In the last decade, New Hampshire’s population grew at the slowest rate in a century, signaling that generations’ worth of astounding economic and cultural gains could be put at risk.

New Hampshire’s population grew by 4.5% from 2010-2020, the lowest growth rate since the state had 2.9% growth from 1910-1920. 

It marked the first time since 1920 that the state’s population growth rate has fallen below 5%.

The decline follows a 43% drop the previous decade and represents the fourth straight drop in population growth recorded by the Census. 

New Hampshire enjoyed double-digit population growth in each decade of the second half of the 20th century. But the rate began falling in the 1980s and has been in sharp decline since the 1990s.

2010-2020: 4.6%

2000-2010: 6.5%

1990-2000: 11.4%

1980-1990: 20.5%

1970-1980: 24.8%

1960-1970: 21.5%

1950-1960: 13.8%

Vermont’s population grew by just 2.8% in the last decade, down from 8.2% in the 1990s. New Hampshire is at risk of following Vermont’s path toward population stagnation. Both states already rely on immigration, rather than births, for population increase.

For decades, New Hampshire has prided itself on its pro-growth economic policies. Keeping taxes low and government small helped make our state the economic marvel of New England. Even without a large port or a cluster of elite research universities, we grew rapidly while states with better natural resources struggled. 

But New Hampshire’s focus on tax rates has left the economy vulnerable in other ares. As the state was chasing growth, local governments were trying to limit it.

Local governments have succeeded in choking off the state’s once robust population growth. That threatens the state’s economic future because the real secret to a vibrant economy is innovation, and innovation comes primarily through people sharing ideas.  

To simplify, it’s not the size of the population itself that matters as much as the size of the market. New Hampshire’s slower population growth is a problem because it is constraining the growth of the state’s economic marketplace.  

You just have to look at the help wanted signs posted everywhere to see the severity of the problem. 

“Larger markets induce more research and faster growth,” as economist Paul Romer put it.

New Hampshire has done a tremendous job stimulating increased market activity by focusing on pro-growth economic policies. But low taxes cannot be the sum of our pro-growth agenda. When creating the conditions for a vibrant marketplace, low taxes are just one factor. 

A vibrant market needs policies that allow innovation and investment, but it also needs people to do the innovating and investing. 

Local regulations that severely restrict the construction of new housing are not the only factor contributing to the state’s lower population growth, but they have played a significant role.  

Using U.S. Census data, we calculated the growth in housing units in New Hampshire in each decade going back to 1940. You can see the huge drop starting in the 1990s. 

2010-2020: 3.9%

2000-2010: 12.4%

1990-2000: 8.6%

1980-1990: 30.4%

1970-1980: 37.5%

1960-1970: 25.2%

1950-1960: 17.7%

1940-1950: 20.5%

Until the 1990s, the growth in the number of housing units was larger than the state’s population growth. In two of the last three decades, the population growth has been larger than the growth in home construction. 

That has produced a huge shortage of housing. The housing shortage is not only driving up home prices and rents. It’s constraining population growth. 

This housing shortage is reducing the supply of available workers, which is hurting the very businesses that legislators have worked so hard to help. (See all the help wanted signs.)

It’s also constraining the growth of the state’s economic market. It doesn’t do much good to help a business create a new job if, with the other hand, you make sure there’s no one around to fill the job.  

In the long run, the local regulations that have created a de facto cap on population growth will work against the tax cuts and regulatory reforms that brought us the tremendous growth of the last 70 years. 

Policymakers need to understand that creating a vibrant, innovative marketplace requires more than just keeping taxes and spending low. Artificially limiting the number of market participants shrinks the market and hurts the whole state.  

There are two sides of the affordable housing equation: incomes and housing prices. While the market pushes New Hampshire incomes higher, the government prevents it from lowering home prices. 

Casual news readers can get only one side of this picture because reports on wages and housing costs often focus on the wage side and ignore or downplay the home supply side.

For example, a recent report by the New Hampshire Low Income Housing Coalition cites the state’s minimum wage and shows various wage rates that would be needed to afford various types of apartments in the state. 

But as we pointed out in May, it’s almost certain that no one in New Hampshire earns the $7.25 minimum wage. Market competition has driven wages much higher.

With labor scarce (the state tabulated more than 34,500 job openings in the state in May and June), the market has been pushing up compensation for years. The average weekly wage of workers covered by unemployment insurance in New Hampshire rose by 18.5% from the fourth quarter of 2019 to the fourth quarter of 2020, state data show. 

The average weekly wage in the Manchester-Nashua metropolitan area was $1,565 in the fourth quarter of 2020, up $255 from the same quarter the year before. 

Employment website indeed.com pegs the average laborer pay in New Hampshire at $16.29 an hour. 

In short, a highly competitive labor market is taking care of the income side of the housing equation. But the opposite is happening on the home price side. 

