Educational choice makes small but important gains in 2023

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Legislators have approved two relatively small but significant improvements to New Hampshire’s existing school choice options. 

The 2024–25 state budget increases per-pupil funding for public charter schools, and a separate bill expands eligibility for the Education Freedom Account (EFA) program. Both changes will offer Granite State students more educational options starting this fall.

Charter schools

Because charter schools don’t receive direct subsidies from local property taxpayers, as district public schools do, they receive an additional state grant per pupil on top of the per-pupil adequate education grant. 

The new state budget increases the base adequacy grant for charter school students from $3,561 to $4,100 and the supplemental charter school grant from $3,411 to $4,900, bringing the total per-pupil amount to $9,000—a 29% increase from the 2022–23 budget. The result is about $121.5 million in charter school funding.

New Hampshire charter schools are public schools operated by a nonprofit organization under a state-approved charter. A new national study shows that they can be extremely effective.

Stanford University’s Center for Research on Education Outcomes released a landmark study this month finding that “the typical charter school student in our national sample had reading and math gains that outpaced their peers in the traditional public schools (TPS) they otherwise would have attended.” Black, Hispanic, low-income, and English-language-learner students attending charter schools also posted larger academic gains than did their counterparts who attended traditional public schools.

Charter schools have become a popular option for New Hampshire families seeking an alternative to traditional public schools. Enrollment in charter schools for the 22–23 school year was a record 5,530 in New Hampshire, a 12% increase from 21–22 enrollment and a nearly 164% increase from 13–14 enrollment. 

Charter schools typically supplement their state education grants through private fundraising. The increased state aid will reduce the reliance on outside donations and put the state’s dozens of charter schools on somewhat better financial footing.

Education Freedom Accounts

House Bill 367 expands eligibility for an Education Freedom Account (EFA) from households making no more than 300% of the federal poverty level to households with income at or below 350% of the federal poverty level. That’s a 16.7% increase in income eligibility. 

This expansion increases the EFA eligibility level for a two-person household by $9,860, for a three-person household by $12,430, and for a four-person household by $15,000, providing many additional families with the ability to pursue alternative educational options best-suited to their children’s needs.

For context, a family of four making no more than $105,000 will be eligible to apply for an EFA under the new cap. 

EFAs are government-approved savings accounts that can be used by families to access a wide range of educational opportunities outside of their government-assigned public school district. The funds can be used for tuition at private and public schools, or for other state-approved education expenses, including supplies and tutoring services. 

The student’s per-pupil adequacy dollars ($4,857 on average as of 2022) are put into an Education Freedom Account from which families can draw for approved expenses.

Like charter schools, EFAs have also become increasingly popular since their adoption in the state, with current enrollment around 3,300. About half of those enrolled are students eligible for free or reduced-price meals.

Among those benefiting from expanded eligibility are single parents. Under the original income cap at 300% of the federal poverty level, a single parent making $60,000 a year would not have been eligible for an EFA. Now a single parent making less than $69,020 is eligible under the new income cap.

Expanded EFA eligibility and increased charter school funding offer a smaller advance of market forces into the provision of public educational services than supporters had hoped for this year. But the small gains will make a big difference to those families who now have access to an alternative education for their children. 



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When ‘market rate’ doesn’t mean ‘affordable,’ government’s probably involved

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The Portsmouth Planning Board did something remarkable last week. It ever so slightly loosened its iron grip on a small portion of the city’s iconic downtown. And in the loosening, a lesson fell out. 

Local investors want to create at 238 Deer St. a mixed-use building with 21 micro apartments. These units would be no more than 500 square feet and would have no on-site parking. 

Though the location is a short walk from the city’s $26 million Foundry Place parking garage—built specifically to facilitate additional commercial activity downtown—the developers needed permission from the Planning Board, in the form of a Conditional Use Permit (CUP), to build those tiny apartments without on-site parking spaces.

A dispute over the need for private parking dragged on for two years, and last week the board voted, despite some member misgivings, to grant the CUP. 

