New Hampshire voters’ trust in government and media has collapsed as a result of the COVID-19 pandemic, a St. Anselm College Survey Center poll conducted for the Josiah Bartlett Center for Public Policy has found. In addition, President Joe Biden’s honeymoon with New Hampshire voters is over, as majorities now view him unfavorably and think the country is on the wrong track. 

Among registered New Hampshire voters, 61% said the COVID-19 pandemic has made them less trustful of the government, and 60% said it has made them less trustful of the media. In both questions, 34% said their level of trust was unchanged. 

Business, however, saw those ratios reversed. Only 22% said the pandemic has made them less trustful of business, with 69% saying their level of trust is unchanged. 

“The huge collapse in trust of government and media, but not business, ought to be a five-alarm warning to government officials and journalists,” said Josiah Bartlett Center president Andrew Cline. “Trust in institutions was already low before the pandemic. It would be a mistake to maintain business as usual and see how low it can go. A serious effort to regain public trust is needed.”

Republicans and undeclared voters posted the largest drops in trust of both government and media. 

Eighty-seven percent of Republicans and 65% of undeclared voters say the pandemic made them less trustful of government. 

Ninety-two percent of Republicans and 63% of undeclared voters said the pandemic made them less trustful of media.

Democrats registered the smallest drops, with most saying the pandemic made no change in their trust of government (59%) or media (62%). 

These trust declines accompanied a significant drop in President Joe Biden’s favorability rating in the Granite State. 

Among New Hampshire voters, 52% now say they have an unfavorable opinion of President Biden, with 47% saying they have a favorable opinion. 

That’s an almost exact reversal from the February St. Anselm College poll, which found that 53% had a favorable opinion of President Biden and 46% had an unfavorable opinion. 

Biden won New Hampshire 53%-45.5% last November. 

A solid majority of New Hampshire voters (59%) now says the country is on the wrong track, with only 31% saying it’s on the right track. 

That’s up from 55% who said the country was on the wrong track in the February St. Anselm College poll. 

Gov Chris Sununu fared better, with 64% saying they had a favorable opinion of him, and 34% saying they had an unfavorable opinion. That’s down four percentage points, from 68%, in the February St. Anselm College poll. 

These 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 political party registration of poll respondents was 30% Democratic, 28% Republican, and 42% undeclared. 

The Josiah Bartlett Center released a previous batch of results from this poll last week. The book of tables for the poll includes both sets of questions and can be read here: SACSurveyBook JBC May 2021. 

The 2022-23 state budget approved by the Senate Finance Committee makes some significant changes from the House version. It lowers overall taxes and spending while preserving several of the House’s policy initiatives, moving some out of the budget, and adding a few new ones. The Senate’s overall two-year state spending package would spend $150 million less in General and Education Funds than the House version, reduce taxes slightly more, and rely on higher revenue projections.

With business tax revenues booming, this has allowed the Senate Ways and Means Committee to count on General and Education Trust Fund revenues of $2.89 billion for the current fiscal year, which runs through June 30. That is $160 million higher than House estimates and nearly $200 million more than Gov. Chris Sununu’s estimate from February. This higher baseline carries over into higher estimates for FY 2022 and 2023 revenues, even though the governor, House, and Senate project revenues to grow at similar modest rates over the next two years. In total, the higher revenues generated in March, April, and May of this year give the Senate more than half a billion in General and Education Trust Fund revenue that their House counterparts did not have earlier this spring. (The above graphic represents the different budget revenue projections.)

Despite several differences, House and Senate budget writers arrived at similar bottom-line spending numbers. The House version of House Bill 1 would spend $13.6 billion in total funds, with $3.46 billion of that in General and Education Trust Funds. The Senate Finance package would spend $13.5 billion total, $3.32 billion from the General and Education Trust Funds.

For more, read our policy brief (pdf): Budget Visions 2022-23- Senate

If the Senate Finance Committee’s proposed budget becomes law, New Hampshire will at last become the only Northeastern state with no personal income tax.

New Hampshire markets itself as having no sales or income tax. But that’s not precisely true. Though the state does not tax individual earned income, it does tax personal income derived from interest and dividends. That is a personal income tax. 

The budget proposed by the Senate Finance Committee would phase out the state’s interest and dividends tax over five years. (The House-passed budget and the governor’s proposed budget also would phase out the tax.)