As we noted last week, a severe shortage of housing is sending rents and home prices to record highs. 

Rents for a two-bedroom apartment have risen 24% in the last five years, reaching a median of $1,498 this year. The median home price statewide passed $400,000 this spring. In Rockingham County, it passed $500,000. 

In a free market, developers would quickly build more supply to meet the huge demand. After all, there are huge profits to be made right now selling homes. But local governments have prevented the housing market from functioning properly. 

Record price increases are not a post-pandemic phenomenon. Prices have been surging for years because local government regulations have prevented developers from meeting the housing market’s sky-high demand. 

Developers aren’t refusing to build. Towns and cities are refusing to let them. 

Local planning and zoning restrictions have made the construction of new units both difficult and expensive. That’s true of both single-family homes and multi-family housing. 

Estimates vary, but the state’s housing shortage generally is pegged at approximately 20,000 housing units. The newly formed New Hampshire Council on Housing Affordability identified a critical need for 13,500 housing units by 2024.

Eliminating this shortage will be extremely difficult, if not impossible, until local governments remove some of the unnecessary obstacles that are causing it. 

Local elected officials would be more likely to remove housing obstacles if they understood that vocal anti-housing activists are not representative of most residents. 

Our poll in June found that a majority of New Hampshire voters (51%-29%) supported relaxing some local government regulations to allow more rental housing, and a plurality (45%-34%) supported relaxing some local regulations to allow for more single-family housing. 

Allowing the construction of much-needed housing is not unpopular. In fact, opponents of new construction are in the minority in New Hampshire. Unfortunately, they make up majorities of many local boards and of the crowds who turn up to their meetings. 

That’s a major reason why the market solution we’ve seen on the income side of the housing equation has not happened on the supply side. 

New Hampshire’s six-year run of business tax cuts should have made the state’s corporate income tax rate the second-lowest in New England. But a funny thing happened along the way. New Hampshire was joined by an unexpected rival. 

When the succession of cuts began in 2015, New Hampshire’s Business Profits Tax (BPT) rate was 8.5%, making it the third-highest corporate income tax in New England. Only Maine’s 8.93% rate and Connecticut’s 9% rate were higher. 

After the passage of the current state budget, New Hampshire’s BPT rate is down to 7.6%, a 10.5% cut in six years. (Legislators cut the Business Enterprise Tax by 27%.)

That makes New Hampshire’s rate lower than the top rate in Vermont (8.5%), Maine (8.93%) and Massachusetts (8%). 

But Connecticut, beset with fleeing businesses and a dwindling population, took measures to stop its own bleeding. It reduced its corporate income tax rate from 9% to 7.5%. 

Rhode Island’s rate has remained at 7% the entire time.

(Maine and Vermont have graduated corporate tax rates. Maine’s lowest corporate tax rate is 3.5%. Vermont’s is 6%.)

Because Connecticut lowered its corporate income tax rate by 1.5 percentage points, New Hampshire’s rate wound up moving down only one place, rather than two, among the New England states. 

This helps to illustrate an important point. States don’t act in a vacuum. 

Businesses aren’t trapped inside any jurisdiction’s borders. It’s a free country, and they can move if they find another location more hospitable. Which they sometimes do. Just ask California.

If each state could erect its own iron curtain, just imagine how high corporate and personal tax rates would be. 

But because it’s a free country, states sometimes find it in their best interest to lower rates to make themselves more attractive. 

That’s why Connecticut and New Hampshire weren’t the only places to lower corporate tax rates in the last six years. A few examples:

  • New York lowered its rate from 7.1% to 6.5%. 
  • Washington, D.C., dropped its rate from 9.4% to 8.25%. 
  • Florida cut its rate from 5.5% to 4.4%. 
  • Iowa slashed its rate from 12% to 9.8%. 
  • North Carolina cut its rate in half, from 5% to 2.5%. 

Some lawmakers prefer to ignore other states and pretend that corporate tax rates are simply a lever for raising revenue from existing businesses. Raise the lever, raise the revenue. Lower the lever, lower the revenue.

But people inside and outside a state’s borders react when those levers are raised or lowered. That’s a big reason why state tax rates change. 

This year, five states states have reduced business tax rates. Ten states have reduced individual income tax rates. The total number of states to reduce either business or individual income taxes is 11, not 15, though, as some states reduced both. 

Some notable examples:

  • Indiana decreased its corporate income tax rate from 5.25% to 4.9%
  • Idaho reduced its corporate income tax rate from 6.925% to 6.5%, retroactive to Jan. 1.

These follow numerous changes made last year, from Arkansas eliminating its top income tax bracket to Tennessee eliminating its tax on interest and dividends to New York eliminating and Illinois reducing its capital stock tax.

It’s true that some states raise rates. New Jersey added a new top corporate tax rate, going from 9% in 2015 to 11.5%. Of course, New Jersey also has earned the title of “Most Moved From State” for three years running (and it’s particularly good at losing higher-income people). In a free country, mistakes will be made. 

