Economic freedom has made New Hampshire an international marvel

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New Hampshire is a small, remote, mountainous state with no major port or trade hub. Considering only natural economic resources, it has more liabilities than assets. Yet its economy is legendary. Its economic growth has been the envy of New England for decades. 

How did this happen?

The simple answer is that New Hampshire unleashed the power of human ingenuity by systematically pursuing economic freedom for its people. The human mind being the greatest economic asset, New Hampshire leaders freed it from unnecessary constraints. Tremendous prosperity followed. 

What we call “The New Hampshire Advantage” is not merely the absence of a broad-based sales or income tax. It is the result of a consistent, decades-long strategy of leaving individuals and businesses largely free to trade with each other as they see fit. 

In short, the state’s economic strategy is to not have an economic strategy, other than to leave people and businesses free. It has worked beautifully. 

Below are the inflation-adjusted real GDP growth rates of every New England state from 1977-2019, from worst to first, along with the rate for the U.S. as a whole. The data are from the U.S. Bureau of Economic Analysis and were compiled by the United States Regional Economic Analysis Project. 

Rhode Island: 124%

Maine: 135%

Connecticut: 163%

Vermont: 188%

Massachusetts: 234%

New Hampshire: 335%

USA: 203%

New Hampshire’s 335% growth is astounding. Such are the benefits of economic freedom. 

The Fraser Institute, a Canadian free-market think tank, has for years ranked North American states on economic freedom. This week New Hampshire ranked No. 1 in North America — again.

For 24 straight years, New Hampshire has ranked as either the first or second most economically free U.S. state. Since Alberta, Canada, drifted away from free-market economics several years ago, New Hampshire has often ranked first in North America. 

As the authors of the Fraser Institute’s report point out, “economic freedom is positively correlated with per-capita income, economic growth, greater life expectancy, lower child mortality, the development of democratic institutions, civil and political freedoms, and other desirable social and economic outcomes.”

Many people assume that New Hampshire’s low levels of taxation and government spending would lead to a high poverty rate. The opposite is true. We have the lowest poverty rate in New England. 

The poverty rates for New England states are:

Maine: 10.9%

Rhode Island: 10.8%

Vermont: 10.2%

Connecticut: 10%

Massachusetts: 9.4% 

New Hampshire: 7.3%

Freedom and prosperity tend to attract people who live in less desirable places. During the half century starting in 1960, New Hampshire experienced the highest population growth rate in New England. In the 1980s, our population growth rate was more than double that of Vermont and five times that of Massachusetts.

A 2008 report for the Council on the Future of Vermont noted the sharp difference between New Hampshire and Vermont in the 20th century.

“Had we kept pace with their growth rate for the past 106 years, our population would now stand at 1.1 million, about double our present population,” it concluded. 

New Hampshire has gone from slightly more populous than Vermont in 1900 to more than twice as populous today.

Unlike Vermont, New Hampshire doesn’t have to pay people to move here. They come voluntarily.

In 2016, we surpassed Maine’s population for the first time in 215 years, though Maine is 3.78 times larger than New Hampshire.

Because humans are the world’s greatest economic resource, economic growth and population growth bring prosperity. Census figures show that New Hampshire’s median household income of $74,057 is about 25% higher than Vermont’s $60,076 and about 35% larger than Maine’s $55,425.

Despite having no Boston Harbor, Logan Airport, MIT, Harvard, BU, BC, or Yale, no Gold Coast along the Long Island Sound, and being relatively isolated in Northern New England, New Hampshire’s median household income is equal to 97% of Connecticut’s and 96% of Massachusetts’.

New Hampshire has a great state motto, which it should keep. But the state Department of Business and Economic Affairs could modify it into an accurate and catchy marketing slogan: “Live free and prosper.”

Since war and revolution gave way to trade and commerce, “Live free and prosper” has been the New Hampshire way. By cherishing economic freedom, we’ve created an island of liberty and prosperity in a region that has become distrustful of both. It works. Let’s stay with it.

