps get some relief from the Jones Act (federal protectionist legislation which helps keep those costs high)? Or, perhaps, if we think transportation is the problem, could we come up with a credit or subsidy for the transportation industry in the hope that that will help power our sputtering economic engine?

Unless, of course, you like being the winner and still champ.

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