And in a free country, states compete for people, entrepreneurs and businesses. 

Freedom made New Hampshire an economic marvel. Recognizing that people are free to live wherever they want, state policymakers for decades have focused on making the Granite State as attractive as possible.

It has worked beautifully. New Hampshire’s economic growth has surpassed every other New England state’s, and the national average, since the late 1970s.

With a booming economy came a growing population, which has enhanced the state’s quality of life and kept New Hampshire from becoming Vermont — a dying state that pays people to move there. 

When people are free, there’s a limit to how bossy a state can be. And there are rewards for offering people more personal, political and economic autonomy. 

New Hampshire has figured this out. Other states are catching on, just as technology has made Americans more mobile than ever before.

The competition is not over. It’s just beginning. 

When PepsiCo opened the first Pizza Hut in the Soviet Union in 1990, one challenge the company had was convincing Soviet bureaucrats that the cooks didn’t need to be trained chefs. 

“This is something the Russians don’t understand,”Andrew Rafalat, Pizza Hut’s regional director for the Soviet Union and Eastern Europe, told The New York Times in 1990. ”You don’t want trained cooks. You want kids off the street. Within a few weeks, they are the best pizza cooks in the world.”

Obviously, New Hampshire isn’t close to being the Soviet Union. (Burlington, Vt., is another story.) But New Hampshire is not as “live free or die” as Granite Staters would like to believe. 

Too many laws and ordinances here would look familiar to the Moscow bureaucrats who thought pizza cooks ought to be highly educated, credentialed and government approved. 

Recent legislation offers multiple examples.

Current law requires bars and restaurants to apply to the Liquor Commission for permission to serve drinks in common spaces such as sidewalks or parking lots, then also get permission from their local government. 

There’s no need for this double approval. Permission from the local government, is enough. Yet it took a global pandemic to convince lawmakers that this requirement should go.  

When the pandemic hit, already short-staffed nursing homes couldn’t fill positions to assist nurses because there weren’t enough licensed nursing assistants. 

Imagine telling the family of a nursing home patient that you’re sorry, but their loved one has to go with less care because the state has decreed that no care at all is better than care from someone who lacks the most prestigious credential. 

It took an emergency order to allow nursing homes to hire and quickly train unlicensed nursing assistants (called temporary health partners) to work under the supervision of licensed nurses. 

Senate Bill 155, which a committee of conference approved with amendments on Monday, would fix those and some other burdensome regulatory requirements.

Senate Bill 133, also approved by a committee of conference on Monday, addresses a few other occupational licensing laws. One fix is to open a path to licensure for the temporary health partners allowed in SB 155. 

Anyone who worked as a temporary health partner for at least 100 hours as a result of the pandemic would be considered as having completed a nursing assistant training course and would be eligible for licensure as a nursing assistant.

Associate teachers at child day care centers would get a similar break if SB 133 becomes law. The bill would allow 30 hours of “documented life experience” to substitute for 30 hours of “training in child growth and development.”

Also getting a break would be small restaurants and cafes. State law requires licensed food service establishments to have a “Certified Food Protection Manager.” The bill would let the CFPM (that doesn’t sound Soviet at all) for small operations be on call. 

The bill also would include psychologists in the list of medical professionals who can engage in telemedicine. (It’s crazy that this wasn’t allowed before.)

Then there are kids’ lemonade stands. Licensing kids’ lemonade stands would seem like a Moscow idea. But local municipal ordinances that require food vendors to obtain permits or licenses usually don’t have an exemption for children selling soft drinks in their own yards. 

Though there have been no news stories of police shutting down kids’ lemonade stands in New Hampshire, technically the stands are illegal if ordinances don’t specifically exempt them.

That’s why House Bill 183 would create a state-level exemption for children age 14 and younger who sell soft drinks from their own property. It establishes under state law that the only permission kids need to set up a lemonade stand is from their parents. (The House concurred with the Senate version last week and awaits Gov. Chris Sununu’s signature.)

These small changes would make New Hampshire a bit freer by slightly reducing the level of government permission needed for certain commercial practices. Other bills have addressed other areas where the pandemic revealed certain regulations to be entirely unneeded, even harmful. 

And yet, as this legislative session winds down, it’s remarkable how little has changed. The state of emergency is over. The pandemic is receding. But the state’s thick net of rigid regulations remains largely intact. 

Most changes were made on the margins. There was no comprehensive rewriting of occupational licensing laws or business regulations. Even after a wave of restaurant closures, lawmakers couldn’t bring themselves to allow cocktails to go. Massachusetts will legalize to-go restaurant cocktails before New Hampshire does. 

State laws and local ordinances remain run through with the presumption that people can’t figure out how to engage in economic activity safely unless they first obtain government permission and government-mandated training. 