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New Hampshire ranked most economically free state for second year in a row

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New Hampshire is the most economically free state in North America for the second year in a row, and the third time in four years, finds this year’s edition of Economic Freedom in North America, the annual report from Canadian free-market think tank the Fraser Institute.

New Hampshire scored 7.84 out of 10 in this year’s report (down from 7.93 last year), beating out second-place Florida (7.73).

“The New Hampshire Advantage has made Granite Staters more economically free than roughly half a billion other North Americans, from Nunavut to Chiapas,” Josiah Bartlett Center President Andrew Cline said. “From the simple idea that people should be left as free as possible to pursue their economic dreams, we’ve created a continental marvel.”

Rounding out the top five freest U.S. states are Virginia (3rd), Texas (4th) and Tennessee (5th). At the other end of the index, New York (50th) is once again the least-free state, followed by West Virginia (49th), Alaska (48th), California (47th) and Vermont (46th).

New England states were ranked as follows: New Hampshire (1), Massachusetts (18), Connecticut (25), Maine (37), Rhode Island (43) and Vermont (46).

The report measures the extent to which the policies of individual provinces and states in Canada, the United States of America and Mexico were supportive of economic freedom, the ability of individuals to act in the economic sphere free of undue restrictions.

Economic freedom—the ability of individuals to make their own economic decisions including what to buy, where to work and whether to start a business—is fundamental to prosperity.

“When governments allow markets to decide what’s produced, how it’s produced and how much is produced, citizens enjoy greater levels of economic freedom,” said Fred McMahon, the Dr. Michael A. Walker Research Chair in Economic Freedom at the Fraser Institute and co-author of this year’s Economic Freedom of North America report, which measures government spending, taxation and labor market restrictions using data from 2018, the latest year of available comparable data.

From 2004 to 2018, the average score for U.S. states in the all-government index fell from 8.31 to 7.97. Across North America, the least-free quartile of jurisdictions had an average per-capita income 8.1 percent below the national average compared to 4.6 percent above the national average for the most-free quartile.

“Higher levels of economic freedom lead to more opportunity, more prosperity, greater economic growth, more investment and jobs,” said Dean Stansel, report co-author and economics professor at Southern Methodist University.

The Economic Freedom of North America report (also co-authored by José Torra, the head of research at the Mexico City-based Caminos de la Libertad) is an offshoot of the Fraser Institute’s Economic Freedom of the World index, the result of more than a quarter century of work by more than 60 scholars, including three Nobel laureates.

The U.S. edition of the report can be found EFNA-2020-US-POST.

Detailed tables for each country and subnational jurisdiction can be found at www.fraserinstitute.org.

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October COVID numbers show that the virus is having a different impact than in the spring

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In New Hampshire in October, new coronavirus infections, hospitalizations and deaths all spiked, but the virus had a less harmful impact than in the spring. 

Though October infections set a record, hospitalizations and deaths remained far below their spring and early summer levels. 

Positive test results totaled 2,799 in October, a 182.5% increase from September. The state’s previous high was 2,505 in May. 

The state recorded 36 new hospitalizations in October, a 50% increase from September. 

But September’s 24 new hospitalizations were the second-lowest since the start of the pandemic, leaving October’s hospitalizations far short of the numbers posted in the spring and early summer months. 

October’s 36 hospitalizations were the state’s third-lowest monthly total. The state recorded more than 100 new hospitalizations in May, June and July, and more than 200 in April. 

The state reported 43 new COVID-19 deaths in October, a tremendous 514% increase from September. 

Yet September’s seven deaths were the lowest since the state recorded three in April. October’s deaths were the fourth-lowest monthly total since March. The state recorded 69 deaths in April, 176 in May, and 126 in June. 

Every death in October was of a person age 60 or higher. In fact, no one under age 60 in New Hampshire has died from COVID-19 in September, October or to this point in November. 