That tax brought in $105.8 million in Fiscal Year 2018, $114.7 million in Fiscal Year 2019, and $125.7 million in Fiscal Year 2020.

That might sound like a lot of money, but for context state business taxes alone have brought in $174.5 million in additional, unplanned revenue so far this fiscal year. The state is more than $200 million in the black this year, and that’s despite a $65 million pandemic-related drop in rooms and meal tax revenue below what was budgeted. 

In eliminating the interest and dividends tax, New Hampshire would follow Tennessee, which eliminated its Hall tax (on interest and dividend income) on Dec. 31, 2020. That tax was phased out over several years, beginning in 2016.

Being situated in Northern New England, New Hampshire has numerous geographical disadvantages that make it challenging to recruit businesses, entrepreneurs, retirees, and young people. It can’t change its weather or 18-mile coastline. But it can change its economic climate.

With an eye on economic and population growth, many other states are pursuing aggressive growth strategies that involve lowering tax rates and regulatory burdens. New Hampshire’s astounding economic growth over the last several decades can largely be attributed to its singular focus on growth-based economic policies. But as Massachusetts and other states have copied states like New Hampshire, Texas, Florida, and Tennessee, it’s become more difficult for New Hampshire to stand out — and to recruit entrepreneurs, businesses, and employees. 

If it eliminated the interest and dividends tax, New Hampshire would join Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming to become the ninth state to levy no tax at all on personal income. 

New Hampshire not only would be the only Northeastern state with no income tax, it would be the only one North and East of Tennessee. On top of New Hampshire’s already relatively competitive economic policies, that would help keep the New Hampshire Advantage alive.

Becoming truly income-tax-free would improve New Hampshire’s competitive position, not just in New England, but internationally. It would help preserve the New Hampshire Advantage in an increasingly competitive era in which states are working non-stop to attract an increasingly mobile workforce and entrepreneurial base.

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 New Hampshire Senate has rolled into its budget a bill (Senate Bill 130) to create Education Freedom Accounts (EFAs), which would give lower-income families the option of choosing the school that best fits their child’s needs. Critics say they would defund public schools. But this isn’t true. EFAs would save taxpayers money while giving families more educational options.

In New Hampshire’s current education funding system, the state directs $3,708.78 in “base adequacy aid” to public schools for each student enrolled. This funding is supplemented for students with additional needs. Students who qualify for special education services, free and reduced-priced lunch, or who are English language learners receive additional funds.

The EFA legislation would let parents who earn no more than 300% of the federal poverty level apply for a state-approved Education Freedom Account. Any family approved for EFA would have its state per-pupil funding deposited into the EFA, which is a restricted savings account. Money in the account could be used only for approved educational expenses.

How would this affect public school spending?

The Josiah Bartlett Center for Public Policy analyzed the fiscal impact of the bill this spring, and our report concluded that the cost of the program to the state would be approximately $2.4 million in the 2021-2022 school year and $5.9 million in the 2022-2023 school year.

The state Department of Education has estimated total expenditures in public education will be somewhere around $3.5 billion, and the state portion will be just above $1 billion in each of the next two school years.

The estimated $2.4 million price tag, if you will, for ESAs in 2021-2022 would be just 0.24% of state education spending and a mere 0.07% of the total projected expenditures on public education in New Hampshire when local and federal funds are included.

The $5.9 million cost in 2022-2023 is still only 0.59% of the projected state expenditures.

On the local side, EFAs would result in savings, not increased expenses.

As mentioned above, the state portion of education expenditures is less than 30% of the total education funding in New Hampshire. In the 2019-2020 school year, 62.6% of total education expenditures in New Hampshire were provided by local taxation.

A student whose family chooses an ESA instead of  his or her assigned public school would receive an average of $4,578 in state per-pupil funding in 2021-2022 and $4,803 in 2022-2023.  This money would leave a district school. But so would the student, and thus, the need to spend additional money raised by local taxation to educate that student.

Our study projects that school districts would save $4.2 million in 2021-2022 and $10.7 million in 2022-2023. Subtracting the cost to the state of $2.4 million and $5.9 million, you get a net taxpayer savings of $1.85 million in the first year and $4.8 million in the second year.

Although saving money is not the primary intent of this policy, EFAs would lead to an estimated $6.65 million in net taxpayer savings in the first two years of the program alone.