That’s a huge decision, for many reasons. Among them, it separates housing from parking not just for this project but possibly for others in the future. Planning boards typically insist on maintaining minimum parking requirements that raise housing costs and occupy real estate that could be turned to more productive uses. 

It also allows tiny apartments to fill a huge market need in Portsmouth, where astronomical housing prices are driving away lower-and middle-income people.

During the board meeting, members kept asking about the rental price of the apartments. The developer’s attorney at one point answered, “…it’s going to be market rate, it’s not going to be affordable, that’s really all we can tell you at this point.”

This comment might not sound off to a lot of people, but it would be a strange thing to say about most products.

Why should there be a difference between “market rate” and “affordable?”

We don’t think of most other consumer goods in these terms. 

No one says, “the bananas are going to be market rate, not affordable,” or “are you pricing those chainsaws at market rate, or are they ‘affordable?’”

Sure, we browse clearance racks, wait for sales, clip coupons, buy generics or store brands, ransack the corner drugstore in protest of systemic oppression. (OK, maybe you do only some of these things.) But for most consumer goods, we don’t conceive of there being a market price and a separate “affordable” price. 

That’s because the market, if allowed to, will provide a gazillion options of most products at a wide range of prices.

If you need toilet paper, the market offers everything from wafer-thin sandpaper to quilted, pillow-soft rolls that smell like a flowering Alpine meadow in spring. 

If you need a car, you can pick up a no-frills Nissan Versa (MSRP: $15,700) or save up a little longer and spring for the slightly flashier Bugatti Chiron Super Sport (MRSP: $3.4 million).

If you need a cell phone, you can get a Nokia flip phone for $19 (less than the price of a 12 piece KFC bucket) or a Samsung Galaxy Z Fold 4 for around $1,800.

Sure, housing prices have a range, too. But in housing, government regulations have literally outlawed the construction of many options at the lower end of the range. So builders can’t offer the lower-price fare that manufacturers are able to offer in most other industries. 

And so we talk of “market rate” housing and “affordable” housing. That’s not because the market doesn’t want to provide less-expensive options. It’s because governments don’t want the market to provide those options. 

As Mark Perry has demonstrated, markets tend to lower prices and improve quality unless government gets in the way. Industries in which government regulations have prevented robust competition (health care, education, housing, child care) have experienced steady price increases, while less regulated industries have experienced price declines. 

Remove the regulatory barriers, and the market will be happy to provide micro apartments, tiny homes, duplexes, in-law apartments, single-family homes on half-acre lots and any number of other less-expensive options for people who want them. 

Once the supply catches up with demand, “market rate” will become “affordable” in housing just as in most other markets.

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NH Zoning Atlas offers groundbreaking insight into local building restrictions

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In 2021, we published a landmark study that showed how local land use regulations drove New Hampshire’s housing shortage. That study changed the conversation on affordable housing in New Hampshire, from one focused on government subsidies to one focused on regulations. This week, the Center for Ethics in Society at Saint Anselm College set the next housing policy landmark when it released the New Hampshire Housing Atlas.

The New Hampshire Zoning Atlas is the most powerful tool Granite Staters have ever had for understanding local zoning ordinances. It catalogues—and maps—23,000 pages of zoning regulations in 2,139 districts in 269 jurisdictions. Never has this information been available in one place, much less open for public examination. 

In the atlas, users can quickly find the building and land use restrictions in one community, or search the state to see what restrictions are in effect across multiple communities. The search tool and maps reveal just how severely New Hampshire municipalities have restricted people’s housing options, and how much freer some towns are than others. 

The atlas shows that single-family homes are allowed by right on 90% of New Hampshire’s buildable land, and by public hearing on another 6%. Sounds good, right? 

A closer look, though reveals that single family homes on lots of less than one acre are illegal—yes, literally illegal—on most of that property. It is legal to build a home on less than one acre in only 16% of the state’s buildable land.

You might think of zoning as “allowing” certain types of property uses. In reality, zoning is a prohibition. It carves communities into areas in which most uses of private property are outlawed. Large minimum lot size requirements are the perfect example of a regulation that outlaws a once common housing preference. The result is a nearly statewide prohibition on the construction of affordable starter homes.  