The state hit another record in October, conducting its highest number of COVID-19 tests. Total PCR tests reached 273,139 in the month, according to data collected from the state’s daily updates. That includes tests from the University of New Hampshire.

The total number of tests was 21,548 higher than what the state reported in September.* 

October’s test positivity rate was 1.025%.

The October trend lines show that even though infections hit a record, the state was in better shape than in the spring, as the infection rate remained low and the infections resulted in less harm. 

There is no definitive answer for why the virus is resulting in fewer hospitalizations and deaths than in the spring, but there are some theories. 

An obvious factor is that younger, healthier people are being infected, resulting in lower hospitalization and death rates. 

A Wayne State University study released in October found declining viral loads in infected people, possibly suggesting a weakening virus or increased masking and social distancing, resulting in people being infected by smaller doses of the virus.

Masking might be playing a strong role, as a July study published in the Journal of General Internal Medicine suggests. The study concluded that mask-wearing basically works to inoculate the wearer, resulting in an infection that causes few or no symptoms.  

If this is true, it would mean that masking can help to reduce both the spread and the severity of the coronavirus. Though there is evidence to support the theory, it is not conclusive. 

What is clear is that the virus has had a less deadly impact in New Hampshire so far this fall than it did in the spring and early summer. 

In the first half of November, infections have continued their steep climb, and the infection rate is more than double October’s, yet deaths are trending down. New hospitalizations appear to be trending slightly upward, though not at the same rate as infections. 

There is no guarantee that these trends will continue. It’s possible that as people move mostly indoors through the depths of the winter, symptomatic infections will spike, or larger percentages of older people will be infected, resulting in higher rates of hospitalization and death. But so far the fall has proven less deadly than many feared.

* The state’s September numbers did not include UNH tests for the first 17 days of the month. UNH does not list its tests per day, so we cannot determine precisely how many total tests were given in September. For that reason, we’re using the state’s reported figures. 

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Fun with 2020 election numbers

Granite Staters on Tuesday put Republicans in complete control of state government while re-electing every Democratic incumbent at the federal level and giving Joe Bide an 8-point victory over President Donald Trump. 

There are as many possible explanations for this as there are buffet items at the new Golden Corral on South Willow Street in Manchester. There are fewer explanations than there are candy options at Chutters, unless you count conspiracy theories. 

But we aren’t going to get into explanations. We’re going to share some of the more interesting figures, all are official counts from the Secretary of State. 

Ready? Let’s have fun with election numbers!*

(*We don’t promise actual fun.)

Gov. Chris Sununu cemented his status as the state’s most popular politician by pulling a record 518,400 votes. To give an idea of how impressive that is, as of the September primaries there were 998,537 registered voters in the state. (Obviously, same-day registrations added new voters this week, but we don’t have a total count.)

Add the Libertarian candidate’s paltry 11,328 votes, and the Republican and Libertarian votes combined more than doubled the 263,988 votes received by Democratic nominee Dan Feltes. 

This is in a year when Democrats had 324,778 registered voters in September to Republicans’ 303,057. (Undeclared registrations were 370,702.)

Sununu’s 65% of the vote doesn’t top former Gov. John Lynch’s 70% in 2008 or 74% in 2006. Lynch, incredibly popular, remains the king as measured by percentage of the vote. 

But Lynch was helped by a Democratic wave in 2006 that saw Carol Shea-Porter and Paul Hodes elected to Congress, and another in 2008 that saw those two re-elected, Jeanne Shaheen elected to the U.S. Senate, and Barack Obama winning New Hampshire on his way to the White House.

Lynch would have dominated anyway, but he might’ve wound up with slightly lower percentages without a strong ticket. 

By the way, Hodes, the former member of Congress from the 2nd Congressional District, lost in this year’s state Senate District 15 primary by 724 votes.  

