Hawaii: Freeloaders’ Paradise or Wage Earner’s Hell? You Be The Judge

Posted by Bob Lord

This is the third in a series of posts on the recently released Cato Institute Study, The Work Versus Welfare Trade-off: 2013. My apologies if I'm overdoing it here, but I think the Cato Instituted study goes to the heart of what conservative political strategy is all about: Rank intellectual dishonesty used to stoke anger and cause the masses to turn on themselves. In the emerging version of that strategy, conservatives are demonizing the poor as a means of distracting Americans from our ever-worsening inequality.

In the Cato study, the author, Michael Tanner, depicts Hawaii as the freeloaders' paradise. In Hawaii, Tanner claims, a "prototype" family receives $49,175 in welfare benefits annually, an amount that equates to a pre-tax income of $60,590. In previous posts here and here, I've discussed the rank intellectual dishonesty in Tanner's analysis.  

The Appleseed Center for Law and Economic Justice has a report on The State of Poverty in Hawaii. Here are some of the data that report uses to describe how life is for those happy freeloaders in Hawaii:

On inequality in Hawaii:

Despite Hawaii's being mired in the
deepest economic slump since the Great
Depression, between 2009 and 2011 the
number of millionaires in Hawai‘i actually
increased from 6.4 percent to 7.2 percent. This
represents an 18 percent increase at a time
when the national median income actually
decreased by 6.7 percent.

Hawaii’s proportion of millionaires is the
second highest in the country, just 0.01 percent
behind Maryland, the highest ranking state.
While the poor are in free fall, thousands of
Hawai‘i’s richest citizens are growing richer. 

On tax justice:

Due to its regressive General Excise Tax and relatively high income
tax, low-income people face a particularly heavy
financial burden in Hawaii.

These taxes weigh most heavily on the poor: The
bottom 20 percent pay almost twice the rate that the
top 1 percent do. The average annual income of the
bottom 20 percent is a mere $9,800. That group is hit with an average tax payment of $1,196, or 12.2
percent of their income. Meanwhile, the top 1 per-
cent – whose average income is $1.04 million – pay a
mere $65,540, or only 6.3 percent.

The combined impact of the GET and the heavy
income tax levied on the poorest residents means
that Hawaii’s tax system is highly regressive, hitting
low-income workers the hardest. 

In Hawaii, 67% of families consisting of one adult working full-time and one or two children fall short of the "self-sufficiency standard," defined as the amount of money
that individuals and families require to meet basic
needs without government or other subsidies. The calculation reflects costs
related to housing, food, child care, transportation, health care, clothing, other household
expenses and taxes, while factoring in children’s
ages, geography and the number of household
wage earners. The self-sufficiency standard covers only the bare
essentials and excludes any additional comforts
such as entertainment.

That's breathtaking when you think about it. Two of every three single parents in Hawaii can't make ends meet. 

The Appleseed Center report refers to an analysis by Money-Rates.com of the relative difficulty from state-to-state for people to earn a living. That analysis exposes in stark terms the true extent of Hawaii's poverty. The analysis starts with the median income of wage earners in a state, then adjusts for unemployment, cost of living, and state taxes. Essentially, the Money-Rates.com analysis ranks the states by how hard it is for the average family to make ends meet.

Hawaii places dead last of all 50 states, but that doesn't begin to tell the story of how tough things are in Hawaii compared to the rest of the country. The other 49 states fall in a range of average adjusted incomes from $41,986 for Illinois in 1st place to $29,159 for Maine in 49th place. Hawaii stands at $22,107, a full $7,000 lower than the next worst state.

The bottom line: Economically, Hawaii may be more similar to other countries than it is to the rest of America.  

Where does Tanner's prototype Hawaiian welfare famliy fit into this picture? 

The Appleseed Center report notes that the HUD voucher program in Hawaii has not operated since 2005. The waiting list for a unit in one of Hawaii's low-income housing projects stands at 9,000. The number of units in the entire state, according the Hawaii Fair Housing Administration is 6,200, but not all of those are inhabitable. That would mean at most 2000 units occupied by single mothers according to national data. Nowhere near all those mothers would qualify for the other welfare benefits included in Tanner's analysis, but let's be charitable to Tanner and assume they do, and also assume that they each have two children.

Under those generous assumptions, 6,000 Hawaiians, less than one-half of one percent of all Hawaiians, would fit Tanner's prototype welfare beneficiary definition. What about the other 99 and one-half percent of Hawaiians? They're the ones taken into account in the Appleseed Center report.

So, you be the judge as to whether Hawaii is the freeloaders' paradise the Cato Institute describes it to be.  

One response to “Hawaii: Freeloaders’ Paradise or Wage Earner’s Hell? You Be The Judge

  1. In the last 20 years, employment in Hawaii has increased by 60 thousand workers. Employment in Maricopa County has increased by about a million workers. People who have a job are much happier than people on welfare.