A lot of good changes have been made. But we still can’t let go of the notion that 424 legislators should tell the pizza parlor how to make pizza. 

More than two-thirds of New Hampshire voters support right-to-work, the Josiah Bartlett Center for Public Policy’s first public opinion poll shows. The poll also found support for Education Freedom Accounts, voter ID laws, and relaxing local housing regulations.

Asked if they would “be in favor of changing the law so that employees who don’t want to join a union could choose not to pay union fees,” 68% of New Hampshire voters said yes, and 22% said no. Ten percent said they were unsure.

“Most Granite Staters just think it’s wrong to make people pay fees to a union they don’t want to join,” Josiah Bartlett Center President Andrew Cline said.

Even Democrats broke in favor of right-to-work, the poll showed. Democrats said they would support a right-to-work law by a 44%-41% margin, just outside the poll’s margin of error. Republicans were in favor by an 88%-6% margin, and undeclared voters were in favor by a 73%-18% margin.

Every demographic group supported the passage of a right-to-work law except those who described themselves as “very liberal.” They opposed it by a margin of 29%-54%, with 17% undecided.

Twenty-seven states have right-to-work laws, which forbid employers from making non-union employees pay so-called “fair share” fees to labor unions. Employers and unions often negotiate contracts that require these fees, on the theory that non-members benefit from union collective bargaining efforts.

VOTER ID

New Hampshire voters are even more strongly in favor of requiring a photo ID to vote. Asked whether voters should “be required to show a photo ID before being allowed to cast a ballot in a New Hampshire election,” 76% said yes, and 19% said no, with 4% saying they were unsure.

By party registration, every group supported voter ID laws, with 98% of Republicans, 50% of Democrats, and 80% of undeclared voters in support. Again, only self-described “very liberal” voters were against, with 33% in favor, 61% opposed.

EDUCATION FREEDOM ACCOUNTS

A plurality of voters is favors Education Freedom Accounts, the poll shows. Asked if they would support letting families access a state-approved Education Freedom Account to pay for educational expenses outside of their assigned public school, 42% were in favor; 37% were opposed. Support was strongest among Republicans (55% in favor, 27% against), followed by undeclared voters (42% in favor, 36% against), then Democrats (28% in favor, 49% against). 

Importantly, these results closely track a poll conducted by the University of New Hampshire Survey Center in 2018. In both polls, the accounts were described in detail. That UNH poll found 40% in favor, 33% opposed, and 18% saying they didn’t know enough about the issue. 

The UNH Survey Center’s poll in March asked a very different question that did not accurately describe the accounts. Unsurprisingly, it got a different result, finding that 35% said they supported and 45% said they opposed. 

The consistency in the results for the two questions that accurately described the accounts shows that more Granite Staters support than oppose Education Freedom Accounts when they have an accurate description of the program. 

BUSINESS TAXES

Another question legislators are considering is what to do with business tax rates. We asked voters what they thought the state should do with business tax rates given the state’s large revenue surplus, which was created primarily by business taxes. The poll found that 58% of voters said business tax rates should stay the same, 34% thought rates should be cut, and only 8% thought tax rates should be raised. 

That is a very clear finding that Granite State voters do not think the state should raise business taxes. 

LOCAL HOUSING REGULATIONS

On the state’s record-setting home and rental prices, the poll found that a majority of voters (51%-29%) support relaxing some local regulations so developers can build more rental housing, and a plurality of voters (45%-34%) support relaxing some local regulations so developers can build more homes.

Democrats were the most supportive of relaxing some local regulations to build more housing. A majority of Democrats supported relaxing local regulations to build more rental housing (60%) and more single-family homes (52%). 

ABOUT THE POLL

The results are from a Saint Anselm College Survey Center online poll conducted on behalf of the Josiah Bartlett Center for Public Policy based on online surveys of 897 New Hampshire registered voters. Surveys were collected between May 26th and 28th, 2021, from cell phone users randomly drawn from a sample of registered voters reflecting the demographic and partisan characteristics of the voting population.

The survey has an overall margin of sampling error of +/- 3.3% with a confidence interval of 95%. The data are weighted for age, gender, geography, and education based on a voter demographic model derived from historical voting patterns, but are not weighted by party registration or party identification.

The full tables for these poll questions can be read here: Tables and Demos.

 

The dire state of New Hampshire’s housing shortage is illustrated in the New Hampshire Housing Finance Authority’s just-released spring Housing Market Snapshot. 

The median home price in New Hampshire hit $362,000 in April, up 16% from last April’s median price of $313,000. 

Last April’s housing snapshot showed that in March of 2019, the median was just $275,000. In just two years, the state’s median home price has jumped by $87,000.

Migration caused by the COVID-19 pandemic is not the primary cause of this increase. The report shows a roughly 5% increase in home buyers from Massachusetts and a much smaller bump in buyers from other states in 2020. 