Also by the way, the Libertarian candidate for governor got 31,243 votes in 2016, riding Gary Johnson’s pot-flavored coattails. 

Sununu has grown more popular each election, which is unusual for a New Hampshire governor. He won with 49% of the vote in 2016, 53% in 2018, and 65% in 2020. 

President Trump also increased his performance from four years before, but so did the Democratic presidential nominee, and by a lot more. 

The president improved his 2016 performance by 19,870 votes, taking 365,660 votes in 2020. That would have been more than enough to win New Hampshire four years ago. But Joe Biden took the state last week with 424,937 votes, a gain of 76,4211 over Hillary Clinton’s 348,526 in 2016.

This is after Biden came in fifth in the presidential primary earlier this year, drawing only 24,944 votes, 51,390 less than winner Bernie Sanders’ total of 76,384.

Sununu outperformed Trump by 152,740 votes. 

Sununu did this by drawing large support from independents and Democrats, showing the power of bipartisan appeal. 

Since 2016, an additional 53,323 Granite Staters registered as Democrats. Republicans gained just 7,370 new voters. Another 18,718 people registered as undeclared. 

Trump did outperform Republican U.S. Senate nominee Corky Messner by 39,431 votes. Sen. Jeanne Shaheen outperformed Messner by 124,542 votes. Shaheen’s 450,771 was second only to Sununu. It was 67,629 short of Sununu’s total, suggesting that a Sununu-Shaheen matchup might have ended Shaheen’s long, popular career in elected office. 

The five member Executive Council flipped from 3-2 Democrat to 4-1 Republican, with only District 2 staying Democratic. The closest race, not surprisingly, was in District 5, where Dave Wheeler beat Deb Pignatelli by just 1,227 votes. 

The state Senate flipped from 14-10 Democrat to 14-10 Republican. In District 9, Republican Denise Ricciardi won by 409 votes, and in District 11 Republican Gary Daniels won by 198 votes. In District 12, Republican Kevin Avard won by 805 votes. Democrats are requesting recounts in all three races.

Total voter turnout was an unprecedented 814,092, obliterating the 2016 record of 755,850.

It also was a record for absentee ballots, with 261,062 cast. In a few towns, including Hanover and Bedford, absentee ballots outnumbered in-person ballots. 

In Coos County, two towns — Greens Grant and Pinkham’s Grant — had only a single voter. Both voted in person.

And that’s probably enough numbers for one newsletter. 

But before we go, a politician/numbers joke.

How many politicians does it take to change a lightbulb?

Well, I takes 1 to introduce the Act to Change The Lightbulb, 16 to serve on the Committee to Study the Changing of Lightbulbs, 9 to pass the bill out of committee, 4 to argue in favor of the bill on the House floor, 12 to denounce the bill as harmful to the general public, 189 to pass the bill, 5 to study it in the Senate, 3 to vote it out of committee, 2 to argue in favor on the Senate floor, 4 to argue that we do just fine with the bulbs we have, thank you very much, 13 to pass it, and one to veto the bill. So the answer is zero. 

See, wasn’t that fun?!

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New Hampshire must avoid another coronavirus crash

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This week, New Hampshire’s initial unemployment claims fell below 2,000 for the first time since March. And the state’s positive PCR coronavirus test rate edged up past 1% for the first time since the state started increasing its testing and calculating the percent-positive rate late this summer. Whether the state can keep the former trend going depends on how the latter is handled. 

It’s hard to overstate the importance of keeping the economy from sliding back into a recession. Contrary to the sentiments of delusional anti-capitalists who blithely assert that the economy can be sacrificed indefinitely for the purpose of crushing the virus, a thriving economy is a tremendous social good and ought to be a top governmental priority. 

When profits evaporate, so do jobs. When jobs evaporate, people suffer, especially those in the most vulnerable financial positions. 

