The odds that legislators will vote to raise New Hampshire’s minimum wage this year are significantly better than the odds that sitting through next year’s Super Bowl halftime show will be more entertaining than going to the kitchen for more nachos.


Ideas like this, as expressed by Rep. Howard Moffett, D-Canterbury:
“If there is more money in people’s pockets, they are going to spend more. That will mean more business and they will go and hire more workers. It is a virtuous circle in the economy.”

Some really people believe that taxing businesses (the minimum wage is effectively a tax on hiring low-skilled labor) and transferring the revenue to the least-skilled employees will make those businesses more profitable than if they had been left alone to use that money in more productive ways.

That theory runs counter to the vast majority of work on minimum wages and, even if plausible, as The Atlantic’s Jordan Weissman pointed out a few years ago , its stimulating effects would be short-lived.

New Hampshire’s minimum wage is pegged to the federal minimum, which is $7.25 an hour. A lot of people believe that people who earn this wage make up a large fraction of the labor force and tend to be primary bread-winners working full time to support their families. None of that is true.

Here are five facts about the minimum wage that ought to inform whatever debate there will be on the topic as the legislature decides how much to tax employers for the practice of hiring low-skilled employees.

Nationally, only 2.3 percent of all hourly wage workers earn $7.25 per hour or less, Bureau of Labor Statistics data show. “Minimum wage workers tend to be young,” according to the BLS. “Although workers under age 25 represented only about one-fifth of hourly paid workers, they made up about half of those paid the federal minimum wage or less.” They also tend to be single. Never-married individuals make up 40 percent of those who earn an hourly wage but 68 percent of hourly wage workers who earn a minimum wage. Married individuals are 44 percent of hourly wage workers but only 21 percent of hourly wage workers who earn the minimum wage or less.

Minimum-wage employees tend to work part-time, BLS data show. Although about 75 percent of hourly wage workers hold full-time jobs, only 35 percent hourly employees with a full-time job earn the minimum wage or less. Only 25 percent of hourly workers hold part-time jobs, but 65 percent of hourly workers with part-time jobs earn the minimum wage or less. Of minimum-wage employees, fully 60 percent work part time.

In New Hampshire, the number of minimum wage workers fell by almost half in 2017, dropping from just over 15,000 people in 2016 to just 8,000 in 2017, according to the state Economic and Labor Market Information Bureau. Forty-nine percent of those 8,000 minimum-wage earners were under age 25, and the same percentage worked part-time.

The minimum wage is an entry-level wage typically paid to the lowest-skilled employees, the vast majority of whom work their way to higher pay within a year. A 2013 study by Texas A&M economists for the National Bureau of Economic Research found that “minimum wage compensation is three- and-a half times more prevalent among new workers than in the entire labor force.” Using data for 3.5 million people from 1979-2012, they found that 77.6 percent of people who earned the minimum wage in one year were still employed the following year, and of those 65.85 percent earned more than the minimum wage.

That last study, by the way, also found that “the minimum wage reduces net job growth, primarily through its effect on job creation by expanding establishments.” That is, the minimum wage doesn’t necessarily always produce an instantaneous reduction in jobs. Rather, it suppresses job growth over time, leading to fewer jobs than would otherwise be available.

In other words, it’s a tax on low-skilled labor. And like any tax, it reduces the supply of what is taxed.

Senate Democrats unveiled their paid family and medical leave bill this week, and the big question was: Why? 

The reasons given — that it will be a job recruitment tool and a family benefit — were hardly enough to justify its cost. 

The bill’s fiscal note predicts that the mandatory 0.5 percent tax would raise $156.6 million a year from private employers. That would make it New Hampshire’s sixth-largest tax, coming in right behind the real estate transfer tax. It would extract from the economy $50 million more per year than the interest and dividend tax does. 

Two years’ worth of revenue from this tax would surpass the entire balance of the state’s employment security trust fund

That is a hefty weight upon the economy for a tax that is entirely unnecessary. 

This tax doesn’t have to exist because the program it would support doesn’t have to exist — even if one agrees that some type of paid leave insurance must be created.