The real culprit is supply. 

The number of new building permits issued in New Hampshire collapsed in the five years from 2004 to 2009 and has not recovered. In 2004, more than 500 permits for single-family homes and more than 200 permits for multi-family housing were issued in the state. By 2009, barely more than 100 single-family home permits were issued, and multi-family permits were in the low double digits.

Since 2009, the number of issued permits has climbed slowly but has not come close to its early 2000s levels. A little more than half as many permits are being issued annually than in the early years of this century. 

One way to think about the numbers is that builders were constructing hundreds more homes each year in New Hampshire when the hit TV show “Friends” ended its run than when “The Big Bang Theory” ended its run. 

Fewer homes being built means fewer homes on the market. There were more than 8,000 homes for sale in the state in May of 2018. This May, there were 4,613. 

Last spring, there was a 1.6 month supply of homes on the market, including a 1.1 month supply of homes priced less than $300,000. 

This spring, the overall supply has fallen to 0.6 months and the supply of homes priced less than $300,000 is down to 0.4 months. 

The only way out of this housing shortage is to build more homes. 

Officially, New Hampshire’s minimum wage is $7.25 an hour. Finding someone who actually earns that, though, could be harder than finding a vegan in a Brazilian steakhouse on Flank Steak Friday.

“You wont’ find it,” Mike Somers, president of the New Hampshire Restaurant and Lodging Association, said. 

A person making $7.25 an hour in New Hampshire is “a bit of a unicorn,” Somers said. “Frankly, we haven’t seen it for years. I haven’t seen anybody paying less than 9.50 or 10 bucks an hour in years.”

New Hampshire is one of 19 states that ties its minimum wage to the federal minimum. Employees who earn tips or commissions can be paid less than $7.25 an hour. Tipped jobs are subject to a minimum wage of $3.27 an hour. But that’s not what people in those jobs actually earn. 

When tips are included, restaurant servers in New Hampshire average more than $18 an hour, according to the Restaurant and Lodging Association. 

So when looking for people who are paid only the minimum wage, the search has to be limited to non-tipped positions.

Before the pandemic, non-tipped minimum-wage jobs already were unusual, if not rare, in New Hampshire. The post-pandemic labor shortage might have eliminated them. 

It’s possible that some employer in New Hampshire is paying someone $7.25 an hour. But in interviews with business managers and trade associations around the state, we found no one who paid the federal minimum for non-tipped work — or who knew of any other business that paid it.

“I think it would be pretty hard to find anybody that’s paying minimum wage,” Donna Allen, manager of the Family Dollar store in Berlin, said. Her store pays $11.50 an hour to start, she said.

Kyle Daley, manager of Solomon’s store in West Stewartstown, said his store pays $9-$10 an hour to start for entry-level positions. Experienced tradespeople such as butchers make more. He didn’t know of any area employer that paid the minimum wage. 

Paul McGonagle, manager of Grant’s Shop & Save in Glen, said the store typically pays inexperienced teens $10 an hour to start. Experienced employees start at $12 an hour. 

“You’re not going to get any employees” at $7.25 an hour, he said. “You’re just not going to get them. And if the parent hears that you’re hiring their kid at $7.25 an hour, they’ll say don’t take it, go work somewhere else. Go to McDonald’s where they’re paying 11, 12 dollars an hour.”

Survey data compiled by New Hampshire Employment Security suggest that non-tipped minimum-wage jobs have been declining for years. 

The agency does not have a database of every wage paid for every job. To estimate how many people make the minimum wage, it uses data from the U.S. Census Bureau’s Current Population Survey.

Because the survey consists of a very small sample, its estimates are not considered precisely accurate. Even if the numbers are off by hundreds, though, the surveys show a years-long decline in the number of people reporting that they earn the federal minimum wage in the state. 

In 2016, Employment Security estimated based on CPS survey results that roughly 15,000 people in New Hampshire earned the minimum wage. In 2017, the number fell by nearly half, to 8,000. It fell to 1,200 in 2018 and bumped back up to 2,500 in 2019.

In 2020, the CPS survey estimated that only 235 people in New Hampshire earned the minimum wage. 

The 2020 estimate is based on a single person reporting to have earned the minimum wage. And that person reported having a tipped job, according to Employment Security. It’s possible that several times as many people earn the minimum wage in a non-tipped position — or that no one does. 

The 2020 number should be considered in the context of the pandemic-ravaged hospitality industry, where many lower-wage jobs are concentrated. Many of those jobs temporarily, or permanently, disappeared as restaurants, hotels, and tourism-related businesses closed or trimmed their workforces last year.

As the economy has recovered, the workforce has not. School closures, additional federal unemployment benefits, and a lingering fear of COVID have kept thousands out of the labor force. As a result, wages have risen unusually rapidly as employers have struggled to fill open positions.

