The U.S. House on July 18 passed the “Raise the Wage Act,” mandating a $15 minimum wage (a 107% increase) by 2025. The bill also eliminates the exemption for tipped employees, forcing a 562% increase in wait staff labor costs by 2026. New Hampshire’s U.S. Reps. Chris Pappas and Annie Kuster voted for the bill. (Pappas’ own restaurant hires experienced employees for less than $15 an hour.) Below are five ways a $15 minimum wage would hurt New Hampshire. 

1. It would reduce job opportunities for Granite Staters. Extensive research has shown that minimum wage increases disproportionately hurt the lowest-skilled Americans by eliminating low-skill jobs. Roughly 163,000 Granite Staters work at jobs that pay less than $15 an hour, according to state Employment Security data. About 11,000 of them earn the minimum wage. Those in the lowest-paid jobs would see the biggest job losses. For example, federal Bureau of Labor Statistics data show that the average wage in New Hampshire for ushers, lobby attendants and ticket takers is $9.43 an hour. These are entry-level jobs for high school students. Forcing employers to raise the hourly rate by 60 percent would prompt theater owners to accelerate the transition to automated ticket kiosks. 

2. It would pressure local governments to raise property taxes. New Hampshire municipalities and school districts pay less than $15 an hour for many positions. A few job openings posted this July include: Department of Public Works laborer, Manchester, $13.25 an hour; lifeguard, City of Claremont, $7.25-$15 an hour; library page, Nashua, $10.08 an hour; lunch/recess assistant, North Salem Elementary School, $12.21 an hour. In fiscal year 2018, Manchester Public Schools spent $10.7 million in salary for paraprofessionals, tutors, certified instructors, food service workers and support staff. Mandating a $15 minimum wage for all government employees will force a large increase in government labor costs, which will lead to budget cuts elsewhere, job losses, tax increases or all three. 

3. It would reduce entrepreneurship. New Hampshire’s business-friendly economic climate is less friendly for startups, according to several national measurements. The latest Kaufmann State Report on Early Stage Entrepreneurship ranks New Hampshire below its neighbors and the national average on three of four metrics: rate of new entrepreneurs, early stage job creation, and startup early survival rate. WalletHub just ranked New Hampshire 48th in Best & Worst States to Start A New Business. Would-be entrepreneurs calculate anticipated profits before deciding to risk their capital on a new venture. Artificially inflating labor costs for the lowest-skilled, least-productive employees by more than 50% would make that math even more challenging, resulting in fewer new businesses — and fewer new jobs.

4. It would make native businesses less competitive. A quaint, New England inn cannot transfer profits from the industrial manufacturing division to make up for government-mandated losses in the bed and breakfast division. Where small, local businesses compete against corporate rivals (the hospitality industry, manufacturing, retail), a $15 minimum wage would advantage national firms, which can better absorb these costs.    

5. It would make New Hampshire less competitive. Employers can locate anywhere in the world. They tend to prefer places that have a large talent pool, low costs, high quality of life, and a favorable business climate. New Hampshire is highly competitive on quality of life and general business climate. Though energy costs are extremely high here, lower labor costs help us compete against Massachusetts, where the average wage is $5 per hour higher, according to BLS data. Artificially inflating labor costs reduces the incentive for employers to locate in more remote areas.  

To protect minorities from hiring discrimination, state lawmakers just passed legislation shown in academic studies to reduce the odds that minority applicants are hired. Hello, law of unintended consequences.

It’s recently become a progressive article of faith that employer credit history checks must be discriminatory in their effect if not their intent because minorities tend to have lower credit scores. Bans on employer credit checks have swept across the country in the last dozen years, and Sen. Elizabeth Warren has tried repeatedly to pass a national ban.

As with so many feel-good political measures, the issue is fraught with myth and hyperbole.

In Senate debates on Thursday, advocates for House Bill 293 suggested that people wouldn’t know if employers checked their credit or decided not to hire them because of a credit issue.

In fact, the federal Fair Credit Reporting Act requires employers to get written permission before checking an applicant’s credit history, and it requires employers to notify applicants exactly what credit issue caused them not to be hired. This allows applicants to dispute the report.

It also prohibits the use of credit history information to discriminate based on “race, national origin, color, sex, religion, disability, genetic information (including family medical history), or age (40 or older).” That is, using particular credit issues to weed out black or female applicants while hiring white applicants with the same credit history is already illegal. So is checking the credit of only minority applicants.

Legislators expressed concern that employers could access an applicant’s credit score or that a person could be denied a job because of a poor score.

“This bill is about economic opportunity for people who are getting dinged on their credit,” Senate Majority Leader Dan Feltes said on Thursday.

But employers don’t have access to credit scores when checking credit reports. Being “dinged” on your score won’t affect your employment prospects.

Employers aren’t looking for credit-worthiness anyway. Employers look for big problems that could indicate an employee might not be trustworthy or might be a security risk.