As the National Institutes of Health has documented, people who lose their jobs suffer from higher stress and more medical ailments. As the Urban Institute documented after the last great recession:

“Being out of work for six months or more is associated with lower well-being among the long- term unemployed, their families, and their communities. Each week out of work means more lost income. The long-term unemployed also tend to earn less once they find new jobs. They tend to be in poorer health and have children with worse academic performance than similar workers who avoided unemployment. Communities with a higher share of long-term unemployed workers also tend to have higher rates of crime and violence.” 

Before the coronavirus hit New Hampshire, weekly unemployment claims were consistently below 1,000 per week. The state’s economy was an employment machine, allowing Granite Staters, both blue and white collar, to enjoy the dignity of work and self-sufficiency.

The lockdown caused unemployment claims to spike from 642 to 29,379 in a single week. Claims surpassed 30,000 for the next two weeks before starting to decline in April. As the economy slowly opened, unemployment claims fell and are now just under triple their pre-pandemic level (1,880 this week vs. 642 the week of March 14).

Some economic sectors remain in dire circumstances (think hospitality), but the economy as a whole has clawed its way back throughout the summer and is well positioned to continue growing. Locking down the economy again would be an economic and humanitarian disaster. 

In the second quarter, New Hampshire’s GDP declined by 36.9%. Another economic hit even close to that would devastate not just the state’s employers, but its non-profits, local governments, and the state budget. 

Businesses make the economy run, and the economy includes non-profits and government. Business profits make it possible for people to pay their mortgages and grocery bills, but also to pay their property taxes, donate to non-profits and churches, and generate the revenue that keeps schools open, roads maintained, and social services funded. 

Business taxes make up the largest single source of revenue for the state budget, accounting for $805.6 million of the state’s $2.6 billion in general and education fund revenue in 2019. The next-largest source, excluding property taxes retained locally, is the rooms and meals tax at $350.1 million. And of course strong rooms and meals tax revenue depends on a healthy hospitality industry. 

Other major taxes — the interest and dividends tax, the insurance tax, the communications tax, the tobacco tax — all depend on businesses to be successful and profitable. Even state liquor sales are business-dependent. The state doesn’t make liquor. It sells liquor and wine made by the private sector. 

Keeping the economy from collapsing again is mission critical for New Hampshire’s employers and for state and local governments. That’s why the governor’s order this week requiring restaurants to collect contact information from patrons was an encouraging sign. 

After several COVID-19 clusters associated with restaurants, the governor could have ordered restaurants closed, as some European countries are doing. Instead, at the request of the New Hampshire Restaurant Association, the governor ordered contact tracing. 

The goal of the order is two-fold. One, it reduces, if not ends, the state alerts that ask people who patronized a cluster-associated restaurant to come forward. Those alerts cause alarm and discourage people from going out to eat. They hurt all restaurants, which hurts the entire industry, making it more likely that struggling restaurants will close permanently. They also hurt the state budget by reducing rooms and meals tax revenue. 

Two, the order allows for quicker contact tracing, which can curtail the spread of the virus, helping to avoid other clusters or outbreaks. That, in turn, helps keep the broader economy open. 

COVID-19 infections, hospitalizations and deaths are expected to continue rising this fall and winter. The state’s response must not be a broad economic shutdown. They are devastating, and if Europe is an indication they are likely to be ineffective as people revolt against their restrictions. If another lockdown is to be avoided, the state and the people have to focus on suppressing clusters and outbreaks. 

The state can do only so much if people don’t take responsibility for their own behavior. As with most any other government intrusion in the name of public health, safety or welfare, if individuals decide to do their share, there will be less for the government to do on their behalf.

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Join us for a 2020 Election Preview virtual luncheon this Thursday

Join The Josiah Bartlett Center for a special 2020 Election Preview this Thursday from 12:30-1 with political reporters Jim Geraghty of National Review and James Pindell of The Boston Globe.

Learn where things stand in New Hampshire, New England, and the nation as we head into the final weekend before the election.