Gov. Chris Sununu’s proposal shows that even if creating a paid family leave plan is a top priority, there is no need for it to take the forms of a mandate, a tax and an entitlement. 

Gov. Sununu’s innovative proposal showed — before the Senate leadership released its plan — that state leaders can offer a paid leave program for employers that avoids high taxes and employer mandates. 

Based on testimony given before the Senate Finance Committee on Tuesday, it remains unclear from a policy perspective why a tax-and-mandate approach was taken when less costly and intrusive options were available. 

It is not as though a 12-week program, vs. the six weeks in Gov. Sununu’s proposal, is essential. California’s landmark paid leave program offers six weeks, and a 2015 study by the California Employment Development Department found that most people who take the leave don’t use all of it.

Supporters of the Senate version say it is necessary to attract workers to the state. Although research does show that many workers would prefer additional benefits rather than a raise, paid family leave is fairly low on the list of preferred benefits. In a 2017 Harvard Business Review survey, only 42 percent of employees said they would consider paid maternity/paternity leave when considering whether to take a higher paying job vs. a lower-paying job with better benefits. (The survey did not include an option for paid medical leave.) 

The survey found that the four most attractive additional benefits were 1) better health, dental, and vision benefits, 2) more flexible hours, 3) more vacation time, and 4) work-from-home options. 

This context is important because paid leave is just another form of employee compensation. Employers gauge employee preferences when deciding whether to offer higher pay or more generous benefits. A paid family leave mandate would deny both employers and employees the option of deciding whether other forms of additional compensation would make more sense for them. 

For example, 80 percent of employees in the Harvard Business Review Survey reported that they’d consider foregoing higher pay if they could work from home, and 88 percent said they’d consider foregoing higher pay if they could have more flexible hours. But only 42 percent said the same of paid parental leave. 

Flexible hours and work-from-home benefits could in many circumstances offer people much better long-term options than a mandated 12-week paid leave plan. And about twice as many people would prefer those two options to paid leave. There is no reason to believe that a paid leave plan is such a crucial form of compensation that it must be mandated by the state. Employees don’t think it is, so why should lawmakers?

If there are options for providing a good or service that don’t involve the use of force or coercion, and that good or service is not an absolutely essential one that only government can provide, then there is no justification for using force or coercion to provide it. Paid family leave is a nice benefit, but it fails the test of whether it should be imposed via government mandate. 

In the last legislative session, this newsletter warned about the dangerous precedent legislators would set if they passed a tax incentive package tailored for a specific industry, in this case a single company, Manchester’s Advanced Regenerative Manufacturing Institute (ARMI). New Hampshire doesn’t do industrial tax incentives, we warned, and if the state starts, other industries will come, hat in hand, to explain how their critically important industry deserves special tax treatment too.

Behold, on Wednesday, before the House Ways and Means Committee, Rep. Tim Lang, R-Sanbornton, presented his bill (House Bill 234) to create a film industry tax credit. To sell it, he noted that it was based on the ARMI bill. 

“The wording is almost identical to the regenerative tissue bill,” he said.

That taxpayer giveaways for the $43 billion (in revenue alone) Hollywood film industry is the first  successor to the ARMI subsidies is a perfect illustration of the bonkers nature of state industrial incentives.  

As if to emphasize that point, Oscar himself came to ask for a handout. 

Oscar is made of bronze and plated with gold. And he wants a subsidy.  

Preceding Oscar were a few people who had been connected to the film industry at some point in their careers. They mentioned the generous tax credits other states offer. They dropped  names of celebrities they had encountered. Then, just as in a movie, a tall, handsome man dressed in black, with flowing silver hair, who spoke with the unmistakable timber of an actor’s voice, stepped up to make an unexpected presentation.

He reached into his black backpack, withdrew its hidden passenger, and placed the well-worn statuette on the desk before him. 

The sounds of soft gasps and impressed whispers floated through the air. 

The man was Ernest Thompson, author of New Hampshire’s single greatest claim to Hollywood fame, “On Golden Pond.” In 1982, that screenplay won Thompson a Golden Globe and the lifelong companionship of the little golden man who accompanied him to Concord on a cloudy Wednesday tucked into the dark hollows of a nondescript hiker’s backpack.

