One Of The United State's Worst Economies Is Also A Popular Tourist Destination

WalletHub's 2025 "Best & Worst State Economies" study looked at 28 indicators across all 50 states plus Washington D.C. It ranks Hawaii 49th overall, ahead of only West Virginia (50th) and Iowa (51st). The report shows Hawaii is 47th in economic activity, last (51st) in exports per capita, 49th in innovation potential, and 50th in the share of high-tech jobs. Yet the state shines on one people-focused indicator; it places 5th for the average educational attainment of recent immigrants, showing that newcomers arrive highly qualified. Hawaii also excels on economic health, coming in 31st, because of tourism-driven paychecks.

Hawaii's Department of Business, Economic Development & Tourism (DBEDT) notes that visitors spent nearly $23.9 billion in 2023, money that rippled through hotels, airlines, shops, and restaurants to generate about $14.3 billion in household labor income and support 234,757 jobs. That tourism-fed cash helps explain why the 2022 American Community Survey put Hawaii's median household income at $98,317, comfortably above the national median of $80,610 reported by the U.S. Census Bureau in 2023.

Statista data also show that only 10.1% of Hawaiians live below the poverty line, while the Census Bureau's Supplemental Poverty Measure puts the nationwide rate at 12.4%. Still, the "Aloha State" is home to one of America's most expensive retirement communities, is one of the five states with the highest electricity bill in America, and can be an expensive state to live in. It compensates, however, by being one of the few states with the highest average salary.

Hawaii is an island, so about 90% of everyday goods, like food and fuel, have to arrive by boat or plane. That extra trip adds to the final price consumers pay. In 2022, the Hawaii Senate passed Resolution SR 128, which quoted the Water Carriers Working Group's report saying shipping adds about 7.5% to consumer costs. Looking back at the state's own numbers, the DBEDT 2017 Input-Output Benchmark Study set the water-transportation margin at 1.75% for every $100 million in retail sales.

This means that for every $100 million Hawaii makes in retail, about $1.75 million of that total goes toward paying shipping costs required to get those products across the Pacific. The cost increases under the century-old Jones Act, which limits cargo routes to U.S-built and U.S-crewed vessels. A July 2020 study by Grassroot Institute of Hawaii, found that the Act adds about $654 million a year in shipping costs and raises prices for Hawaiian consumers by $916 million, about $645 per person.

Hawaii welcomed over 9.6 million visitors in 2024, bringing in $20.68 billion in direct spending — an 0.2% dip from the $20.73 billion recorded in 2023, per the DBEDT January 2025 press release. That strong pace carried into 2025; Maui saw almost 60,000 visitors a day in February. But lean into those numbers too much, and you miss the problem underneath. Relying so heavily on tourism means Hawaii's economy still hinges on an industry that can shift due to fuel-price hikes, recessions, and even events like the Maui wildfires. Even with all that visitor cash, the state hasn't built up other revenue streams like technology or manufacturing.

Tourism and the military make up a significant chunk of Hawaii's economy. The former contributes about 23.6%, per the DBEDT's September 2023 briefing, while the latter makes up 8.3 % of Hawaii's GDP, as stated in the state-run defense economy portal. By contrast, technology accounts for just 2.2% and manufacturing for 1.6%, one of the lowest share of any state per Hawaii's Department of Business, Economic Development & Tourism April 2022 report. Because so much depends on visitors and defense spending, Hawaii is vulnerable if either takes a hit. Besides, all those tourists also drive up costs for locals. More demand for rooms and transport pushes up rents and fares. Visitors might shrug off the higher prices, but residents end up stuck paying those hikes long after vacationers head home.