We’ll cover the top New Hampshire and New England races, explore what the situation looks like in top battleground states, see how U.S. Senate races are shaping up, and discuss the policy issues that have shaped the 2020 election.

This is a virtual event, so you can enjoy it from your home or office.

Register online here: https://bartlett2020electionpreview.eventbrite.com

 

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N.J. legislators ask to join N.H. tax lawsuit against Massachusetts

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Three days after New Hampshire sued Massachusetts to stop it from taxing the income of remote workers, a New Jersey Senate committee passed a bill requiring their state treasurer to explore joining the suit. If New Jersey joins, New Hampshire will have started a multi-state effort to stop high-tax states from reaching across their borders to tax non-resident commuters. 

Last week, Massachusetts adopted a new administrative rule allowing it to collect income taxes on New Hampshire residents who work remotely for Massachusetts companies. On Monday, New Hampshire sued in federal court, calling the practice unconstitutional. But Massachusetts isn’t the only state to do this, and other states have taken notice of New Hampshire’s suit. 

For decades, New York State has applied its income tax to people who work remotely for New York companies. Hundreds of thousands of New Jersey and Connecticut residents have to pay New York income taxes even if they don’t physically commute into the state.

New Jersey state Sen. Declan O’Scanlon told the Josiah Bartlett Center that the New Hampshire lawsuit could bring justice for New Jersey residents too. 

“The lawsuit between New Hampshire and Massachusetts may very well pave the way to helping make the case,” he said.

O’Scanlon is co-sponsor of a bill that would require New Jersey’s treasurer to study the commuter tax issue and make a report to the state legislature. On Thursday, the N.J. Senate Budget and Appropriations Committee unanimously amended the bill to instruct the treasurer to explore joining New Hampshire’s lawsuit.

The bill then unanimously passed the committee. Its next step would be a vote before the full Senate, O’Scanlon said.

He and the bill’s prime sponsor, Sen. Steven Oroho, had been interested in pursuing a fight against New York for a while, O’Scanlon said.

“I had a couple of people send me stories about the New Hampshire lawsuit, knowing I have an interest in this,” he said. 

“There is no logical explanation of why we wouldn’t pursue our residents paying New Jersey taxes rather than New York taxes.”

A spokesman for the New Jersey treasurer was unavailable for comment, but O’Scanlon said the effort has bipartisan support and the governor’s office has taken notice. 

“I am hearing from within the Murphy administration that there is interest in this,” he said. 

When the bill gets to the full Senate, O’Scanlon said he doesn’t foresee any serious opposition.

“It should be like a hot knife through butter,” he said. “It will help our taxpayers and enhance our revenue. Not often do you have an issue that lines up like that. “

New Jersey allows residents to take a tax credit for income taxes paid to New York. So New York’s taxation of commuters costs New Jersey lots of money. Senators on the Budget and Appropriations Committee speculated that the cost could be in the billions of dollars. 

Edward Zelinsky, who teaches tax law at Benjamin Cardozo School of Law in New York City, told the Josiah Bartlett Center that New Jersey and New Hampshire are in the same position. 

“I believe it’s identical. From a constitutional perspective and a tax policy perspective, the issues are the same,” he said. 

“If the employer is in New York or in Massachusetts and you are at home in Connecticut or in New Hampshire, their position is that you owe income taxes. 

“Now, in fact, New York has gone very aggressively. New York is not just sending tax bills to people in Connecticut. New York has sent tax bills to people in Tennessee, in Arizona. Their position is that they can overstep the boundaries and send tax bills to anyone they want. In Massachusetts, they are technically saying the same thing.”

Zelinsky, who lives in Connecticut and works some days in New York City, sued New York over this issue in 1994 and lost in the New York state courts. The U.S. Supreme Court refused to take up the case.  But he said that legal scholars have come to see his — and New Hampshire’s — position favorably.

“I lost in court; I won in the arena of academic opinion,” he said.