Charming and captivating, Thompson regaled the committee with tales of Hollywood glory, all of which could be New Hampshire’s again if only the state would subsidize film production.  

Production executives tell him, he said, that they won’t film the sequel to “On Golden Pond” in New Hampshire because Massachusetts offers incentives and New Hampshire doesn’t. 

All the while, Oscar glowed in silent, golden testimony of his own.

In a movie, this would’ve been the rousing scene, with soaring music and a closeup of someone brushing away a tear, that preceded a unanimous vote to pass the bill, thus validating the hero’s journey and confirming the value of “investing” in “the arts.”

But Concord is a practical, not a dramatic, place. Instead of cheers and tears, there was only the voice of the committee chair as she interrupted the tales of celebrities gracing New Hampshire’s hills and valleys, cut off the testimony, and firmly braved the cold, golden glare of the little bald man on the desk. 

In the people’s House, even Oscar has only five minutes to testify, and there was one last witness to call. 

That witness was from the Josiah Bartlett Center for Public Policy. Instead of a celebrity, we had data. 

Among the points we made to the committee were:

  • Massachusetts’ own study of its tax credit program concluded that the credit returns only 14 cents on every dollar spent. 
  • A North Carolina study of its tax credit program concluded that it returned only 19 cents on the dollar. 

It’s not easy following Oscar. But someone had to present the case that an industry that hands out gold-plated statues even to the nerds who make cool spaceship sound effects shouldn’t get taxpayer subsidies. 

We presented the only testimony against giving New Hampshire taxpayer money to Hollywood producers. It was Josiah Bartlett vs. Oscar. 

Come to think of it, that might make a pretty good movie, provided “Oscar” is a giant bear or an alien or a sinister British commander during the Revolutionary War. 

A heroic Josiah Bartlett fighting some powerful enemy would be fine with us, just as long as the movie came with the disclaimer: “No taxpayer dollars were harmed in the making of this film.”

Two New Hampshire state employees on Monday filed a federal class action suit against the State Employees Association (SEA) to recoup fees non-member employees were forced to pay the union.

Plaintiffs Patrick Doughty and Randy Severance hope to compel the SEA, a chapter of the Service Employees International Union, to repay all so-called “agency fees” collected over the past three years, which is as far back as the statute of limitations allows, according to their attorneys.

The pair are represented by attorneys from the National Right to Work Legal Defense Foundation. Serving as local counsel is attorney Bryan Gould of Concord. The suit was filed in U.S. District Court in Concord.    

Doughty, an engineering technician in the Department of Transportation, joined the union when he was first hired in 2001, he told The Broadside, but resigned in 2012 over disagreements with the contract and the union’s increasingly left-wing political positions.

“I opted out because at the time the contract that the union voted for was, in my opinion, terrible, he said. “I wanted to try to recoup some of that money that I had to spend out. And they were also becoming so far left.” 

Once out of the union, Doughty was required under the state’s collective bargaining agreement to continue paying fees to the union. Those agency fees were supposed to cover only the cost of collective bargaining, on the theory that all employees benefit from the terms negotiated by the union.

But Doughty and Severance say they didn’t agree with the union’s politics or the contracts it negotiated.

“Being a government employee and being under the contract, you’re kind of held to what you can get under the contract,” Doughty said. “There’s no merit raises or other things you can get when you work for a private outfit.”

Severance, who works in the Department of Information Technology, said the contract actually prevented him from obtaining higher compensation. 

“I’m pretty good at my job,” he said. “I’m above average. And when you’re group-negotiating and you’re above average, you’re being dragged down. In the private sector, I could go to my boss and negotiate according to my skills and my level of work. But I can’t do that here. I’m getting paid the same as the lazy ne’er do well who doesn’t get his work done. The union says, ‘well, we negotiate in your favor.’ I say, ‘that’s not doing me any good.’”

Severance said he started working for the state in 2000 and never joined the union. When the union later began collecting agency fees, he objected. When his complaints were dismissed, he sued unsuccessfully to halt the collection. 

“Every opportunity I had, I put up a fuss, complained about it, but there’s only so much you can do. Then the Janus decision came down and I contacted the National Right to Work Foundation,” he said.

