Raising New Hampshire’s minimum wage to $15 an hour would cost the state nearly 6,000 jobs and more than 9,000 residents, raise consumer prices, reduce economic output, and cause serious harm to small businesses and the leisure and hospitality industries, a new report from New Hampshire Employment Security concludes.
The study, released Monday by the Labor Market Information Bureau, examined in detail how a minimum wage increase would affect employers and employees in the state, across all industries. It projected the impact of raising the minimum from $7.25 an hour to $9.50, then $12, then $15 by 2026.
The findings show that, although some lower-wage employees would experience an increase in earnings, the overall economic impact on the state would be negative.
Among the report’s findings:
- New Hampshire’s gross domestic product will be more than $800 million lower by 2031 than it would have been without a $15.00 minimum wage.
- The state’s population will be 9,630 lower and its labor force will include 6,023 fewer individuals in response to a $15.00 minimum wage and the resulting diminished employment opportunities in the state.
- Increases in personal income over the baseline forecast will peak at $873 million in the year the minimum wage reaches $15.00 but will decline in subsequent years in response to employment losses. The increase in personal income will, however, remain positive, and be $228 million above baseline forecast by 2031.
- Workers in the lowest wage categories will see the largest increases in income but also experience the highest number of job losses in response to a $15.00 minimum wage.
- Industries such as food services and drinking places, and other leisure and hospitality industries, as well as retail trade, are forecast to experience the largest job losses. These reductions in employment offset much of the benefits of increased wages for low-wage workers in those industries.
- Aggregate price levels will increase by less than one percent across the New Hampshire economy in response to the $15.00 minimum wage, but specific industries most affected by the increase, such as the food services and drinking places industry (+7.0%), and the retail industry (+3.4%) will see substantial price increases.
Wage costs would hit some industries much harder than others, the report finds. Wage costs would rise by 1.4% in manufacturing, but 10.8% in accommodations, 18.6% in leisure and hospitality, and 20.1% in food service and drinking places.
On the economy as a whole, the study finds that “GDP will be lower in New Hampshire as a result of a $15.00 minimum wage than it would have been without the minimum wage increase, by approximately $806 million dollars by the end of the forecast period in 2031.”
If the state adopts a $15 minimum wage, the study predicts that over the next decade retail prices would increase by 2.41%, accommodations prices by 3.14% and food service & drinking places prices by 6.86%.
The report also warns that a $15 minimum wage would reduce teen employment, which could have a broad cultural and economic impact in New Hampshire.
“New Hampshire has traditionally had among the highest percentage of teenage and youth under the age of 22 participating in the labor force of any state in the nation. Opportunities for work for young people help teach solid work habits at an early age and have been important in developing New Hampshire’s reputation for having a high-quality workforce. A high minimum wage will reduce employment opportunities for youth, exacerbating trends in the decline of the youth labor force and further disadvantaging industries that are already most affected by the minimum wage hike (food services, retail, recreation) that rely on youth labor.”
The report finds that “the negative job impacts resulting from a minimum wage increase are concentrated in the lowest wage occupations, precisely the occupations that a minimum wage increase is designed to benefit.”
Furthermore, job losses for the poorest fifth of the population would not be distributed evenly throughout the state. Grafton, Coos, Rockingham and Carroll counties would experience larger job losses among their lowest-income residents, the study found.
Overall, the study concludes that raising New Hampshire’s minimum wage to $15 an hour would make the state poorer and less populous than it would have been without the minimum wage increase. Those are results lawmakers should strive to avoid, not achieve.