In its lawsuit, New Hampshire states that “Massachusetts has unilaterally imposed an income tax within New Hampshire that New Hampshire, in its sovereign discretion, has deliberately chosen not to impose.”

The suit states that its purpose is “to rectify Massachusetts’ unconstitutional, extraterritorial conduct.”

Zelinsky said the constitution favors New Hampshire, but the big question is whether the Supreme Court will hear the case. That will be up to the discretion of the justices. But he will be among the many commuters and remote workers pulling for the Granite State.

“I’m saying very openly that I’m cheering New Hampshire on.”

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The minimum wage, again?

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Like a good horror movie villain that just won’t die, the minimum wage has risen again. It reemerged in the presidential debate on October 21, and the same legislator who introduced the $15 minimum wage bill vetoed this year by Gov. Chris Sununu has filed another minimum wage bill for next year. 

In the presidential debate, the moderator surprisingly acknowledged the cost of higher minimum wages in her question to former Vice President Joe Biden.

“We are talking a lot about struggling small businesses and business owners these days. Do you think this is the right time to ask them to raise the minimum wage or support a federal $15 minimum wage?”

That was a good framing of the question. Biden gave a confusing answer. 

“I do,” Biden said. “Because I think that one of the things we’re going to have to do is we’re going to have to bail them out too. We should be bailing them out now, those small businesses. You’ve got one in six of them going under. They’re not going to be able to make it back.”

It’s unclear how “bailing out” businesses relates to the minimum wage, unless Biden meant that the federal government is already spending money to keep businesses alive so it might as well spend more to keep alive those that would be harmed by a federal $15 minimum wage law.

Biden went on to say, in response to an assertion from President Trump, “there is no evidence that when you raise the minimum wage business go out of business. That is simply not true.”

Ah, but it is true. 

A 2017 Harvard Business School study found that higher minimum wages result in restaurant closures.   

A 2018 U.S. Census Bureau study of manufacturers over 23 years found that “when wage rates increase, establishments are more likely to exit the market.” It also found that increases in the minimum wage led to reduction in hours worked and increases in automation. 

A 2019 National Bureau of Economic Research study found that “increases in the federal minimum wage worsen the financial health of small businesses in the affected states.… Increases in the minimum wage also lead to lower bank credit, higher loan defaults, lower employment, a lower entry and a higher exit rate for small businesses.”

The theory behind the minimum wage is that greedy capitalists sitting on piles of cash are exploiting workers and therefore must be forced to share their wealth. In reality, businesses fight to survive in highly competitive markets, and artificial wage floors often hurt both the businesses and the people they were intended to help. 

A 2019 UC-Irvine study found that minimum wage increases caused slower employment growth in California’s restaurant industry, with significantly larger effects in low-income neighborhoods.

The Congressional Budget Office just last year concluded that “the net effect of a minimum-wage increase is to reduce average family income” because “workers lose their jobs and business owners must absorb at least some of the higher costs of labor.”

It further concluded that higher minimum wages increase unemployment. “By increasing the cost of employing low-wage workers, a higher minimum wage generally leads employers to reduce the size of their workforce.”

The question to Biden from ABC News debate moderator Kristen Welker got the issue right. Minimum wage increases do strain small businesses, and that strain would be even more acute as businesses struggle with revenue losses caused by the pandemic and government restrictions on economic activity. 

The service industry has taken a financial beating during the pandemic. It’s a major reason for what Biden and others have called the K-shaped recovery. As the economy has picked back up, employment has lagged in sectors that employ a lot of lower-wage workers, such as restaurants. Among the hardest-hit businesses during the pandemic have been restaurants and movie theaters, both of which pay many employees at or near the minimum wage. 

If politicians want to guarantee larger-scale restaurant and theater closures, and permanent job losses for many in the service sector who have endured temporary unemployment during 2020, a $15 minimum wage would do the trick. 

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We have a podcast!

