Income Distribution and Poverty Alleviation for the Native Hawaiian Community

1
Income Distribution and Poverty Alleviation for
the Native Hawaiian Community

• Seiji Naya
• Presentation at the 2nd Annual Hawaiian Business
  Conference Hawaii Convention Center
• May 22-23, 2007

2
DISCUSSION TOPICS

• 1. Poverty and Growth --- large poverty rate for
  Native Hawaiians
• 2. Is income distribution so bad that the rich
  get the lions share of income, leaving little to
  the Native Hawaiians?
• Findings show the answer is not too bad but
  should be improved
• 3. This analysis examines the components of
  income and considers factors related to poverty
• 4. Recommendations to help with business
  development for Native Hawaiians
• !!! Apology for some technical terms in my
  presentation.

3
Two newspaper articles in April 2007

• 1. Hawaii has the largest of millionaires in
  terms of Household Income
• Hawaii U.S.
• 6.8 4.8
• 2. Our Poverty Rate is lower than the U.S.
  average
• Hawaii U.S.
• 9.8 13.3
• BUT this does not reveal the Native Hawaiian
  case.

4
(No Transcript)
5
Table 1. Income and Poverty 1979 and 2005
Category Community 1979 2005 Annual Avg Growth (79-05)
Per capita income () Native Hawaiian 5,661 16,932 4.3
Per capita income () Statewide 7,740 25,326 4.7
Per capita income () NH as of State 73.1 66.9
Poverty rate of individuals () Native Hawaiian 14.6 15.0
Poverty rate of individuals () Statewide 9.9 9.8

• Despite higher growth, higher poverty lingers
• Economic growth is no guarantee of lower poverty
  level

6
Table 2. Size of Income Groups 2005
Category State Total Native Hawaiian Native Hawaiian
Population 1,238,158 246,515 19.9
Households 430,007 57,818 13.4
Families 305,735 45,965 15.0

• We measure income distribution by these groups

7
Income Distribution Measures

• Two most commonly used measures of income
• distribution
• 1. Size Distribution of Income from which we
  derive
• a. The Lorenz Curve divides income recipients
  into different groups according to ascending
  levels and determines the of that income
  received by each group
• b. Gini Coefficient measures equality or
  inequality of Income Distribution
• 2. Kuznets Ratio Ratio of top high-income 20 to
  the bottom 40. The higher the ratio, the more
  going to the rich and less to the poor.

8
Figure 2. Lorenz Curve
Lorenz Curve Gini Perfect equality AB
0 Perfect inequality ACB 1
Equal distribution range 0.20 0.35 Unequal
distribution range 0.50 0.70
9
Figure 4. Size Distribution of Per Capita
Personal Income 2005
In each of all five higher-income categories,
shares of Native Hawaiians are lower. It is
cIear that the number of Native Hawaiians earning
higher income (e.g. 5.1 for 50,000 and more vs.
10.1 for Non-Native Hawaiians) is much smaller,
but earning low income is much larger,
explaining why poverty is much higher.
10
Figure 3. Family Income Distribution 2005
The lines are almost identical. But the Gini
Coefficient for Native Hawaiians (0.43) is
slightly higher than that for Non-Native
Hawaiians (0.38), the later is a little closer to
the diagonal line. Income distribution is
relatively equal but, in the case of Native
Hawaiians, income is so much lower.
11
Table 3. Gini Coefficient and Kuznets Ratio 2005
  Gini Coefficient Gini Coefficient Gini Coefficient
Group Household Income Family Income Personal Income
Native Hawaiian 0.416 0.415 0.409
Non-Native Hawaiian 0.417 0.378 0.412
U.S. 0.462 0.432 0.462
  Kuznets Ratio Kuznets Ratio Kuznets Ratio
Group Household Income Family Income Personal Income
Native Hawaiian 3.2 3.4 3.1
Non-Native Hawaiian 3.3 2.6 3.0

12
Figure 5. Share of Native Hawaiian Households and
Persons by Income Level 2005
Bars of Households by household income
level Line Graph of persons by per capita
level Note the difference in the pattern of the
two. The bar graph (household income) shows a
less-pronounced fall compared to the line graph
(per capita), i.e. Native Hawaiians do better at
household level income than per capita income.
13
Table 4. Average Household Size
    Average household size (Persons) Average household size (Persons) Difference
Household income level Native Hawaiians Non-Hawaiians Difference
No income   1.76 1.69 0.07
1 - 10,000 2.29 2.11 0.18
25,000 - 34,999 2.79 2.47 0.32
100,000 or more 4.66 3.87 0.79
       