Last June, the U.S. Supreme Court ruled in Janus vs. American Federation of State, County, and Municipal Employees that agency fees were an unconstitutional violation of public employees’ First Amendment rights. 

Though the state stopped collecting agency fees on behalf of the State Employees Association immediately after the Janus ruling came down, Severance and Doughty each contacted the National Right to Work Foundation independently, seeing the ruling as an opportunity to undo an injustice.

“It’s not really that I’m anti-union,” Doughty said. “It’s just the fact that they never really had the right to take fees from people who didn’t want to join.”

Severance gave similar reasons.

“I reached out to them when I read about the Janus decision and I read about other states that were suing to claw back some of the misappropriated paychecks. I got on their website and found the ‘contact me’ button,” he said. 

“Generally speaking, it’s been about $50 a paycheck, and two and a quarter paychecks a month for three years. So about $4,000. There’s no Bermuda vacation in this, and it’s not about the money. It’s about the principle. And the class action.”

The National Right to Work Legal Defense Foundation was not certain how many state employees would be covered if the court grants class action status. But the Josiah Bartlett Center for Public Policy discovered through a public records request last July that the SEA was collecting agency fees from 2,104 state employees when the Janus ruling was handed down on June 27.

Non-union state employees were forced to pay more than $1 million in agency fees to the SEA and the Teamsters in the year before the Janus ruling terminated those fees, state records showed, with almost all of that going to the much larger SEA. If successful, the new lawsuit could cost the SEA millions of dollars.   

Patrick Semmens, vice president of the National Right to Work Legal Defense Foundation, said all non-union employees forced to pay fees to the State Employees Association had their First Amendment rights violated and deserve compensation. 

“We’ve always believed that the idea that you can be forced to subsidize an organization so that they can speak to your government on your behalf is a free speech violation. Finally the Supreme Court caught up.”

The State Employees Association did not have a response to this story by press time. 

If foreigners dispersed throughout the United States a poison that killed hundreds of thousands of Americans, and drug makers had a safe, easy-to-administer antidote, would the federal government dare restrict its distribution?

It’s an easy answer — because just that scenario is happening right now.

Drug overdoses are poisonings (they’re officially classified as such). The United States is in the midst of a drug poisoning epidemic, with Chinese fentanyl and Mexican-and-Columbian heroin having driven overdose death rates to unprecedented levels. For these opioid poisonings, an antidote exists, but the federal government insists that you get a prescription first. 

The Food and Drug Administration has approved naloxone, better known by the brand name Narcan, for use by prescription only. You might have read stories reporting that naloxone is available “over the counter” in New Hampshire and other states. That is not precisely true. 

In an October memo on the drug’s availability, FDA Commissioner Scott Gottlieb explained why it remains available by prescription only.

“Although the auto-injector and nasal spray formulations have instructions for use, they don’t have the consumer-friendly Drug Facts Label (DFL), which is required for OTC drug products,” he wrote. 

“Before submitting a new drug application or supplement for an OTC drug product, companies need to develop this DFL and conduct the required studies to show that consumers can understand how to use the product without the help of a health care professional.”

People are dying needlessly because the FDA doesn’t think Americans can safely inhale a nasal spray “without the help of a health care professional.” 

States have managed to save some lives by offering work-arounds. New Hampshire and other states have passed what are called “standing order” laws. Those allow doctors to give a pharmacy a standing prescription the pharmacist can use to dispense the drug to anyone who asks for it.

Many pharmacies in New Hampshire now stock naloxone, but the price remains high, and not all pharmacies carry it. 

Even with standing-order laws, naloxone is not as widely available — or as cheap — as it would be were it classified as an over-the-counter drug. The FDA acknowledges this. 

“We recognized the important public health opportunity to bring naloxone OTC,” Gottlieb wrote in October.

In December, the state estimated that drug overdose deaths in New Hampshire will finally fall below the previous year’s level, but by a small percentage. Had the FDA approved naloxone for over-the-counter sales years ago, a downward trend might have been realized much earlier, saving untold numbers of lives.  

