Hawaii
Hawaii is America's Worst State for Business in 2024, with off-the-charts costs and climate risks rising
An aerial image taken Aug. 10, 2023, shows destroyed homes and buildings burned to the ground in Lahaina in the aftermath of wildfires in western Maui, Hawaii.
Patrick T. Fallon | Afp | Getty Images
First came the Covid-19 pandemic, striking at the very heart of Hawaii’s economy.
Then, just as the state was beginning to recover, came last summer’s deadly Maui wildfires, which killed more than 100 people, destroyed upward of 2,000 structures, did $5.5 billion in damage and paralyzed the state’s tourism industry yet again.
Finishing last in CNBC’s 2024 competitiveness ranking, America’s Top States for Business, seems pretty minor in comparison to all of that. But Hawaii’s economic issues go even deeper than the high-profile tragedies that have befallen the state.
Consider the Honoapiilani Highway.
Hawaii Route 30 hugs the western shore of Maui. Well before the fires, state transportation officials warned in a 2021 report about climate risks that the highway was at risk from rockfalls, landslides, flooding from high waves, storm surges, coastal erosion and even tsunamis. Already, portions of the road frequently close due to flooding.
“Given our understanding of what is changing, we need to make some tough decisions to ensure the long-term viability of the State,” the report said.
A sign is posted warning of earthquake damage to the road from seismic activity at the Kilauea volcano on Hawaii’s Big Island, in Hawaii Volcanoes National Park on May 17, 2018.
Mario Tama | Getty Images
Hawaii was never going to do well in a competitive ranking that emphasizes infrastructure, as this year’s does. The state is remote — 2,400 miles from the mainland — and as an island chain, basic infrastructure features that are important elsewhere, such as freight rail, are irrelevant. But now, even the infrastructure the state does have is under threat, such as the Honoapiilani Highway.
“That’s the only link to the rest of the island from the area where the wildfires were,” said U.S. Secretary of Transportation Pete Buttigieg, who visited Hawaii in February.
The state is set to receive $2.8 billion under the Bipartisan Infrastructure Law, and nearly half of it will go toward rebuilding bridges and roads. Some $160 million of that will go toward relocating portions of the Honoapiilani Highway.
“We’re funding them to raise that highway to higher ground,” Buttigieg told CNBC. “We’re not going to make somebody build a road the exact same way if it’s getting washed out year after year by what used to be a once-in-100-years event.”
In an aerial view, cars back up for miles on the Honoapiilani Highway as residents are allowed back into areas affected by the wildfire, in Wailuku, Hawaii, on Aug. 11, 2023.
Justin Sullivan | Getty Images
It will be at least 2027 before the improvements are complete, transportation planners say. Add the many other roads and bridges needing help, and it begins to explain why Hawaii’s infrastructure ranks No. 47 in this year’s Top States study.
The high cost of paradise
Hawaii is also America’s most expensive state to do business in, with the third-highest cost of living. Residents and businesses pay the nation’s highest utility costs, and corporate and individual taxes are high.
With so many inherent disadvantages, why doesn’t Hawaii finish at the bottom of the rankings every year? The answer, in part, is because it’s Hawaii, with a legendary quality of life. But now, even that is under siege.
Hawaii ranks No. 7 for Quality of Life in 2024, its lowest ranking in the important category since our Top States study began in 2007.
It is not that Hawaii isn’t still a paradise. But even in a paradise, working families need child care.
While licensed child-care facilities are readily available in Hawaii, they are prohibitively expensive. According to Child Care Aware of America, child care in Hawaii costs 18% of the median income for a married couple. That is the most expensive in the country, and nearly twice the national average.
Multiple studies have linked quality child care and preschool to economic competitiveness.
In 2022, the Hawaii legislature approved $200 million in spending for new prekindergarten classrooms, part of a broader goal championed by Lt. Gov. Sylvia Luke to offer universal pre-K for three- and four-year-olds in the state by 2032.
A family walks on the beach together during sunset in Kauai, Hawaii.