The fear mongering claim that EFAs would “defund public schools” just isn’t true. They would save taxpayers money while providing students who don’t succeed in their assigned public school a much-needed option for finding a school that works for them.

EFAs are not an attempt to defund public schools or “privatize education.” The EFA legislation incorporated into the state budget would do neither of those things. It would provide an alternative way to fund public education for lower-income New Hampshire families whose children need educational options that might not be available through their assigned district school.

EFAs would account for less than 1% of projected state education expenditures and save local taxpayers $6.65 million over the next two school years. That would be good deal for both students and taxpayers.

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.  

The state Senate on Thursday voted to repeal two state laws that unconstitutionally exclude religious schools from participating in state education tuitioning programs. Both bills were previously approved by the House.

House Bill 282 repeals the state’s prohibition (in RSA 193:1) on religious schools participating in town tuition programs. 

State law allows local governments to assign students to a non-public school when the resident district lacks a public school of the same grade span. A town that has no high school, for example, can pay a private high school to take the town’s students. 

However, the law forbids religious schools from participating in these tuition programs. But the U.S. Supreme Court ruled in 2019 in Espinoza v. Montana Department of Revenue that such exclusions are unconstitutional because they deprive religious institutions of equal treatment solely by virtue of their religious status. 

A state may not exclude religious schools from a public benefit simply because they are religious schools. 

“A State need not subsidize private education. But once a State decides to do so, it cannot disqualify some private schools solely because they are religious,” the court held.

Quoting a similar previous case, Trinity Lutheran v. Comer, the court pointed out that the “Free Exercise Clause, which applies to the States under the Fourteenth Amendment, ‘protects religious observers against unequal treatment’ and against ‘laws that impose special disabilities on the basis of religious status.’”

Another state law allows school districts to send students to public schools and public academies if those students are determined to have suffered a “manifest educational hardship” at their assigned school. It also excludes “sectarian” schools. 

Senators on Thursday passed House Bill 388, which would allow districts to send students in these circumstances to private as well as public schools. The bill also strikes the word “sectarian” from the statute, thus incorporating religious schools into the program. 

Critics have said that these bills violate the First Amendment’s required separation of church and state and amount to a giveaway to religious schools. The truth is precisely the opposite. 

The state is forbidden by the U.S. Constitution from denying religious institutions from participating in an otherwise neutral program, including town tuition contracting, solely because those institutions are religious. The existing laws, not the bills, are in violation of the Constitution. 

The effect of House Bills 282 and 388 is to ensure that these laws governing school tuition contracts are constitutional. 

In late April, New Hampshire was No. 1 in the nation in the percentage of distributed vaccines administered. Nearing mid-May, the state has dropped to 24th (80%). 

As those who were most eager to get vaccinated have done so, the number of people signing up for their first dose has fallen sharply. Though Becker’s Hospital Review reports that 59% of the population has received at least one dose as of May 14, only 35% has been fully vaccinated. 

This slowdown in vaccine demand creates a public health concern because it threatens to prolong the spread of the pandemic.

The state has been encouraging people to get vaccinated for months. It has initiated a public awareness campaign with the message that getting vaccinated protects you and others. This has been the standard public messaging for COVID-19 vaccination campaigns. But recent research suggests that it’s not very effective at convincing those who remain reluctant to get vaccinated.

A recent YouGov poll found that 63% of Americans who do not plan to get vaccinated think it’s safe to gather indoors with other unvaccinated people without wearing a mask. A campaign that focuses on telling people they and their loved ones will be safer if vaccinated won’t resonate with unvaccinated people who already think they’re safe.  

Shift to incentives and a positive message

A better vaccination campaign would offer a combination of fun incentives and positive messages. 

A UCLA study found that people respond to cash and lifestyle incentives. Offering between $25-$100 raised people’s willingness to get the vaccine by between 13-19%. Cash was more effective with Democrats than Republicans.

Telling people that they won’t have to wear a mask after they get vaccinated also was effective at changing minds. For all respondents, the percentage who said they were more likely to get a vaccine rose by 13 points, from 50% to 63%. For Republicans, the gain was 18 points, from 35% to 53%.

That’s one reason the CDC’s newly announced guidance that vaccinated people don’t have to wear masks is so important. Requiring people to continue masking in public after vaccination undermines the government’s message that vaccination will make them safer and bring a return to pre-pandemic life. 