“We put ads out months ago, and we’ve had two applications,” McGonagle said. “They’re just not coming to work because they’re being paid to sit home. And some of these people are making more sitting home than they’ve ever made before in their life.”

“Those ads run all the time. I got signs in my windows. They’re just not coming in. Why would they come in if they get more money sitting home? You go by some people’s yards, you say, wow, their yard’s getting a lot of work. My yard’s not getting any work done.”

Asked where we could find anyone still paying the minimum wage, Nancy Kyle, president of the New Hampshire Retailers Association, said, “Good luck with that.”

“Retailers are having such a hard time getting help, they have to pay in some cases double the minimum wage,” she said.

The lowest wages paid in retail, Kyle said, are typically to disabled employees who need to have someone assist them on the job. But even in those cases, it’s unlikely employers are still paying the minimum in this job market, she said.

“Oh, no,” said Lauren Blessington, manager of O’Neil Cinema in Epping, when asked if she knew of anyone who paid $7.25 an hour. 

O’Neil, a family-owned theater, pays inexperienced teenagers $8-10 an hour, the lowest starting wage we found. Experienced staff make more.

Blessington pointed out that the theater job comes with non-cash benefits that employees highly value: free movies, drinks and popcorn for the employee and a guest.

Though it’s possible that some Granite Staters are making $7.25 an hour in 2021, it’s clear that market forces have made non-tipped minimum-wage jobs extremely rare. Given recent wage growth, it’s likely that the $7.25-an-hour minimum wage job will soon be eliminated in New Hampshire, if it hasn’t been already.  

As the economy has been growing rapidly and thousands of jobs have gone unfilled, the federal government has been paying New Hampshire to pay people not to work. Gov. Chris Sununu announced on May 18 that New Hampshire will no longer participate in this counterproductive program as of June 19, but instead will begin paying the unemployed to find jobs. 

Had an unforeseen catastrophe wiped out employers en masse and permanently erased thousands of jobs, a case could be made for raising and extending aid to the unemployed. But that didn’t happen. 

The economy took a serious hit last March and April, but the economy has been recovering, with accompanying job growth, since last May. 

New Hampshire now has more than 30,000 job openings, an amount comparable to the number of openings before the pandemic. Instead of a shortage of jobs, the state has a severe shortage of people looking for work. 

As we wrote before the governor made his announcement, there appear to be three primary factors contributing to the state’s labor force shortage this spring. One is that thousands of people remain afraid of catching COVID-19. Another is the switch to remote and hybrid schooling, which has caused some parents, particularly mothers, to drop out of the workforce. The other is the additional federal unemployment benefits. 

The $300 in additional unemployment benefits (previously $600) was money added to existing unemployment benefits. In addition to receiving this extra federal money, unemployed Granite Staters have had their benefits extended. 

Under state law, benefits run out after 26 weeks. To accommodate what was expected to be a prolonged recession, benefits have been extended for more than twice as long as would otherwise be allowed.

The average weekly unemployment benefit in New Hampshire this April was $277. The state’s maximum weekly benefit is $427. The additional $300 a week brings the average benefit to $577 and the maximum to $727. 

For a 40-hour work week, those benefits would amount to $14.43 and $18.18 an hour, respectively.

The prolonged job drought for which these benefits were intended never materialized. Instead of providing aid to cover people’s basic living expenses amid a shortage of jobs, the state has been paying thousands of people not to work amid a surplus of jobs. 

In addition to ending the state’s participation in this federal pay-people-not-to-work program, Gov. Sununu announced that he would use $10 million in federal relief money to offer unemployed people signing bonuses once they have found a job and kept it.

The state will give people $1,000 for finding a full-time job and holding it for eight weeks, or $500 for a part-time job. People making $25 an hour or more will not be eligible. 

Given that this money has to be spent on COVID relief, it makes sense to create incentives to move people from the unemployment rolls to paid work.

The pandemic shrank New Hampshire’s already undersized labor force. A shortage of workers is causing serious problems for employers and threatens to slow the state’s recovery. Using financial incentives to address that problem is a legitimate use of federal COVID relief funds, and one that helps the state as a whole while also helping the unemployed find work.

Allegedly, state alcohol regulations are justified by the need to protect the public. Yet many of the laws that prevent the growth and expansion of craft breweries in New Hampshire are not remotely related to public health or safety. Their one and only purpose is to protect other industries from competition. 

A bill to remove some wholly unnecessary craft brewery regulations shows how legislators intentionally handicap small businesses on behalf of more established industries.

Senate Bill 125 would make four changes to the state laws that regulate craft breweries. In each instance, the law that would be changed exists not to protect the public, but to protect restaurants, retailers, beer distributors or large breweries. (Note: Brewers are divided by law into nano breweries, brew pubs, and “beverage manufacturers.”)