OTC naloxone will not get to the root causes of this epidemic. But it would let a lot of people live while policymakers seek solutions. The governor and legislators can help by formally requesting that the FDA quickly approve naloxone for sale without a prescription. 

If the governor got all other New England governors to join him, it would put pressure on the Trump administration to speed this approval process.

If it weren’t for the expectation (among modern governors) that modern governors must use state-of-the-state addresses to excite the populace with a list of flashy new policy proposals, Gov. Chris Sununu could have simply read excerpts from the state’s recent Comprehensive Annual Financial Report, released December 27. 

We quote a few key passages below.

“In 2018, New Hampshire was no.1 for economic opportunity (US News and World Report); child well-being (Annie E. Carsey Foundation), and, for the fourth year in a row, Politico proclaimed New Hampshire as the Best State in the Union. The state placed high in other areas, including: Best state to live in; to raise a family; quality of life; best economy; best taxpayer ROI.

“As stated, the state’s unemployment rate (seasonally adjusted, non-farm), as of October 2018, stood at 2.6 percent, which was well below the national average of 3.7 percent; both rates remained unchanged from October 2017. Year-to-date, 15,300 more people were employed in Oc-tober 2018 than in October 2017. The seasonally unadjusted rate for October 2018 was 2.1 percent statewide, with some counties below that, including Grafton (1.6 percent); Sullivan (1.7 percent), and Merrimack and Stafford (both 1.8 percent).”

Then there’s the budget news.

“Traditional unrestricted revenue for the General and Education Trust Funds received during fiscal year 2018 totaled $2,577.2 million which was above the fiscal year 2018 Plan of $2,443.9 million by $133.3 million, or 5.5%. The favorable results as compared to the fiscal year 2018 budget resulted, in part, from the following taxes which performed better than expected: Business Taxes by $118.8 million (17.9%); Interest and Dividends Taxes by $9.8 million (10.2%); Meals and Rooms Taxes by $1.9 million (0.6%); and Insurance Taxes by $1.4 million (1.2%). Real Estate Transfer Taxes were below the fiscal year 2018 budget by approximately $5.8 million (3.7%), as well as Tobacco Taxes below budget by $3.4 million (1.6%) and Communications Taxes below budget by $0.6 million (1.4%). The State’s other remaining revenue sources combined were approximately $11.2 million above the fiscal year 2018 budget.”

The non-technical translation of the above passage would read: “We rollin’ in money, ya’ll.”
Business activity is robust, which is generating a lot more revenue than budget writers anticipated. Note that the revenue gains are in business, investment, insurance and entertainment taxes. These are consistent with a strong economy that is experiencing increases in business and consumer spending. 

It’s worth noting that the decline in real-estate transfer tax revenue is a reflection of a cooling real estate market, which is a reflection of increasing interest rates combined with high prices caused by New Hampshire’s housing shortage.

And that brings up another graph of the report.

“New Hampshire’s demographic trends coupled with the third-lowest unemployment of any state in the country demands a focus on workforce recruitment and training to fuel state employer requirements. Growth is in sectors that require an educated and qualified workforce, such as precision manufacturing, biomed tech, high-tech, and healthcare. Positive trends for workforce growth include increases in labor force participation, declining median ages in certain areas of the state, and positive net migration numbers in key age demographics.”
The non-technical translation of this passage would read: “Without more skilled employees, this train’s gonna run outta steam and slow to a crawl right in front of a bunch of hobos burning trash in rusty oil barrels.”

The governor addressed this issue, most notably with his mention of a new plan to offer students a year of community college education at no additional cost to the state. A lot of N.H. employers are deeply concerned about workforce retraction and retention, and for good reason. 
Another important component of the workforce shortage is housing, which remains a serious obstacle to long-term economic growth. The high cost of housing — created by supply restrictions — discourages young people from moving here (or staying) to fill all the jobs our businesses are creating. This is a drag on the economy and has to be addressed. 

Given the rosy revenue picture, one would naturally expect a governor to propose a laundry list of new, permanent spending. Governors often try to cement their legacies by creating permanent programs, which they know are harder to kill than a baboon’s body odor.

