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Why do certain places like Hawaii have high incomes and high costs? Where does the money come from?

On Japanese TV, there are often programs about how prices are different in other countries.
This includes very expensive areas such as Switzerland and Hawaii.
It is understandable that Switzerland can have high incomes due to a long history of private banks and multinational organizations, but where does the money from a place like Hawaii come from? A living wage in Hawaii is over $100,000 annually at this point, which sounds ridiculous. However, somehow there is money for this to be possible for many. Why?

I decided to ask Bard AI with carefully prompted questions, and got some useful information.


Hawaii has very high prices, but also high salaries even for normal jobs. Where does this money come from?


Hawaii has a high cost of living, but also high salaries for even normal jobs because of a number of factors, including:

  • Tourism: Hawaii is a popular tourist destination, and the tourism industry is a major driver of the state’s economy. Tourists are willing to pay high prices for goods and services, which helps to support high salaries for workers in the tourism industry.
  • Limited supply of land: Hawaii has a limited amount of land, which drives up the cost of housing and other expenses. This also means that there is a high demand for labor, which contributes to higher salaries.
  • Government jobs: Hawaii has a large government sector, and government jobs typically pay well. This helps to boost the overall salary level in the state.
  • Unionization: Hawaii has a high unionization rate, which also helps to drive up wages.

The money that supports Hawaii’s high salaries comes from a variety of sources, including:

  • Tourist spending: Tourists spend billions of dollars each year in Hawaii on hotels, food, activities, and other goods and services. This spending helps to support the jobs and businesses that pay high salaries.
  • Government spending: The federal and state governments spend billions of dollars each year in Hawaii on military bases, government programs, and other expenses. This spending also helps to support the state’s economy and high salaries.
  • Local businesses: Many local businesses in Hawaii, such as construction companies and healthcare providers, also pay high salaries. These businesses are able to pay high salaries because they charge high prices for their goods and services.

Overall, Hawaii’s high salaries are supported by a combination of factors, including tourism, the limited supply of land, government jobs, and unionization. The money that supports these high salaries comes from a variety of sources, including tourist spending, government spending, and local businesses.


Does this phenomenon also occur in other similar areas like Guam?


Yes, the phenomenon of high prices and high salaries for even normal jobs also occurs in other similar areas like Guam. This is because Guam is also a popular tourist destination, has a limited supply of land, and a large government sector. Additionally, Guam has a relatively high unionization rate.

Here is a breakdown of the factors that contribute to Guam’s high prices and high salaries:

  • Tourism: Guam is a popular tourist destination, and the tourism industry is a major driver of the island’s economy. Tourists are willing to pay high prices for goods and services, which helps to support high salaries for workers in the tourism industry.
  • Limited supply of land: Guam is a relatively small island with a limited amount of land. This drives up the cost of housing and other expenses, which also contributes to higher salaries.
  • Government jobs: The US federal government and the government of Guam employ a large number of people. Government jobs typically pay well, which helps to boost the overall salary level on the island.
  • Unionization: Guam has a relatively high unionization rate. Unions help to negotiate higher wages and benefits for their members, which also contributes to higher salaries on the island.

The money that supports Guam’s high salaries comes from a variety of sources, including tourist spending, government spending, and local businesses.

It is important to note that, while Guam has high salaries, it also has a high cost of living. This means that the purchasing power of Guam residents is not necessarily higher than that of residents in other parts of the United States.

Overall, the phenomenon of high prices and high salaries for even normal jobs is common in popular tourist destinations with a limited supply of land and a large government sector. Guam is one example of such a place.


Do these tourist-focused area also keep more money because more money is coming in than out?


Yes, tourist-focused areas do tend to keep more money than other areas because more money is coming in than out. This is because tourists typically spend more money than they bring with them when they visit a tourist-focused area. This money is then redistributed throughout the local economy, supporting businesses and workers in the area.

For example, a tourist might spend $1,000 on a hotel room, food, and activities during a week-long vacation in Hawaii. Of that $1,000, the hotel might keep $500, the restaurant might keep $200, and the tour company might keep $300. The hotel, restaurant, and tour company would then use that money to pay their employees, buy supplies, and pay rent.

This process of money being spent and redistributed throughout the local economy is known as the “multiplier effect.” The multiplier effect can be quite strong in tourist-focused areas, as tourists tend to spend a lot of money on a variety of goods and services.

As a result of the multiplier effect, tourist-focused areas tend to have higher incomes and lower unemployment rates than other areas. This is because the money that tourists spend in these areas helps to support businesses and workers, which creates a more prosperous economy.

However, it is important to note that the economic benefits of tourism are not evenly distributed. For example, large hotel chains and tour companies often own a large share of the tourism industry in many tourist-focused areas. This means that a significant portion of the money that tourists spend in these areas flows to these large corporations, rather than to local businesses and residents.

Overall, tourist-focused areas do tend to keep more money than other areas because more money is coming in than out. This is due to the multiplier effect, which is a process of money being spent and redistributed throughout the local economy. However, it is important to note that the economic benefits of tourism are not evenly distributed.


As you can see from the responses, the following are reasons for the high amount of money in places like Hawaii:

  • Tourism: Increasing income.
  • Government jobs: Increasing income.
  • Limited supply of land: Increasing prices.

The interesting part of tourism, especially in place like Hawaii or Guam, is that tourists typically take in lots of money, but take out very little, leading to what is called the “multiplier effect” where money accumulates in an area. More so because these isolated island areas make it a lot more difficult for money to get out.