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On Oct 19, the Josiah Bartlett Center for Public Policy in partnership with New Hampshire Journal launched a new podcast focused on New Hampshire politics and policy.

The podcast provides daily insights and analysis on topics directly related to the 2020 election so Granite Staters can have a better understanding of the issues facing the state this fall. Each episode features a free-market perspective on the top issues plus a guest to provide additional insight and context.

The podcast is available online here and on Spotify here. We’ll be up on more apps very soon, so check back here later in the week to see an updated list.

And if you don’t already subscribe to the Bartlett Center’s weekly email newsletter, The Broadside, do that here right now.

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N.H. is running out of places for our families, friends & coworkers to live

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The No. 1 reason people move to or stay in New Hampshire is not jobs or low taxes or the environment. It’s family, according to University of New Hampshire Granite State Poll results summarized in the New Hampshire Housing Finance Authority’s October Housing Market Report. 

New Hampshire’s strong economy gives our extended family members plenty of options for employment should they decide to stay or return home. Maintaining a vibrant economy is a way of keeping our families connected and close. But the other essential part of this equation is missing — where are they going to live? 

The coronavirus pandemic has made New Hampshire’s acute housing shortage even worse, data from the New Hampshire Housing Finance Authority (NHFA) show. 

Multiple news organizations have documented the run on houses in New Hampshire, Vermont and Maine as people flee cities for the safety of rural and suburban spaces with low infection rates. That surge in purchasers has spiked New Hampshire’s already high demand, driving prices to record levels. 

New Hampshire’s median home price reached a new peak of $335,000 in August, a 14% increase since last August, NHFA tracking shows. Sales are down 6% since January. Those numbers “reflect extremely low inventory levels, not a lack of demand,” the NHFA concludes.

“September 2020 listings in total have dropped 27% when compared to September 2019. As prices continue to rise, listings under $300,000 become scarcer; the number of homes below this price have decreased 37% from last year,” the authority’s October report details.

In September, there was less than a month’s supply of homes priced under $300,000 in the entire state. 

To put it another way, your child who wants to move home from Boston or Raleigh or Silicon Valley might have to keep that big-city salary just to afford a house in New Hampshire. 

The housing shortage is tighter this fall even though building permits for single-family homes rose by 24% from January through August. New Hampshire’s housing stock is so low that it will be years before we come close to building enough homes to satisfy demand. 

For rentals, the picture is even worse. Building permits for multi-family homes fell by 61% from January through August. As demand has surged, communities have clamped down on new apartment construction (or builders have given up even applying). 

For example, Bedford’s planning board in September rejected a proposal to build 200 market-rate luxury apartments in the town’s commercial zone on South River Road. Though the apartments would have brought more tax revenue and less traffic than a commercial development previously approved for the same lot, and would have made the town a profit after school and public safety costs were deducted, the board rejected it. Board members didn’t want more apartments, even though the data showed that apartments would have left the town financially better off than commercial development.  

Because local regulators continue to artificially restrict the supply of rental housing, rents keep rising. The median monthly rent for a two-bedroom apartment in New Hampshire rose 4.9% in the past year, to $1,413, NHFA data show. The state’s rental vacancy rate has risen a bit but remains below 2%. 

All of this means that if your children and parents want to move back to town, they will struggle to find a home. 

The NHFA’s report shows that almost three-fourths (73%) of New Hampshire home buyers are Granite Staters moving to another home within the state. High prices inflated by a severe shortage of new construction do not primarily hurt out-of-staters who want to move here for jobs. They primarily hurt Granite Staters. 

They also hurt New Hampshire employers. Fidelity and Sig Sauer this week announced expansions that would create more than 700 new jobs in the state. The shortage of housing in Southern New Hampshire will make it harder for those companies to fill those positions.  

New Hampshire’s families, workers and employers are in desperate need of new home construction, both owner-occupied and rentals. The situation has been worsening for years. At what point do all three go to their local boards and demand that they get out of the way and let builders build?

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