To his credit, Gov. Sununu avoided this spending trap. His new initiatives were proposed as one-time expenditures that would not recur in future budgets.

We would prefer that any surplus money be put into the Rainy Day Fund (as the governor’s previous budget did) or be returned via tax cuts. But if it is to be spent, treating one-time money as one-time money is preferable to creating new line items in the state budget.

The governor pointed out that the state is flush with cash because the economy is booming, and it is booming in part because the state has resisted the temptation to burden commerce with higher taxes and heavier regulations. If we had written his speech, we would have mentioned this many more times. He should continue to press the point during the legislative session. It would be hard to stress it too much.

The incoming chairman of the House Ways and Means Committee wants New Hampshire to go from having the second-lowest corporate tax rate in New England to the second-highest (based on Tax Foundation rankings). The incoming House speaker initially expressed opposition to the idea, only to backtrack in an interview with the New Hampshire Union Leader. 

The message is clear: Expect the House to pass a large business tax increase in 2019. 

Rep. Susan Almy, D-Lebanon, told New Hampshire Business Review that she plans to introduce two business tax bills early next year. One would repeal the rate reductions, started in 2016, which cut the Business Profits Tax from 8.5 percent to 7.9 percent this year, and the Business Enterprise Tax from 0.75 percent to 0.675 percent. The BPT is scheduled to fall to 7.5 percent and the BET to .05 percent in the tax year ending in 2021. 

New Hampshire’s overall business climate is strong, but the state ranks 45th on the Tax Foundation’s corporate tax ranking. Even after the cuts, our business tax rates remain high. Making them once again higher than those in all of our neighboring states would hurt New Hampshire’s economic competitiveness and discourage economic growth. 

It also would hurt small business formation. A Federal Reserve study earlier this year found a strong negative relationship between high corporate tax rates and entrepreneurship. 

More than half of New Hampshire employment comes from small businesses, which comprise 99 percent of all businesses in the state, according to Small Business Administration data. Raising the corporate rate would not only make New Hampshire less competitive among Northeastern states, but it would suppress new business startups.

Speaker Steve Shurtleff seemed to have a good sense of the negative effects of higher corporate tax rates when he told NHBR, “I don’t see why we wouldn’t maintain the status quo…. We’ve got a good robust economy in New Hampshire. We don’t want to do anything to jeopardize that.”

That’s exactly the right attitude, and New Hampshire businesses would be reassured had the incoming speaker stuck to that position. Unfortunately, he later told Kevin Landrigan that he must have misspoken and that Almy’s plans were “on the right track.”  

Almy’s other bill would let the Legislative Fiscal Committee increase the BPT if revenue declines to the point that the rainy day fund is put in jeopardy.

The only track Almy’s bills are on is the one to slower economic growth. Almy thinks the Legislature would have a veto-proof majority to raise business taxes. If that’s true, the state economy is at risk of taking a sudden and entirely preventable downturn next year. 

Merry Christmas, New Hampshire. 

The strong economy has brought gifts for all the girls and boys of the Granite State. It has been dropping jobs and money like Santa dropping misfit toys.

The New Hampshire Department of Employment Security reported on Monday that the state’s unemployment rate fell to 2.5 percent in November. The state added 16,570 jobs from November 2017 to November 2018. From October to November, the state added 1,170 jobs. 

The national unemployment rate in November was 3.7 percent, a full 1.2 percentage points higher than New Hampshire’s. 

The government sector is being showered with gifts too. 

The Department of Administrative Services reported that total state revenues in November were above budget by $3.8 million (3.5 percent) and above the prior year by $2.8 million (2.6 percent).

The department reported that business tax revenues for November “totaled $16.2 million, which were $5.6 million (52.8%) above plan and $1.1 million (7.3%) above prior year.” Year to date, “business tax collections are above plan by $63.8 million (37.6%) and $43.9 million (23.2%) above the prior year.”

From state fiscal year 2016, when the first round of state business tax cuts took effect, to the end of fiscal year 2018, business tax revenue exceeded expectations by $319.5 million, as we reported in the fall. With business tax revenues coming in $63.8 million above plan so far this year, the total in unanticipated business tax revenue since the tax cuts took effect has reached $383.3 million. 