This confusing messaging is prevalent in New Hampshire. Dover, which has a public mask mandate, tells residents that they must continue masking after getting vaccinated. 

Its guidance reads: 

“WILL I BE ABLE TO STOP WEARING A MASK AND SOCIAL DISTANCING IF I GET THE VACCINE?

“No.”

Portsmouth and Nashua are among the New Hampshire municipalities that continue to mandate mask-wearing in public, including outdoors, which undercuts the state’s vaccine messaging. 

Instead of communicating the depressing, negative message that vaccination offers no escape from mask mandates and other government controls, government ought to be sending a message of hope and joy while offering people fun incentives to get the shot.  

Yes, the caveat is that businesses, local governments and other organizations might continue to require masks indoors for the time being. But governments aren’t effectively communicating that this should be a temporary, transitional practice rather than a permanent one.

A few jurisdictions, however, have tried creative, incentive-based initiatives to encourage vaccination, and the results are encouraging.

An Erie County, N.Y., program that offered free local craft beer and a pint glass to those who showed up to get vaccinated at a local brewery resulted in more vaccinations in one day than all of the county’s first-dose clinics for the previous week, The Buffalo News reported. 

New Jersey is partnering with the Brewers Guild of New Jersey to provide a free beer for anyone who gets vaccinated in May. 

Ohio is giving away $1 million each to five newly vaccinated people via a lottery, plus college scholarships to five students. 

Alabama is holding a mass vaccination event at the Talladega Superspeedway and letting people do two laps around the speedway (behind a pace car) after getting their shots. 

There is good evidence that unvaccinated people respond more to incentives such as free cash and beer — and the lifting of mask requirements — than to New Hampshire’s current messaging. The state could produce better results by changing its vaccine marketing as soon as possible to do the following:

  1. Partner with willing craft breweries, wineries, distilleries, restaurants, etc. to offer freebies in exchange for getting a vaccine. Businesses hard hit by the pandemic — such as movie theaters and restaurants — might make good partners. The state is receiving another $1.5 billion in federal COVID relief funds. Using some of that money to boost the state’s vaccination rate by partnering with local businesses to offer beer, coffee, doughnuts or movie tickets to reluctant residents would be a cost-effective investment in speeding the end of the pandemic. 
  1. Start communicating to people that mask-wearing and other restrictions, at least in public spaces and especially outdoors, can end when enough people get vaccinated. The confusing messaging on masking is suppressing interest in vaccination. A clear, positive message, effectively communicated, can help to reverse that. 

The state has both a public-health and an economic interest in bringing the vaccination rate up to the highest possible level. Giveaways and better messaging won’t convince everyone to get a vaccine, but there is evidence that they can produce a large enough change on the margins to make a significant difference. Available evidence suggests that this would be more effective than the standard messaging being used by New Hampshire and most other states. 

As a few lawmakers engaged in a publicity stunt last Saturday to press for a state-imposed $15 minimum wage, New Hampshire employers were raising wages and offering cash incentives in desperate efforts to attract workers.

A Portsmouth restaurant is hiring line cooks for $22 an hour, with a $500 signing bonus. A Salem cafe is offering up to $22 an hour and a $600 signing bonus.

The pandemic has worsened New Hampshire’s already challenging labor shortage as thousands have dropped out of the workforce for a variety of COVID-related reasons. Employers have responded by raising pay.

Average hourly earnings in New Hampshire are up more than $2 an hour, coming to an increase of $87 a week, since last March, state data show.

And still, thousands who left the workforce when the pandemic hit are staying home.

There are 28,600 fewer people in New Hampshire’s workforce than there were a year ago, though thousands more jobs are available.

Federal data show 33,000 job openings in the state as of this past December, the latest month for which official data are available, according to New Hampshire Employment Security. That’s up from 31,000 the year before.  

“If you looked at the job openings line, you wouldn’t detect that there was a pandemic,” Annette Nielsen, economist at New Hampshire Employment Security, said in an interview.

“My analysis is that it’s definitely the labor force participation rate, it’s down by a couple of points and that’s definitely the big reason” for the labor shortage, Nielsen said.

There is no single cause of this reluctance to rejoin the workforce. Several circumstances are working together.

One factor cited by employers is the $300 increase in federal unemployment benefits. 

In fact, the co-owner of the restaurant where the lawmakers held their minimum wage publicity stunt, Madear’s Southern Eatery & Bakery in Pembroke, told the New Hampshire Union Leader that the extra federal money was keeping people on the sidelines.