People generally have no problem with municipalities using zoning to, say, keep industrial operations out of residential neighborhoods. The New Hampshire Zoning Atlas shows, however, that municipalities commonly use this power to outlaw small yards, duplexes, apartments and any mixing of commercial and residential activities. The maps show that it isn’t unusual for municipalities to take zoning restrictions to absurd extremes.

Lebanon’s rural lands 3 zone has a huge 10-acre minimum lot size for single-family homes, which we knew from previous research. But the atlas shows that Hanover isn’t alone. Meredith’s forest and conservation district also has a 10-acre minimum lot size. Marlowe’s rural lands district has a minimum lot size of 20 acres!

Neighboring towns can have huge discrepancies in the types of homes they allow. 

No portion of Bedford, Merrimack or New Boston has a minimum lot size of five acres or more. But significant portions of Mont Vernon and Amherst do. Two-family housing is allowed in most of Londonderry, but in only a small sliver of Derry. 

Though the New Hampshire Zoning Atlas is itself policy neutral (it’s just a presentation of data), it’s likely to lead to policy changes. It’s hard to justify zoning that allows rental housing of five units or more, but bans duplexes and triplexes, for example. This particular rule shows up in a surprising number of communities.

The atlas offers an invaluable tool for citizens who want to better understand how government regulations prevent the market from providing housing options that people want, even in times of sky-high demand.

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The Boston Globe agrees: local regulations are the root of the housing shortage

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When the Josiah Bartlett Center released our landmark study of the nexus between New Hampshire’s housing shortage and local land use regulations, in October of 2021, the connection between the two was not widely reported in the popular press. Academics, developers and planners knew that local regulations were responsible for reducing the supply of housing, but it was rarely mentioned in the media.

Not even two years later, and even media organizations that generally embrace government activism and progressive regulation of the economy are acknowledging that local land use regulations are at the root of the housing shortage here in New England.

The Boston Globe is out with a long editorial titled “A hundred years of choking housing growth catches up with Massachusetts.”

The conclusion: “Since the early 20th century, the Legislature has let individual municipalities thwart housing. Now the consequences threaten the Commonwealth’s future.”

The Globe pointed out that in 1920 Massachusetts legislators, acting on authority granted to them by a 1918 state constitutional amendment, authorized municipalities to regulate land use.

Municipalities “promptly started using their new authority to pass rules that suppressed housing growth and kept out poor people and renters.”

It didn’t take long for warning signs to start flashing about the impact of local obstructionism spawned by the zoning amendment. Just after World War II, the Globe reported that “zoning restrictions in many Greater Boston communities are hampering large rental projects” for returning veterans. In 1961, the Globe reported on complaints from builders that zoning rules made “more moderately priced housing ‘an impossibility to build.’ ” In 1971, a developer said, “until ways are found to force towns to change zoning codes … ‘we are not going to be able to lick the housing shortage in Massachusetts.’ ” A 1979 feature about housing in Braintree reported, “Because of zoning regulations and environmental restrictions … it is no longer financially feasible to build housing for the middle class in town.”

By and large, those warnings were ignored. Meanwhile, the gap between the cost of housing in Massachusetts and the cost of housing elsewhere kept widening. In 1940, according to the census, the median home value in Massachusetts was 1.3 times the national median. In 2000, it was 1.55 times. In 2021, it was 1.7 times.

Now, the bill may be coming due. The median single-family home in Greater Boston cost $707,250 in January, compared to $378,700 nationally in the fourth quarter of last year. In Boston, 46 percent of renters are “rent-burdened.” For years, housing advocates warned that crippling housing prices and the lure of cheaper housing elsewhere would eventually affect the state’s ability to sustain and attract businesses. Now a tipping point seems to have been reached; 110,000 people have left the state since the beginning of the pandemic, nearly enough to fill Fenway Park three times over.

The same story can be told of New Hampshire, although the timeline is somewhat different. Progressive zoning ordinances swept the state, separating workplaces from living spaces, segregating multi-family units from single-family units, and putting government in charge of everyone’s property. The results were predictable. Government regulations prevented developers from supplying the amount of housing necessary to meet demand, and the resulting shortage drove prices to record highs.