1. State law prohibits New Hampshire beverage manufacturers (but not nano breweries or brew pubs) from selling more than a single 15.5 gallon keg “or the equivalent of one case of 12 ounce containers per person per day” directly to a member of the general public. 

You can walk into a supermarket or convenience store and fill your full-sized, carpeted 1970s van with as much beer as it can carry, and joyfully tap your fuzzy rear-view-mirror dice all the way back home to your sitar jam session. But it’s illegal to do exactly the same thing at a craft brewery that makes more than 2,000 barrels of beer a year. (The van might also be illegal, but that’s another topic.)

Imagine a nano brewery, a brew pub, a “beverage manufacturer” craft brewery, a convenience store and a supermarket lined up side by side on one city street. Right now you can stop at four of the five and buy as much beer as you want. But at the larger craft brewery, you can buy only one case of beer per trip.

What’s the point of this law? Obviously, it isn’t to protect the public from consuming too much beer. You can buy as much beer as you want at any licensed retailer other than a larger craft brewery. Its only purpose is to force consumers to buy beer at other retailers.

Nano breweries and brew pubs are exempt from this prohibition apparently because they were added to statutes later and the ban was either inadvertently or deliberately left out of their regulations.

SB 125 would strike the prohibition, allowing people to decide for themselves where to buy more than a single case of beer.

2. State law does not explicitly authorize New Hampshire breweries, nano breweries or brew pubs to ship their products directly to in-state consumers. However, the state allows out-of-state breweries and wineries to ship directly to New Hampshire residents. (Even then, it excludes nano breweries and brew pubs.)

As a result, Granite Staters who would like to order beer from home are banned by their own state from giving their business to local brewers. This harms consumers and in-state brewers — but helps beer retailers and distributors, as well as out-of-state brewers.

SB 125 would remove this prohibition and let all types of in-state brewers, as well as wineries, deliver straight to consumers.

3. State law further forbids New Hampshire breweries from opening their own stand-alone retail locations to sell beer directly to consumers. Again, there is no public health or safety justification for this law. People can buy beer by the full-size ‘70s van load from convenience stores, grocers and supermarkets.

The only possible reason for banning brewery-owned retail stores is to deny consumers an alternative to their local supermarket or convenience store (which are supplied by independent beer distributors).

SB 125 removes this prohibition and lets brewers set up their own retail outlets.

However, the bill uses the term “outlets,” which is plural. The New Hampshire Lodging and Restaurant Association and the New Hampshire Grocers Association have objected to this, saying the law should limit brewers to opening a single retail outlet.

In Tuesday’s meeting of the House Commerce and Consumer Affairs Committee, Rep. John Hunt, R-Ringe, assured the associations that the bill would be amended to limit brewers to a single retail outlet.

SB 125 also would seem to prohibit brewers from joining together to jointly open a retail outlet. N.H. Liquor Commission officials believe the bill prohibits partnered outlets, which means this is how the law would be enforced.

How this prohibition protects consumers is anyone’s guess. But it would increase costs for breweries and limit their retail options, further benefitting beer distributors and other beer retailers.

There is no discernible public interest in limiting brewers to a single retail outlet or prohibiting them from partnering with other brewers to open stores. Any such prohibition would exist solely to protect other businesses from competition — which, of course, would hurt consumers and brewers.

4. State law does not allow nano breweries (those that produce 2,000 or fewer barrels a year) or brew pubs (which produce 2,500 or fewer barrels a year) to hire another brewery to make beer for them.

This prohibition doesn’t reduce the amount of beer available to consumers. Grocery shelves are fully stocked with beer made outside New Hampshire. The effect of this law is to make it harder for New Hampshire’s smallest breweries to scale up, which benefits larger brewers.

SB 125 would remove this prohibition and allow brewers to enter into brewing contracts with each other. However, it comes with several restrictions.

It states that a “contract brewer shall not deliver beverages to on-premises and off-premises licensees within the state.” The small brewery could hire a larger brewery, but only to make the beer. Then the small brewery would have to pick up the beer and deliver it, or pay someone else to do so. Again, this restriction features no public health or safety benefit.

The bill also prohibits nano breweries and brew pubs from reducing their on-site output when they contract with another brewer. In other words, contracting can be done only to increase total production, not to replace any portion of existing production.

So if a brew pub or nano brewery contracts with another brewer to expand production, it had better not have an accident, owner illness or any other misfortune that causes on-site production to drop. That would put it in violation of the law. 

Protectionism’s broader impact

When legislators belatedly passed laws that allowed Granite Staters to start small breweries and brew pubs (which were already flourishing in other states), they imposed thick layers of regulations, many of which protected other industries that were afraid of the competition. SB 125 addresses only a few of these. 

Largely because of legal barriers, New Hampshire’s craft brewing industry lags far behind many other states, including the People’s Republic of Vermont.

