Hawaii's wages lag inflation, U.S. average

The state's average pay increased 4 percent in the second quarter of 2006, but prices rose even more

While jobs may be numerous, and wages higher, the pay for Hawaii workers continued to lag behind the cost of living in paradise last year, according to federal data released yesterday.

The state's average wage ranked 26th nationally at $704 per week in second quarter of 2006, 10 percent less than the national average of $784, according to the latest statistics from the U.S. Bureau of Labor Statistics.

While Hawaii's average wage gained 4 percent from 2005, it did not keep pace with the rate of inflation, which the University of Hawaii Economic Research Organization placed at 5.1 percent for the year 2006.

"We experienced an inflation shock in the first half of the year (2006), with a 5.8 percent increase in consumer prices," said Carl Bonham, executive director of the UH organization. "People did not anticipate that big of an increase in consumer prices."

The first half of 2006 is when gas prices shot up, Bonham said, along with electricity and housing costs.

UHERO predicted inflation will still remain fairly high in 2007, at 4.4 percent, but then decline to 3.4 percent in 2008.

"Wages adjust a little more slowly," Bonham said. "When you have these surprise increases in inflation, it takes time for the labor market to adjust. It's likely to happen over the next year or year and a half. In the meantime, people are tightening their belts."

New York continues to top the list for average weekly wages, at $1,453, followed by Santa Clara, Calif., at $1,386 and Arlington, Va., at $1,335.

Honolulu wages rank 172 out of 325 counties nationwide. Meanwhile, Oahu is one the nation's most expensive housing markets.

All four major counties recorded increases in average weekly wages.

Honolulu county recorded the highest average weekly wage, at $726 per week, a 3.7 percent increase over the year before. Maui's average weekly wage was at $660 per week, recording a 5.8 percent gain.

Kauai had an average weekly wage of $624, 5.6 percent higher, while the Big Island recorded only a 3.2 percent increase, at $637.