It’s not that this story was never told. It showed up in stories about specific housing proposals over the years. But now mainstream news organizations are connecting the dots to tell the bigger story. The Globe’s recognition that local regulations are central to the region’s housing shortage is important because the problem can’t be fixed until we’ve identified its cause. With the largest newspaper in New England lending its voice to the land use regulation reform movement, the push for increased private property rights gains an unexpected but welcome ally.

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Join us for a beer & a conversation about licensing on April 11

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Granite Staters entering the job market often face government-imposed barriers to entry. State-required licenses can come with onerous fees, arduous training requirements and a lack of reciprocity for individuals already licensed by another state in their field of practice.

Gov. Chris Sununu has proposed a major overhaul of New Hampshire’s occupational licensing bureaucracy. The governor’s proposal would establish universal license reciprocity, streamline the license approval process, consolidate licensing boards and eliminate 11 of them, and eliminate 23 permanent and 11 temporary licenses.

How would changing the state’s licensing bureaucracy and eliminating nearly two dozen licenses affect New Hampshire consumers?

Join us at Stark Brewing in Manchester on Tuesday, April 11, for a drink and a discussion to learn how unnecessary licensing regulations make it harder for Granite Staters to achieve the American Dream and how New Hampshire can work to break down these barriers.

Panelists are:

Drew Cline, Josiah Barlett Center for Public Policy

Ross Connolly, Americans for Prosperity

Jessica Poitras, Institute for Justice

 

Time & Location: 6-8 pm, Stark Brewery, Manchester, N.H.

 

AFP-NH is generously providing one drink ticket per attendee

Dinner will be provided.

RSVP Required (REGISTER HERE)

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The rich folks are coming! The rich folks are coming!

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“Very heavy taxes, are hurtful, because they lessen the increase of population by making the means of subsistence, more difficult.”

— John Adams, 1780

Last November, Massachusetts voters approved a so-called “millionaire’s tax.” It raises the state income tax from 5% to 9% for incomes of $1 million or more, an 80% tax increase. 

Four months later, the Massachusetts Society of Certified Public Accountants is sounding an alarm.

After surveying 270 member CPAs, the society in March released a paper titled “Massachusetts is Losing Residents and it’s Getting Worse: Can Tax Policy Changes Mitigate Outmigration?”

The survey of Massachusetts certified public accountants found that:

  • 82% of CPAs surveyed indicated that their high-income clients have expressed plans to leave Massachusetts in the next 12 months. Florida and New Hampshire are overwhelmingly the most popular choices for relocation. While some may argue that a move to Florida is driven by a desire for better weather and a different lifestyle, the fact that the second most popular destination is New Hampshire suggests that people want to stay in the area but may be motivated instead by a lower cost of living, including a lower tax burden. Furthermore, New Hampshire is set to repeal its Interest and Dividends Tax by 2026, which would make a decision to relocate even more appealing.

  • 61% of respondents indicated that tax policy is the primary reason their clients are considering leaving the Commonwealth in the next 12 months. 

  • An additional 39% of CPAs indicated that tax policy is a consideration for relocation. 

  • 0% of respondents indicated that tax policy is not a factor in the decision for high-income taxpayers to relocate.

  • More pointedly, half of CPAs said that the new Millionaire’s Tax specifically is the primary reason their clients are considering a move in the next 12 months.

“Some may have been willing to bear Massachusetts’ tax policy in the past, but moving from a five to nine percent income tax rate is an unprecedented 80% rate increase,” the report concluded. “That will undoubtedly inspire affected Massachusetts residents to reconsider their primary residence.”

New Hampshire Business Review reached a similar conclusion after interviewing New Hampshire real estate agents.

Outliers

The Massachusetts CPAs call Massachusetts an “outlier” in the region for its extremely high tax rates and complex tax code. 

“Being an outlier makes it more difficult for the Commonwealth to compete with its regional neighbors and on the national landscape when it comes to attracting jobs, residents and capital investment, but it also violates basic tax principles of neutrality and economic efficiency,” the CPAs wrote.