HB 293 acknowledges that there is real value in employers having access to credit histories. It exempts any “bank holding company, financial holding company, bank, savings bank, savings and loan association, credit union, or trust company,” any “state or local government agency which requires use of the employee’s or applicant’s credit history or credit report” and anyone required by federal law to check an applicant’s credit.

It also exempts numerous executive and managerial jobs and any position that has an expense account or company card.

However, it doesn’t exempt front-line positions that handle cash, such as store clerks. The bill was drafted to eliminate credit history checks for lower-level hires, on the idea that this would reduce discrimination. But academic research shows that such restrictions actually harm minority job applicants.

A 2018 MIT study found that state restrictions on credit history checks “in fact have sizable, negative effects on labor market outcomes for blacks.”

The authors note that a minority applicant’s credit history provides a check against an employer who has biased assumptions about the trustworthiness of minority applicants. Seeing a black applicant with no major credit issues works against preexisting biases. Without access to credit reports, more employers appear to assume that black applicants have worse credit histories than they really do.

A 2017 Harvard/Federal Rserve Bank of Boston study found that “the changes induced by these bans generate relatively worse outcomes for those with mid-to-low risk scores, for those under 22 years of age, and for blacks—groups commonly thought to benefit from such legislation.”

“We find that the introduction of a ban is associated with a 1 percentage point increase in the likelihood of being unemployed for prime-age blacks compared with the contemporaneous change for whites. Thus, it appears that the prohibition of credit screening and the increased emphasis on other signals may actually, relatively, harm minority applicants.”

Legislators may have unwittingly made it harder for minorities in New Hampshire to find employment. They may have done so because they failed to check their own biases about how employers use credit checks.

Cue the Canadian clones singing wildly in a 1970s’ Lincoln Continental on a snow-covered road trip.

Joe Biden kicked off his 2020 presidential campaign in Pittsburgh last week with a speech that contained a serious but overlooked policy proposal to expand economic opportunities for all Americans — one that can draw broad bipartisan support.  

“The major moral obligation of our time is to restore, rebuild and respect the backbone of America: the middle class,” Biden said. “As we rebuild it, we need this rebuilding to be all-inclusive, opening the doors of opportunity for all Americans….”

Few Americans would disagree with that idea. One serious obstacle to a broader expansion of economic opportunity, Biden pointed out, comes from anti-competitive occupational licensing laws. 

After advocating the abolition of non-compete clauses for lower-wage workers, saying they exist only “to suppress wages,” Biden said we should “do the same thing with occupational licenses.”

“Why should someone who braids hair have to get 600 hours of training? It makes no sense. It’s designed to keep the competition down. Look, folks, you can’t just transfer your licenses across one state to another. They’re making it harder and harder in a whole range of professions, all to keep competition down. Why should we get rid of these unnecessary hoops out there? Because we have to restore America’s ability and individual Americans to be able to fight for their own dignity.”

Biden is right on this — as was President Obama before him. 

Anti-competitive occupational licensing regulations reduce economic opportunities and diminish human dignity by forbidding ambitious Americans from working in many fields unless they first obtain permission from the government.

The result is a particularly regressive form of wealth redistribution — from lower-income to higher-income workers. 

“Not only does licensing redistribute earnings from unlicensed to licensed workers; it also shifts the burden of unemployment away from licensed workers,” as the Brookings Institution put it a few years ago.

Occupational licensing also limits mobility, as Biden noted and as a study for the Federal Reserve Bank of Minneapolis found. If you get a license in one state, but that license isn’t recognized by other states, you’re stuck. Licensing reduces competition in part by restricting worker mobility. 

This is not a fringe issue. A dramatic increase in occupational licensure has occurred since the middle of the last century. In the 1950s, only about 5 percent of occupations in the United States required a license, but by 2006 almost 30 percent did, a 2008 National Bureau of Economic Research study found. 

Because these requirements have been shown to reduce competition and limit economic opportunities for millions of Americans, they have drawn condemnation from across the ideological spectrum.

The libertarian Institute for Justice has produced compelling reports showing the negative effects of occupational licensure, the latest being available here. The Obama administration undertook its own review of occupational licensing laws and in 2015 released a report that called for widespread reform. 

“There is evidence that licensing requirements raise the price of goods and services, restrict employment opportunities, and make it more difficult for workers to take their skills across State lines,” the Obama administration review concluded.

The Obama administration considered occupational licensing barriers so economically harmful to people on the lower rungs of the economic ladder that it began offering federal grants to encourage state-level reductions in licensing laws. 

Matthew Yglesias of Vox noticed at the time that the administration’s push against occupational licensing laws, which are government regulations, after all, was out of synch with liberal orthodoxy. Reducing these regulations might be even more unfashionable now, as “socialism” has grown in popularity among the far left. 

Yet Biden wasn’t afraid to connect these state laws to his broader fight for economic opportunity and human dignity. For Biden to point out the harmful and demeaning effects of some government regulations in his campaign kick-off speech is both noteworthy and praiseworthy.

This is an economic problem that both the left and the right can agree to fix — if leaders of both sides are willing to address it.

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.