SFGate: As visitors to Hawaii decline, risks abound
March 7, 2026
By Christine Hitt
For years, thousands of Hawaii’s residents have left the Islands for the continental U.S., where better-paying jobs and lower housing costs are easier to find.
While Hawaii’s high cost of living is often blamed, experts say the deeper issue is that there aren’t enough high-paying jobs in industries beyond tourism to keep up with the soaring cost of living, leaving the state struggling to keep up with the rest of the nation.
It’s a striking illustration of why the state must diversify its economy.
“There’s still been growth in visitor numbers but the per person in real inflation-adjusted terms, spending was at its highest actually in 1988, so it means tourists now are spending less than they did individually in 1988,” Steven Bond-Smith, an economist at the Economic Research Organization at the University of Hawaii, told SFGATE by phone.
Bond-Smith said a healthy economy in the US averages about 2% growth over long periods of time, but Hawaii is averaging much lower, at around 0.6%. Because the state hasn’t kept pace with the continent, residents are driven to leave.
“You need higher- and higher-value jobs and activities being done here,” Bond-Smith said. The jobs that tend to offer higher wages are in very large US cities and they’re particularly in tech or biotech, he explained. “The main activity here is obviously tourism, and it hasn’t had that kind of income growth that other places have had.”
Tourism is not enough
The situation has renewed urgency around a longtime push to diversify the state’s economy, highlighting the need to create more high-paying jobs and reduce the state’s dependence on volatile industries.
“We are reliant on two major industries, which is tourism and the military. We have experience during COVID that reliance on tourism can hurt our economy. So diversifying our economy really means to weather the storm when it comes to potential challenges in the future,” Hawaii state Rep. Greggor Ilagan told SFGATE by phone. “If we’re reliant on tourism and only tourism, then we’re going to be in trouble when it comes to other factors.”
In the last 10 years alone, the 2018 eruption on the island of Hawaii, the COVID-19 pandemic and the Maui wildfires have caused significant drops in tourism, highlighting the risks of depending too heavily on a single industry. The number of visitors still hasn’t recovered to what it was before the pandemic.
Diversification doesn’t mean anti-tourism or that tourism will be replaced. “Diversification includes tourism, as well as you know, diversifying tourism,” Ilagan said.
Bond-Smith also emphasized tourism’s importance. “It’s still going to be the backbone of the economy, so the tourism industry itself needs to think about how they can increase the value added to visitors,” he said.
Why hasn’t it happened yet?
Diversifying Hawaii’s economy, and the need to do so, isn’t a new concept. “People have been talking about diversifying the economy for decades,” Kelii Akina, CEO of the Grassroot Institute of Hawaii, told SFGATE in a phone call.
“The government started talking about that under George Ariyoshi (in the 1970s and ’80s), when it looked as if tourism was disproportionately the leader in the economy,” Akina said. But he said the state has “been very unsuccessful in initiating real diversification,” arguing that its approach is flawed.
Akina said the government often “keeps businesses and industries going long after they have proven to be failed, proven to be noncompetitive in the market.” He pointed to efforts to build a film industry through tax credits and starting a breadfruit industry as examples he considers unsuccessful.
Instead, he said, the best thing the government can do is to get out of the way of business and eliminate regulations.