“The current tax code introduces complexity and incentivizes opportunities to use a domicile change as a tax planning tool, which creates a host of unintended consequences for the state. Before the Millionaire’s Tax Massachusetts maintained a competitive edge in our region with the relatively low, flat individual income tax rate, which helped mitigate other issues such as the uniquely burdensome short-term capital gains tax rate and estate tax. Unfortunately, that is no longer the case.”

Those are words New Hampshire policy makers should always remember. 

New Hampshire is an outlier too, in the other direction. Our lower tax burden has helped to make our state the economic envy of the region, a continental marvel and a haven for tax refugees.

New Hampshire ranks 47th in state tax collections per capita, just a hair worse than Florida, according to a Tax Foundation ranking released this month. 

How do the other New England states fare? They’re all in the top 20. 

Vermont is No. 1, Connecticut 3, Massachusetts 7, Maine 15, and Rhode Island 16. 

New Hampshire collects very little tax revenue per person, compared to our neighbors, and yet we have the region’s lowest poverty rate and a booming economy. And we’re stealing population from the high-tax jurisdictions around us. Funny how that works. 

WalletHub, in an analysis also released this month, ranked New Hampshire 48th (third best) in tax burden. Maine and Vermont ranked in the top five, and the rest of the New England states were in the top 20. 

Migration patterns don’t precisely align with tax burden rankings because people aren’t 100% economically motivated, but there’s a tremendous amount of overlap. In 2022, Americans did tend to move from high-tax to low-tax states, as usual, according to several different data sets, including the Census’ own. 

The top in-migration states in 2022 were low-tax Florida, Texas, North Carolina, South Carolina and Tennessee, while the top out-migration states were high-tax California, New York, Illinois, New Jersey and Massachusetts, according to the list compiled by the National Association of Realtors.

Just-released Census data show that six of the top ten counties in the United States for population growth from July 2021-July 2022 were in Texas. The counties that lost the most people were Los Angeles County and Cook County, Illinois, Axios reported. 

The Massachusetts CPAs note in their report that a huge tax rate increase on people who are most able to move, passed right as the rise of remote work has made people less tied to their location, is a recipe for exodus. 

Likewise, a big tax rate cut on the same people, at the same time, would be a strong attraction. Strategically, this year would be the perfect time to accelerate the phase out of New Hampshire’s Interest & Dividends tax. 

Scheduled to phase out over the next four years, the tax remains for now a signal to high-wealth individuals that Florida would be a better relocation destination. 

Like any number of high Massachusetts taxes, the I&D tax is a disadvantage. It weakens New Hampshire’s competitive position and serves as a disincentive to move, or stay, here. 

It’s currently on schedule to be phased out by 2027. The House Finance Committee has recommended moving that date to 2025. Were the state to do that, or nix the tax entirely this year, it would not be lost on high-income individuals, retirees and anyone else with income from interests or dividends that New Hampshire’s tax burden is falling as Massachusetts’ is rising. 

New Hampshire is not listed among the seven states that truly have no income tax. Eliminating the I&D tax would put us on that list and make New Hampshire an even more attractive destination. 

Some might say that we don’t have to make ourselves more competitive if Massachusetts is making itself less competitive. But state tax competition is no longer just regional. 

The rise of remote work makes it even easier for people to shop for a low-tax place to live, regardless of where their employer is located. And the world’s increasing wealth makes it easier than ever for investors, entrepreneurs, retirees and others to move to favorable jurisdictions. 

The Massachusetts CPAs point out that when high-income residents leave Massachusetts, they take their community involvement and charitable giving with them. Making New Hampshire more attractive to these increasingly mobile people benefits not just New Hampshire’s economy, but our communities too. 

While Massachusetts is pushing higher-income residents out, New Hampshire has an opportunity to turn their attention away from Florida and toward the Granite State. 

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N.H. could become first New England state to license music therapists

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As Gov. Chris Sununu moves to undo the state’s overly burdensome occupational licensing regime, legislators are trying to add more licenses. 

On Wednesday, March 22, the House voted 210-166 to require a state license for the practice of music therapy. 