Vermont, of all places, relaxed some of its beer manufacturing restrictions in the 1980s, sparking the growth of an industry. It has 77 craft breweries compared to New Hampshire’s 93, according to data kept by the national Brewers Association. But with less than half of New Hampshire’s population, Vermont has 15.4 craft breweries per 100,000 people over age 21 vs. 8.8 for New Hampshire. 

In craft brewing circles, Vermont is legendary. It was an early adopter of craft brewing. New Hampshire has played catch up with Vermont for years.

Maine, which has slightly fewer people than New Hampshire, has 136 craft breweries (43 more than New Hampshire), or 12.9 per 100,000 people over age 21.

Brewers in both Vermont and Maine have fought protectionist and prohibitionist laws. But in at least some cases those laws were loosened earlier there than in the “Live free or die” state.  

For years, New Hampshire’s overly restrictive laws have needlessly hindered the growth of the local craft brewing industry. Most of those restrictions are pure protectionism for other industries. 

Legislators deliberately handicapped craft breweries to protect restaurants, retailers and beer distributors. Those protections have made it harder than necessary for New Hampshire brewers to grow and to reach consumers. 

One consequence is that Portland, Maine, and all of Vermont are better known as craft beer destinations than New Hampshire, though the Granite State has some excellent and award-winning breweries. By restricting the growth of one industry, protectionist laws have given our neighboring states a small but noteworthy competitive advantage in both tourism promotion and the recruitment of young professionals. 

Laws should favor free and open competition, not one industry over another. The laws that regulate New Hampshire craft breweries ought to facilitate innovation, creativity, experimentation and economic growth. Too often, they do the opposite. 

Better laws will better serve communities and consumers. They’ll lead to more business growth, more jobs, a higher quality of life… and more great beer. 

One of the consequences of regulating business by statute is that statutes are categorized, and therefore businesses have to be categorized too. The rigid legal classifications for businesses can lead to some restrictions that make sense only to lawyers, legislators, and scientists who catalogue animal and plant species.

The first step in regulating a business is to define it. Is it a restaurant, a brew pub, a cocktail lounge? Each of those falls under a separate definition and is governed by separate regulations. A business may not float between categories.

So, for example, state law divides breweries into multiple categories. There are beverage manufacturers, nano breweries, tenant breweries and brew pubs. If a nano brewery makes more than 2,000 barrels a year, it can’t be a nano brewery anymore. One additional barrel of beer puts it in a separate legal category with separate regulations. 

Cigar bars have their own section in the law. When legislators allowed cigar shops to sell alcohol, they decided they could no longer call them cigar shops. So they had to define “cigar bar” in the law and create a new section for it. 

By definition, a cigar bar has to generate at least 60% of its quarterly gross revenue from the sale of cigars and cigar-related products (those are defined in law), have a humidor on the premises, not allow anyone under age 21 on the premises, not allow cigarette smoking, not allow outside alcoholic beverages, and not serve food. 

Wait, not serve food?

Full-service restaurants are prohibited from operating cocktail lounges (bars) on days when their dining rooms are closed. But cigar bars are forced by law to serve alcohol without food. 

What in the world?

Well, if cigar bars serve food, then people might start to think of cigar bars as restaurants. If people think cigar bars are restaurants, it might occur to them to go to a cigar bar, rather than a restaurant, for dinner. 

And if business regulations exist for any purpose, it’s to prevent a new type of business from competing with an established business for customers. 

So — by law — cigar bars may serve their customers alcohol, but may not provide any food whatsoever to help slow the alcohol absorption. Not even free bar peanuts. 

Never mind that drinking on an empty stomach causes the body to absorb alcohol faster. 

The first to recognize the problem caused by this law was not legislators, but… cigar bar owners. (Who would have guessed?)

They tried in the last legislative session to get this legal prohibition on serving food to cigar aficionados repealed, but COVID speeded the end of the session before the bill, which passed the House and had a unanimous thumb’s up from the Senate Commerce Committee, could pass. 

This week, a bill to end this prohibition, House Bill 171, was taken up by the Senate Commerce Committee again after passing the House last week. It received a 5-0 ought-to-pass recommendation. 

One reason the bill has a good chance of becoming law is because it doesn’t upset restaurant owners. It doesn’t upset them because it would not end the ban on cigar bars competing with restaurants.

Legislators can be clever when they want to be. The bill would strike the word “service” from current law and replace it with “sale.” 

That way, cigar bars could put out free pretzels or nuts, but couldn’t sell food, so they technically wouldn’t have to be classified as restaurants — and wouldn’t compete with restaurants. 

See how it works?

Of course, cigar bars won’t be able sell candy bars or cupcakes or packaged snack foods either. They have to take a loss on any food they serve. Selling even pre-packaged food might put them into competition with convenience stores or bakeries, just as selling hot food would put them into competition with restaurants. 

And if there’s one thing the state absolutely must avoid, it’s different types of businesses competing with each other to satisfy consumer demand.