“It’s also the idea with stimulus and the unemployment extension, that does not help at all,” said Robb Curry, the progressive activist and restaurant owner.

About 4.6 million Americans dropped out of the labor force last year for COVID-related reasons, according to a May analysis from Bank of America economists.

That analysis concludes that extended Unemployment Insurance benefits and fear of Covid are the top two factors depressing labor market participation.

“Our estimates suggest that those who previously made less than $32,000 would be better off in the near term to collect UI benefits than work,” the analysis concluded.

The previous $600 additional unemployment benefit “definitely would be for some people an incentive to decide not to work,” Nielsen said. 

The current $300 in additional benefits would not be as strong a disincentive to work, she said, however she noted that its effects could be larger in New Hampshire, where the workforce is older. One fifth of New Hampshire’s labor force was between the ages of 55 and 64 in 2009. By 2019, it was up to a fourth, or more than 130,000 employees.

“The thing is that there are a lot of people in New Hampshire aged 55 to 64, so if you change that just a little it can make a big difference,” she said. 

A high proportion of New Hampshire’s labor force qualifies for Social Security, even Medicare (starting at age 65), so an additional $300 can tip the scale toward not working, she said. 

Then there were school closures. In states where schools went remote, women dropped out of the labor force at much larger rates.

It’s not clear how much each factor (fear of COVID, higher unemployment benefits, remote schooling) has contributed to the lower labor participation rate. But it is clear that reluctance to return to work is COVID-related and continuing.

New Hampshire unemployment claims remain well above their pre-pandemic levels, state data show. In February of 2020, individuals filed 15,068 weeks’ worth of benefits claims. That number rose to 58,630 one month later. This march, it was 59,313.

Unemployment claims have remained stubbornly high — at roughly four times the pre-pandemic rate — since last November. 

With COVID cases falling and the economy booming again, the most significant drag on New Hampshire’s economy is the reluctance of thousands of people to return to work. 

There is no quick fix, but a few developments could help. One is the state’s return to a work-search requirement for unemployment benefits. Another is getting all schools and summer camps fully reopened. 

But probably the largest single factor would be hitting the vaccination threshold at which COVID spread collapses. That’s around approximately 70-80% of the population, though estimates vary.

Israel, with more than 70% of its population fully vaccinated, seems to have subdued the virus. 

With the virus controlled via vaccination, all of the factors keeping people from returning to work vanish. 

The 2022-23 state budget passed in the state House of Representatives on Wednesday would reduce state general and education fund spending by 1.4% below actual 2020-21 state spending. The reduction from what legislators approved in the last session is even larger. 

There is always some discrepancy between legislative appropriations and actual spending, as governors make adjustments when managing state operations. In the 2020-21 budget cycle, Gov. Chris Sununu took emergency measures, including a hiring freeze, to save money after the pandemic caused a dip in revenues last spring. 

As a result, the state has spent less money in the current budget cycle than legislators allotted. The 2022-23 budget approved by the House Republican majority Wednesday spends 1.4% less than actual state spending in the current budget (which still has a few months to go).

But when compared to total appropriations as approved by the previous, Democratic-controlled Legislature, the reduction totals 2.3% of general and education fund spending.

The general and education funds are the portions of the state budget funded by state tax and fee revenues. They do not include federal funding.

On taxes, the budget:

  • Reduces the Business Enterprise Tax rate from 0.6% to 0.55% and increases the filing threshold to $250,000 for both of the tax’s two threshold levels, gross receipts and enterprise tax base. Current thresholds are $200,000 for gross receipts and $100,000 for enterprise tax base. The budget thereby reduces both the BET rate and the number of businesses that have to pay it;
  • Reduces the Business Profits Tax from 7.7% to 7.6%;
  • Phases out the Interest & Dividends Tax by 1% a year over five years;
  • Reduces the Meals & Rooms tax from 9% to 8.5%;
  • Changes the triggers for unemployment insurance tax rate adjustments. Current law triggers rate cuts of 1% if the Unemployment Insurance Trust Fund reaches $275 million and 1.5% if it reaches $300 million. Those triggers are raised to $350 million and $400 million, respectively.

Those are the top-line state spending and tax changes. Josiah Bartlett Center will have a more detailed breakdown of the budget next week.