Fly View Productions | E+ | Getty Images
“Access to preschool is a social justice issue for Hawaii,” Luke said in a statement at the time. “Children who have attended high-quality preschool or child-care programs are much better prepared for success in kindergarten, but not every family has access to early learning programs.”
The plan was to build 80 new classrooms by this August, with ambitious annual goals after that. But according to a website for the program run by Luke’s office, the program is already falling short of its goals. Two years after the bill was passed, only about half the money has been spent. Just 13 classrooms have been built, with another 50 under construction. The physical facilities are just part of the battle. Hawaii also faces a serious shortage of child-care workers.
An economy struggling to rebound
Put it all together, and it leads to America’s second-worst economy, according to the Top States study, after Mississippi. It is little surprise that no major companies are headquartered there. Economic growth was modest last year as the state struggled to recover from the wildfires, and job growth was meager at best.
In their most recent quarterly economic outlook, published in June, forecasters with the state’s Department of Business, Economic Development and Tourism predicted that tourism will end the year flat following a 4% drop in the first four months of the year, largely due to the wildfires.
They do expect visitor traffic to bounce back next year, and to continue growing — albeit at more modest levels — through 2026.
But in America’s Bottom State for Business, they have learned the hard way that Mother Nature can have other ideas.
HONOLULU (HawaiiNewsNow) – It’s shaping up to be a slower-than-usual summer for Hawaii’s tourism industry, but business leaders hope events that market the islands’ unique local food and products can turn that around.
The state expects total visitor arrivals to grow only about 2 percent this year. Numbers slid half a percent in April from the previous year, with the largest market, West Coast tourists, falling nearly 5 percent. The statewide hotel occupancy rate averaged 76.4 percent.
Economists blame higher airfares, rising inflation, fewer international visitors and uncertainty following the March kona low storms.
State-supported events like the Hawaii Lodging & Tourism Association’s (HLTA) Hawaii Hotel and Restaurant Show and DBEDT’s Hawaii Made Conference aim to boost tourism by promoting products you can only find in Hawaii.
“We’re going to continue to struggle, but we can’t stop promoting. We can’t stop advocating,” said HLTA President/CEO Mufi Hannemann. “If you can travel during these times, you’re going to come and have a wonderful experience in Hawaii whether you’re just coming for sun and surf or you’re coming here to immerse in our culture or to do business, this is the place to come.”
And those who do come are spending more.
At the Hotel and Restaurant Show this week, local food manufacturers hoped to secure more buyers in the hospitality industry.
Many rely on business and leisure visitors trying their products while in Hawaii and taking them back home where they promote it.
“The traceability that you want to know where your food is coming from,” said June Rees, general manager of Kauai Shrimp, which has 40 ponds off the coast of Kekaha. You’ll find their shrimp on many menus across the islands.
“There are a lot of people that heard about us but never tried, so this show gives us exposure to the new restaurant or chef that have heard about the name but never really tried the product.”
But fewer tourists mean less sales and slower business growth and investment.
Jina Wye is the founder of Okonokai, which makes snacks from native seaweed grown off the Kona coast on Hawaii Island.
“It’s like a superfood that everyone should be eating everyday,” she said. “There’s a lot of just missing infrastructure for manufacturing, but that’s something that we’re working on. It’s actually why I’m part of this whole like DBEDT pavilion because the state is really working hard to develop more infrastructure.”
For the family behind Aloha Star Coffee Farm, getting their award-winning premium kona coffee into airports, hotels and restaurants is key.
“Getting the opportunity to find the market niche that we need,” said Karina Rodriguez, co-owner of Aloha Star Coffee. “We are small, that sometimes we don’t have all the resources for marketing and, and going to the biggest stores, and we are working on that.”
Food entrepreneurs will get another chance to promote their products at DBEDT’s Hawaii Made Conference this Tuesday at the Sheraton Waikiki. Click here to register and for more information.
The 16th Hawaii Food & Wine Festival is another event that promotes local chefs and restaurants while promoting tourism. It spans three weekends from Oct. 16 to Nov. 8 across three islands. Find information here.
Copyright 2026 Hawaii News Now. All rights reserved.
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