Hawaii Economy

Although tourism has become Hawaii's foremost industry, many other sectors contribute to the state's economy

From Taro to Tourists

Hawaii's economy has undergone many changes throughout its history. Early Hawaiians lived under a basic feudal system, with an emphasis on subsistence. They farmed, fished, and raised livestock, such as chickens and pigs. Although people were granted the use of a certain plot of land by ruling chiefs, they didn't own the land; rather, they saw themselves as its guardians.

After Captain James Cook charted Hawaii in the late 1700s, Western whalers and merchants began using Hawaii as a port to replenish their supplies. A market economy developed as more and more westerners came to Hawaii. The old feudal way of life eventually disappeared, replaced by sugar and pineapple plantations. Shipping and banking also became big businesses, which was all tied into the plantations. When land ownership was introduced, many native Hawaiians lost their farms to whites because they simply didn't understand the concept, so they didn't take the necessary steps to register their land.

Annexation to the United States led to the rise of labor unions in the 1930s and 1940s. As workers gained more rights and better wages, the sugar and pineapple industries began to decline. By the 1990s, the vast majority of plantations had shut down. A handful of smaller operations still export some sugar and canned pineapple.


In 1946, the Hawaii Visitors Bureau started large campaigns to encourage tourism. Their efforts paid off, with the number of travelers visiting the islands steadily increasing throughout the remainder of the century. The advent of jet travel in the 1960s proved especially helpful in attracting tourists to Hawaii. Most visitors come from the United States, Canada, Australia, and the Far East (especially Japan).

Hotels, restaurants, construction companies, architects, retail stores, and other businesses all contribute to the tourist-driven economy. When the boom was just beginning, many jobs paid well due to the labor unions. Currently, however, low paying jobs dominate employment. Women are hit especially hard, making up 60 percent of the low wage workforce. They hold the majority of jobs as cashiers, hotel clerks, and hotel housekeepers.

Sports tourism brings in a good deal of money. High profile events, such as the Ironman World Championship triathlon and the Hawaiian International Billfish Tournament, garner media coverage as well as increased revenues.

As with other travel destinations, Hawaiian tourism declined following the terrorist attacks of September 11, 2001. Although the industry has regained strength since then, its growth rate has slowed considerably. Many Hawaiians don't want the industry to grow larger, since the buildings and roads required for new facilities destroy the very habitat which attracts visitors. Conservation of the environment has become a major concern. Still, tourism remains Hawaii's number one industry.

Military and Government

Since Pearl Harbor's establishment as a United States military base in 1874, the military has played an important role in Hawaii's economy. With military personnel and their families comprising 10 percent of Hawaii's population, more civilians work for the military than any other employer in the state.

Both state and county governments also employ large numbers of workers. Jobs run the gamut, including professional, technical, and unskilled labor.

Other Industries

When the plantations closed down, diversified agriculture developed on the newly available lands. Kona coffee, macadamia nuts, tropical fruits, and vegetables serve as primary crops for the food processing industry. With Hawaii's abundance of beautiful flowers and tropical plants, floriculture has also thrived. Eucalyptus trees are even being grown to supply pulp to Japan for paper manufacturing.

Timber bamboo grew in popularity in the 1990s, mainly used in flooring, fencing, and furniture. Its sustainability, attractiveness, and incredible strength fueled the demand. With the high cost of importing home building materials, its use in home construction is now growing.

Aquaculture, the cultivating and harvesting of marine animals and plants, has a long history in Hawaii. Early Hawaiians created fishponds, raising fish for food. Current commercial operations also produce shellfish, algae, ornamentals, and more. Because Hawaii's high seafood consumption surpasses the state's supply, this industry has experienced steady growth in the past 10 years.

Garment manufacturing is a small but healthy trade. Most companies focus on Hawaiian style fashions, though uniforms for local businesses are also made.

Research and development in scientific fields has proliferated. For instance, the summit of Mauna Kea houses twenty top-notch astronomical observatories. With exceptional weather conditions found in few other locations worldwide, observatories are booked years in advance. Other burgeoning scientific fields include oceanography, geophysics, satellite communications, and biomedicine.

Since the silent movie era, Hawaii has attracted filmmakers. While not a major contributor, film and television production give Hawaii's economy a boost. A number of well-known movies have filmed here over the years, such as From Here to Eternity (1953), Tora! Tora! Tora! (1970), and Jurassic Park (1993). Film and television production jumped dramatically in the 1990s and continues to increase. Popular television shows shot in the Aloha state include Hawaii Five-O (1968-1980) and current favorite Lost (2004-Present).

Economic Challenges

Certainly Hawaii is a paradise, but the cost of living in paradise can be steep. Many products, including food items, must be imported. Then there's the housing expense, driven up by limited land and high demand. Overall income on the islands tend to be lower than in many states, too. All these things add up to a high cost of living and less means to pay for it.

A number of measures designed to ease these problems have been enacted or proposed. Due to the land shortage, many new planned communities focus on high rise buildings, townhouse developments, and apartment complexes. Renewed attempts are being made to restore native Hawaiians to homesteading lands, as provided in 1920's Hawaiian Homelands Act. And businesses not related to tourism are being encouraged to diversify Hawaii's economy and provide better paying jobs.

As Hawaii heads into the future, resolving these issues will bring new economic struggles and opportunities. But one thing seems certain – travelers will keep returning to say "Aloha" to these gorgeous islands for years to come.

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