Why? Health insurance.

Supporters said New Hampshire needs to license music therapists to ensure that patients can be reimbursed by their health insurer when they purchase music therapy treatment. 

It’s not that music therapists don’t practice — and practice safely — in New Hampshire. They do. It’s purely a matter of insurer reimbursement.

But as Rep. Carol McGuire, R-Epsom, pointed out, that’s hardly a reason to create an entire licensing bureaucracy for one therapeutic specialty. 

“…it is not the best use of our time and our state resources to create a separate statute, a separate license, a separate registration board, separate rules for each tiny specialization in the therapy field,” McGuire said.

House Minority Leader Matt Wilhelm, D-Manchester, argued that licensing music therapists would increase the supply of music therapists.

“New Hampshire is in the middle of a mental health crisis and the need for therapists is an urgent need,” he said.  People who need this type of therapy “could benefit from additional therapists.”

“…if there were certified music therapists and licensed music therapists,” he said, “it would increase the amount of people that would have access to care and high-quality care….”

But research on occupational licensing finds that licensing requirements tend to reduce the supply of practitioners and drive up prices. 

Only nine states license music therapists, according to the Certification Board for Music Therapists, a national organization that promotes excellence in music therapy.

If House Bill 532 becomes law, New Hampshire would be the only New England state to require a license to practice music therapy. Rhode Island registers, but does not license, music therapists, and Connecticut requires certification, but not a license, for anyone who uses the title “music therapist.” 

National certification through a respected trade organization offers a simple method for consumers to seek outside expert verification of music therapist credentials. 

In fact, supporters did not even make a health or safety argument for the license. There were vague references to “quality” therapists, but no one argued that the public is in danger from unlicensed music therapists, or that consumers are incapable of checking a therapist’s degrees or other credentials. 

In his budget, Gov. Sununu proposed a thorough restructuring of the state’s occupational licensing bureaucracy, complete with a consolidation of numerous boards and the elimination of 21 permanent licenses and 13 temporary licenses.

Other states are moving in this same direction. There’s a growing movement nationwide to remove unnecessary barriers to economic opportunity, particularly after the COVID-19 pandemic exposed just how economically damaging so many licensing restrictions are. 

Creating an additional licensing bureaucracy for a single niche field — when no health or safety reason has been identified — would move New Hampshire in the opposite direction. 

If health insurance reimbursement is the issue legislators want to address, then they could do so through insurance laws.

 

Editor’s note: Do you like the painting used to illustrate this piece? It’s the first AI-generated art we’ve used to illustrate an essay. We asked for a woman listening to music in a therapist’s office. Not bad. And no artist’s license was required.

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As predicted, Massachusetts’ flavored tobacco ban is creating a black market

At Reason.com, Jacob Grier noticed that Massachusetts’ ban on flavored tobacco products has, predictably, created a black market in flavored cigarettes. The smuggling is so prevalent that law enforcement is running out of places to store seized products.

The Massachusetts Department of Revenue reports conducting more than 300 seizures in FY 2022, compared to 170 in 2021 and just 10 in 2020. Many of these involve substantial amounts of products and missed tax revenue. For example, a single search warrant yielded “a large quantity of untaxed ENDS products, [other tobacco products], and Newport Menthol cigarettes affixed with New Hampshire excise tax stamps” representing an estimated $940,000 in unpaid excise taxes.

Revenue officials are seizing so many illicit products, in fact, that they are running out of room to store them. The “Task Force’s increased investigative and enforcement activities during the past year have led to the seizure of large quantities of illegal tobacco products, resulting in a strain on the Task Force’s storage capacity,” says the report. But fear not, they are working on leasing additional space “that will significantly increase storage capacity and allow for continued increased enforcement.”

Official seizures represent only a fraction of the illicit trade, so the actual extent of illegal products and lost revenue is certainly larger. The state’s report notes that tobacco tax revenue has fallen by approximately 22.6 percent over three years. This is partially due to declining rates of smoking, but the authors acknowledge that smuggling of untaxed products may also be a factor.

