In 2024, Hawaii is ranked as the worst state for business in America due to its high costs and increasing climate risks.

• Despite efforts to recover from the Covid-19 pandemic and last year's Maui wildfires, Hawaii remains at the bottom of CNBC's annual business competitiveness rankings.
• The state's infrastructure is being destroyed by rising sea levels, which have been a problem for some time.
• In a state where everything is costly, child-care expenses are exorbitant.

The Covid-19 pandemic hit Hawaii's economy hard.

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, came as the state was beginning to recover.

Hawaii's economic problems are more profound than the high-profile disasters that have affected the state, despite finishing last in CNBC's 2024 competitiveness ranking, America's Top States for Business.

Consider the Honoapiilani Highway.

The western coast of Maui is hugged by Hawaii Route 30. Prior to the fires, officials warned in a 2021 report about the risks of climate change that the highway was at risk from rockfalls, landslides, flooding from high waves, storm surges, coastal erosion, and even tsunamis. Portions of the road frequently close due to flooding.

To ensure the long-term viability of the State, we must make some difficult choices based on our understanding of the changes, according to the report.

Despite being an island chain, Hawaii has always struggled in infrastructure-focused rankings due to its remote location, 2,400 miles from the mainland. However, even the limited infrastructure the state does have is now at risk, such as the Honoapiilani Highway.

According to U.S. Secretary of Transportation Pete Buttigieg, who visited Hawaii in February, that is the only link to the rest of the island from the area where the wildfires were.

Under the Bipartisan Infrastructure Law, the state will receive $2.8 billion, with nearly half of it allocated for rebuilding bridges and roads. Of that amount, $160 million will be used for relocating portions of the Honoapiilani Highway.

"Buttigieg stated on CNBC that we are funding the construction of the highway to a higher elevation. He explained that we will not require someone to build a road in the same manner if it is being washed out annually due to a once-in-100-years event."

Hawaii's infrastructure ranks No. 47 in this year's Top States study due to the many roads and bridges needing help, with improvements expected to be complete at least 2027, transportation planners say.

The high cost of paradise

Hawaii is the most expensive state in America to conduct business, with the third-highest cost of living. Utility costs are the highest in the nation, and both corporations and individuals pay high taxes.

Despite its numerous inherent disadvantages, Hawaii does not consistently rank at the bottom due to its legendary quality of life. However, this is now being threatened.

Since 2007, Hawaii has consistently ranked high in the Quality of Life category, but in 2024, it fell to No. 7, marking its lowest ranking yet.

Although Hawaii remains a paradise, working families still require child care.

Child care facilities in Hawaii are expensive, costing 18% of the median income for a married couple, which is the highest 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 funding for new prekindergarten classrooms as part of a broader goal to provide universal pre-K for three- and four-year-olds in the state by 2032, championed by Lt. Gov. Sylvia Luke.

""High-quality preschool or child-care programs can better prepare children for success in kindergarten, but not all families have access to early learning programs," Luke stated."

Despite ambitious annual goals, the program run by Luke's office is falling short of its goals two years after the bill was passed. Only about half the money has been spent, with only 13 classrooms built and another 50 under construction. The physical facilities are just part of the battle, as Hawaii also faces a serious shortage of child-care workers.

An economy struggling to rebound

No major companies are headquartered in America's second-worst economy, according to the Top States study, after Mississippi. Economic growth was modest last year as the state struggled to recover from the wildfires, and job growth was meager at best.

The state's Department of Business, Economic Development and Tourism predicted in their most recent quarterly economic outlook, published in June, that tourism will end the year flat after a 4% drop in the first four months, mainly due to the wildfires.

It is anticipated that visitor traffic will recover next year and gradually increase, although at a slower pace, until 2026.

In America's Bottom State for Business, they have learned the hard way that Mother Nature can have other plans.