That’s effectively found money. New Hampshire’s business tax cuts are not solely responsible for this windfall. The Tax Policy Center, a joint project of the Brookings Institution and the Urban Institute, reported on Monday that U.S. states enjoyed a significant revenue boost in fiscal year 2018. The 7.8 percent increase in state revenue came primarily from individual income and business taxes and is thought to have been driven in large part by the federal tax cuts. 

As we prepare to enter 2019, a state budget year, there will be some pressure to repeal the business tax cuts. Those cuts will be portrayed as a giveaway to wealthy businesses. In fact, they contributed to a long period of economic growth that created thousands of jobs and sent state revenue soaring.  

In January, New Hampshire’s work requirement for most Medicaid Expansion enrollees takes effect. Opponents portray it as cruel and punitive. A new study suggests it will make Medicaid enrollees significantly wealthier. 

Granite Staters enrolled in Medicaid Expansion can have a household income of up to 138 percent of the federal poverty level. The state’s work requirement covers all Medicaid Expansion adult enrollees between the ages of 19-64, minus a long list of exclusions. Thirteen exemptions exclude populations such as the medically frail, people with a doctor’s note excusing them from work, parents of children younger than six and adults caring for ill family members. 

The state will require eligible Medicaid Expansion enrollees to participate in what the Centers for Medicare and Medicaid Services calls “community engagement” for 100 hours per month. Qualifying community engagement activities include work, job training, vocational educational training and job searching.

This requirement is not designed to punish those who receive health insurance coverage through expanded Medicaid. Rather, it is designed to help enrollees become self-supporting and avoid the many negative effects of being unemployed. 

A study released last week by the Buckeye Institute’s Economic Research Center concluded that work requirements like the ones adopted by New Hampshire could increase lifetime earnings by as much as $212,694 for women and $323,539 for men. 

The benefits go beyond the financial. Spending a long time out of the workforce produces many negative outcomes. One Urban Institute study summarized the effects this way:

“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.”

Work requirements for able-bodied Medicaid recipients are designed to counter those negative effects.

The Buckeye Institute study suggests that New Hampshire’s Medicaid work requirement can add to the state’s thin labor force and significantly increase the lifetime earnings of many lower-income residents. This effort deserves praise, not condemnation.  

The Foundation for Economic Education is celebrating the 60th anniversary of Leonard Read’s famous essay “I, Pencil” with a series of essays about the essay that are worth reading for anyone who isn’t familiar with the groundbreaking original work.

If you haven’t read “I, Pencil,” you must. It is a short, simple essay that makes profound points about market economics — points that are overlooked every day by millions of people whose lives are enriched by the market economy that we all take for granted.

In the essay, Read writes from the point of view of a basic pencil. His central insight is expressed by the pencil’s simple statement that “not a single person on the face of this earth knows how to make me.”

That seems absurd. Of course someone knows how to make a pencil. But no. In fact, no one person can do it. Because to make a pencil, one has to mine graphite, fell tall trees, forge the metal that makes the eraser band, obtain the rubber that makes the eraser, and, of course, build the factories, ships, roads, trucks, and containers that make and transport all the components. Don’t forget drilling for the petroleum and refining the fuel that makes the vehicles go.

A single, simple pencil is not so simple after all. What makes it possible — and for a few dollars a pack — is the modern market with its division of labor and free exchange of goods and services. Because school children need pencils, thousands of people who don’t need pencils or even care about pencils exchange their labor for some small part of what later becomes a pencil.

It is, in short, a miracle. As Read writes, in the character of the pencil: “If you can become aware of the miraculousness which I symbolize, you can help save the freedom mankind is so unhappily losing.”

“I, Pencil” was so influential, that Milton Friedman, who popularized it, posed with a pencil on the cover of “Free to Choose.”

Even 60 years after the publication of “I, Pencil,” millions of Americans remain suspicious of markets, completely unaware of how and why they work, and possessed of the belief that some controlling force is needed to make sure people get the goods and services they need.

If you know someone who hasn’t read this great essay, share it with him or her. The more people who have even a simple understanding of the benefits of the market economy, the better.