A recent analysis of sales data by Reason Foundation, the nonprofit that publishes Reason, found that the decline in cigarette sales in Massachusetts coincided with substantial increases in sales in counties bordering the state.

Advocates of flavor bans downplay the potential for criminal prosecutions, but the experience in Massachusetts demonstrates that opponents are right to highlight this concern. The Task Force takes note of multiple criminal investigations leading to indictment or prosecution. Although violating the flavor ban is not in itself punishable by imprisonment, forcing these products onto illicit markets results in sellers violating state tax law. In Massachusetts, this is a felony punishable by up to five years in prison.

It’s only a matter of time (if it hasn’t happened already) before the first American will be sentenced to prison for selling menthol cigarettes or flavored e-cigarettes. It’s likely to happen in Massachusetts, where two men were arraigned last month on charges including tax evasion, money laundering, conspiracy to commit tax evasion, and flavor ban violation.

As we pointed out in 2020, not only did free-market advocates predict this black market, but the Massachusetts Multi-Agency Tobacco Task Force did too.

It’s fun to point out how New Hampshire benefits from this bad law. But as Grier notes, eventually people will go to prison simply for selling cigarettes that taste different than regular cigarettes. Ruining people’s lives in a misguided effort to control a product you have no hope of controlling is not funny.

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How to crush youth employment? Make it more costly to hire young people

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A surefire way to suppress already low levels of youth employment is to raise the cost of employing younger workers. Some proposals in the Legislature would do that, in the name of helping these same workers. 

One proposal, House Bill 125, would make it illegal to employ 16-and 17-year-olds after 9 p.m. Sunday-Thursday and after midnight Friday and Saturday during the school year. 

Were this to become law, employers would be subject to fines of up to $2,500 each time a high school student clocks out a minute late. (These fines are seldom imposed, according to the state.)

State law currently caps at 35 the number of hours older teens can work during a five-day school week. HB 125 was intended to fix an oversight in a previous revision of youth employment law that inadvertently let teens ages 16 and 17 work up to 48 hours during shortened school weeks. But this particular attempt at a fix would inevitably trigger unintentional violations of state child labor laws. 

The predictable effect of such a law would be to discourage the hiring of high school students, and to reduce the hours of those who are hired. 

New Hampshire already limits youth under the age of 16 to working between 7 a.m. and 9 p.m. Adding a 9 p.m. curfew for older teens would further depress employment in this age group. Teen employment was declining sharply before the pandemic and fell again in 2020. It has not recovered to pre-pandemic levels. 

With a precise time limit on the books, employers would be in violation of state labor law every time a teen doesn’t punch out on time. To avoid being written up for labor law violations whenever a teen gets distracted at the end of his or her shift, employers would end shifts earlier, hire fewer teens, or both. 

As if intended to depress youth employment even further, House Bill 58 would raise the wage for tipped jobs to a minimum of $7.25 an hour. Currently, New Hampshire employers may pay wages as low as $3.26 an hour to employees who earn tips.

HB 58 would set the regular federal minimum as the floor for all jobs, even those with substantial tip income. Were this to become law, restaurants would have to pay all servers an additional $3.99 per hour. The negative effect on employment would be immediate and predictable. 

A University of California-Irvine study published last August found that raising the tipped minimum wage reduced employment. 

“(O)ur evidence is quite clear and unambiguous in pointing to higher tipped minimum wages (smaller tip credits) reducing jobs among tipped restaurant workers, without enough of an increase in earnings of those who remain employed to offset the job loss,” the authors found.

Other research has found that higher minimum wages reduced teen employment, and that “teens exposed to higher minimum wages since 2000 had acquired fewer skills in adulthood.” 

Well-intentioned regulations such as those in HB 58 and HB 125 would end up worsening New Hampshire’s existing labor shortage and hurting the very people they are intended to help. 

In 2019, the U.S. Bureau of Labor Statistics recorded 67,000 employed Granite Staters between the ages of 20-24. In 2022, that number was down to 52,000. 

In 2019, the state estimated the number of waiters and waitresses in New Hampshire at 12,390. In last year’s report, it was down to 7,260, a decline of 41%, even though the entry-level wage was $1 per hour higher. 