All households   3.47 2.77 0.70
One possible explanation is that Native Hawaiians
are more egalitarian and help each other (Ohana
spirit) resulting in a narrower income gap at
household and family level than individual
per-capital income level.
14
Table 5. Income Structure 2005
Income Category Native Hawaiians Non-Native Hawaiians NH as of Non-NH
Int. Div, Rental 355.4 1,681.9 21.1
Public Assistance 131.9 34.6 381.5
Retirement 853.6 1,891.7 45.1
Self-Employment 826.9 2,361.2 35.0
Social security 718.9 1,606.1 44.8
Supple. Security 83.7 86.8 96.4
Wage and salary 13,699.8 19,303.5 71.0
All other Income 261.8 448.2 58.4
TOTAL 16,932.0 27,414.0 61.8
Native Hawaiians are low in all the categories
except public assistance income. Especially low
interest, dividends, rental income, and
self-employment income (21 and 35 of
Non-Native Hawaiians, respectively).
15
Table 6. Possible Factors of Low Income for
Native Hawaiians
Item Factor Native Hawaiian Non-Native Hawaiian
1 Young Population (med. age) 24.6 38.5
2 Family Size (avg. of persons) 3.9 3.4
3 College Degree of Labor Force ( of workers 25 yrs) 42.2 57.5
4 UH Graduation Major (2005)    
  a. Science Technology ( of graduates) 7.0 14.1
  b. Business Administration ( of graduates) 12.1 17.8
5 Management Professional Positions 23.0 32.0
6 Business Ownership and Performance (2002 figure)    
  a. Firm/Population Ratio (firms per 100 people) 3.2 10.4
  b. Average sales per firm (1,000) 179.9 710.8
16
Grameen Bank approach of community-based
micro-loans may be one solution

• Idea conceived by Mr. Yunus, recipient of Nobel
  Peace Prize (2006)
• Promoted by World Bank and Asian Development Bank
  
• Mutual responsibilities of 4-5 person group
• Peer-to-peer monitoring
• The Bank organizes training and technical
  assistance programs for borrowers
• Recommendation that OHA consider this approach in
  conjunction with private banks or by itself

17
ASIAN INEQUALITY 1991-2005 1 ASIAN INEQUALITY 1991-2005 1 ASIAN INEQUALITY 1991-2005 1 ASIAN INEQUALITY 1991-2005 1 ASIAN INEQUALITY 1991-2005 1 ASIAN INEQUALITY 1991-2005 1 ASIAN INEQUALITY 1991-2005 1 ASIAN INEQUALITY 1991-2005 1
Country Period Gini Coefficients Gini Coefficients Gini Coefficients Top 20 / Bottom 20 Top 20 / Bottom 20 Top 20 / Bottom 20
Country Period Initial Year Final Year Growth Rate Initial Year Final Year Growth Rate
Nepal 1995-2003 37.65 47.3 2.85 6.19 9.47 5.31
China 1993-2004 40.74 47.25 1.35 7.57 11.37 3.7
Philippines 1994-2003 42.89 43.97 0.28 8.34 9.11 0.98
Thailand 1992-2002 46.22 41.96 -0.97 9.41 7.72 -1.98
Malaysia 1993-2004 41.22 40.33 -0.2 7.72 7.7 -0.02
Sri Lanka 1995-2002 34.36 40.18 2.24 5.34 6.83 3.52
Cambodia 1993-2004 31.8 38.05 1.63 5.24 7.04 2.68
Vietnam 1993-2004 34.91 37.08 0.55 5.4 6.24 1.31
India 1993-2004 32.89 36.22 0.88 4.85 5.52 1.18
Laos 1992-2002 30.4 34.68 1.32 4.27 5.4 2.35
Indonesia 1993-2002 34.37 34.3 -0.02 5.2 5.13 -0.15
Bangladesh 1991-2005 28.27 34.08 1.34 4.06 5.03 1.53
Taipei, China 1993-2003 31.32 33.85 0.78 5.41 6.05 1.12
Korea 1993-2004 28.68 31.55 0.87 4.38 5.47 2.02
Pakistan 1992-2004 30.31 31.18 0.24 4.22 4.46 0.46