Restaurants, already pressed by rising supply, labor and energy costs, have been raising prices to maintain their meager margins. Add in a state mandate to more than double base pay for wait staff, and some restaurants certainly will be forced out of business. Others will raise prices even further. Restaurant prices rose 8.2% from January of 2022 to January of 2023, according to the National Restaurant Association. That’s higher than overall consumer prices, which rose 6.4%.  

According to surveys of New Hampshire Lodging and Restaurant Association members, servers in New Hampshire earn between $20-$45 an hour when tips are included. Granite Staters do tip generously, ranking fifth nationally and first in New England, according to Toast, a Boston company that provides software for point-of-service tablets used by the restaurant industry.

As New Hampshire employers struggle with a labor shortage, persistent inflation and predictions of a looming recession, artificially increasing the cost of employing younger and lower-skilled workers would add an additional burden. As that burden would be tied to the hiring of those workers, it would likely lead to reduced opportunities for them. 

Hurting both employers and younger workers is not the intent of such regulations, but it would be the predicted outcome.  

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Why universal school choice would help all N.H. students — and the public schools

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“Healthy market competition is fundamental to a well-functioning U.S. economy. Basic economic theory demonstrates that when firms have to compete for customers, it leads to lower prices, higher quality goods and services, greater variety, and more innovation.”

— Heather Boushey and Helen Knudsen, “The Importance of Competition for the American Economy,” The White House, July 9, 2021

Competition has been central to American life from the beginning. It’s at the core of the American identity. As the Biden administration has stated (in the quote above), competition has proven its public value by stimulating the innovation that improves quality and lowers prices. 

Libraries full of economic research bear this out. As a paper for the Organization for Economic Cooperation and Development put it in 2002: “Competition has pervasive and long-lasting effects on economic performance by affecting economic actors’ incentive structure, by encouraging their innovative activities, and by selecting more efficient ones from less efficient ones over time.”

This applies to all industries, including education. School choice is expanding in state after state because the data show that it works. And it works not just for students who enroll in alternative programs but for those whose families choose traditional public schools as well.

“We find evidence that as public schools are more exposed to private school choice, their students experience increasing benefits as the program scales up,” a 2020 study of Florida’s tax credit scholarships found. “In particular, higher levels of private school choice exposure are associated with lower rates of suspensions and absences, and with higher standardized test scores in reading and in math.”

That’s not a fluke. 

Of 28 studies that have examined the competitive effects of various school choice programs on students who remain in traditional public schools, two found negative effects, one could find no effect, and 25 found positive effects, as EdChoice details in its compilation of school choice studies titled The 123s of School Choice. 

What about educational outcomes, such as graduating from high school or college? No study has found a negative effect, and most have found positive effects. 

For example, a 2019 Urban Institute study of Florida’s tax credit scholarship program, the nation’s largest private school choice program, found that it generated a 12% increase in college attendance.  

The vast majority of research on school choice finds that the introduction of a choice program tends to improve test scores, educational outcomes, parental satisfaction, integration, and civic values and practices — while saving money. 

The financial effects have been studied the most, and their findings aren’t surprising. Of 73 studies of the fiscal effects of school choice programs, five found a net cost increase, four found cost neutrality, and 68 found that the introduction of choice generated cost savings. 

School choice works because the competitive forces unlocked by the creation of a robust marketplace generate the same positive effects in education that they do in other industries. 

“Students attending schools with more competitive pressure made larger gains as program enrollment grew statewide than did students at schools with less market competition,” the authors of the 2020 Florida study wrote.

Because competition has been proven to generate positive outcomes in education, as in other industries, protecting education from competition can only harm students. 

The fastest way to improve outcomes for New Hampshire students is to give them more options. This can be done with a simple change. 

Eligibility for both the Tax Credit Scholarship and the Education Freedom Account programs is capped at 300% of federal poverty level. Removing the income cap and making both programs universally accessible would stimulate innovation, and match more students with their best educational environment, more rapidly than any other reform. 

Were all students to become eligible for both programs, competition would quickly begin to work its magic. There is no faster, more effective way to improve outcomes for all students. 

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