While the market drives up wages, government prevents it from providing more housing

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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. 

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State’s housing shortage has driven rents up 24% in five years

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New Hampshire’s severe housing shortage continues to drive prices to record highs and put rentals and single-family homes out of reach for many families. 

  • The median price of a two-bedroom rental in New Hampshire has risen 24% in the last five years and 43% since 2011, reaching a record high of $1,498 a month (including utilities) this year, the New Hampshire Housing Finance Authority’s annual rental survey has found. 
  • The median price of a two-bedroom rental rose 6% last year, and the price for all rentals rose 7%. 
  • In Hillsborough and Rockingham Counties, the median rent is more than $1,600 a month (including utilities). 
  • The vacancy rate for two-bedroom apartments is down to 0.6% and the rate for all units is 0.9%. (A healthy vacancy rate is around 5%.) In every county, the vacancy rate is below 1% for two-bedroom units and below 2% for all units. No New Hampshire county has had a vacancy rate above 4% for all units since 2017. 
  • The percentage of New Hampshire two-bedroom rental units considered affordable to the median-income renter household (meaning the household would spend no more than 30% of its income on rent) is just 13%.
  • Single-family home prices are also hitting records. The median home price in Rockingham County hit $509,850 in June. Statewide, it hit $409,000.
  • In 2012, homes spent an average of more than 125 days on the market. In June, homes spent an average of 18 days on the market. 
  • In 2012, there was a more than 10-month supply of inventory for single-family homes. In June, it was down to 1.2 months. 

 The state’s housing shortage is not new. It’s been a well-known problem for decades. It has persisted despite numerous state-level efforts to address it. But those efforts, often focused on housing subsidies or task forces, have made little impact. The Housing Appeals Board, the most promising recent reform, just started its work this year. And its focus is on enforcing existing laws and rules to ensure that local governments don’t overstep their legal authority.

The shortage persists, and has become worse, because it is largely a product of local regulations that restrict housing development. Local ordinances often outlaw small homes on small lots, severely restrict mixed-use development, and make it nearly impossible to build multi-family buildings even in areas where they are allowed. 

The cumulative result over many decades is a massive shortage of housing. Estimates vary, but the 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. 

Whatever the actual number is, filling the need will be no less challenging than it has been in recent decades — as long as local governments continue to needlessly restrict new home construction and deny needed developments at the urging of a handful of anti-housing activists. 

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For occupational and business regulations, the pandemic has brought mostly marginal changes

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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. 

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Legislators might soon legalize sidewalk dining in New Hampshire

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Summer weather is here, and restaurants from Portsmouth to Hanover are opening up for outdoor dining on streets and sidewalks. But unless the Legislature acts, those popular outdoor seating areas are in jeopardy when the state of emergency expires. 

State law doesn’t expressly allow holders of liquor licenses to add service in common areas, such as public sidewalks or parking lots. The relevant statute (RSA 178:24) addresses expansion of service into areas license holders control, but not into public spaces.

On May 31, 2020, Gov. Chris Sununu allowed restaurants to offer outdoor dining under Exhibit C of Emergency Order 40. (Local approval is required if the expansion is into a shared space, such as a sidewalk.)

The purpose was to give restaurants a chance of surviving the pandemic. People stopped going to restaurants when the pandemic hit last year, then the governor ordered indoor dining rooms closed. When they opened back up, people were reluctant to return. Allowing outdoor dining was intended to authorize restaurants to serve their customers in a way that is common in many other parts of the world, but not in New Hampshire. 

(We use the common term “outdoor dining” here, but really what the state’s regulating is the service of alcohol.)

Of course, the big question is: Why does state law interfere with sidewalk dining (drinking) in the first place? Why not just clarify that liquor license holders are not prohibited by the state from expanding into common spaces?

Senate Bill 155, as amended by the House, would do that. 

The House-passed version states that “a licensee may expand into a shared space, such as a sidewalk or street, with the approval of local officials.” The Senate version extended the temporary allowance for outdoor dining for another two years.

For the House amendment’s permanent authorization to become law, the Senate would have to agree to the amendment. The bill could come before the Senate for a vote on Thursday. 

In addition to allowing outdoor dining for liquor license holders, SB 155 would codify several other provisions contained in Gov. Chris Sununu’s COVID-19 emergency orders.

  • It would create a new legally recognized medical occupation called a “Temporary Health Partner,” which is essentially a nurse’s aid. When the pandemic hit, hospitals were short-staffed but could not bring in unlicensed assistants just to help with simple tasks. This would let medical providers hire helpers who would work under a nurse’s supervision. 
  • It would authorize the emergency medical licensure of various types of medial professionals, such as doctors who let their licenses expire within the last three years, and nursing students. 
  • It would let pharmacists sell COVID-19 testing kits and administer the tests. 
  • It would let out-of-state pharmacies providing investigational drugs to New Hampshire patients to be licensed as mail-order pharmacies temporarily for COVID-related reasons.
  • And it would let summer camps that temporarily closed for COVID-related reasons maintain their status under local ordinances as a continuously operating camp. It basically prevents their grandfathered status from being revoked because they closed during the pandemic. 

The bill offers a nice introduction into the world of unneeded state regulations. It would remove just a few of the many state laws that prohibit the private sector from serving customers in ways that lawmakers of the past either did not anticipate or did not want to allow, for whatever reason.  

If it passes, sidewalk dining could become a permanent part of New Hampshire life.

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Will legislators legalize kids’ lemonade stands this week?

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Temperatures are expected to hit 90 degrees in much of New Hampshire this week. The state’s largest school district closed Monday on account of the heat. Other school districts are letting out early. What will kids be doing? Some of them are sure to set up lemonade stands. Technically, that would be illegal in many communities unless the children obtain a permit first.

It’s not that communities specifically target kids’ lemonade stands. It’s that municipal ordinances that require permits to sell food or drinks typically don’t contain exemptions for children. 

In other states, police have been called to shut down unlicensed lemonade stands. Stories in recent years from Colorado, Texas and New York received national news coverage, which prompted legislators in New Hampshire and other states to propose laws exempting child-operated soft drink stands from local permit requirements.

House Bill 183 would do that in New Hampshire. It has passed the House and Senate in different forms and is back for consideration in the House, which meets on Thursday. 

The House version exempted people up to age 18 who sell soft drinks from municipal vendor permit requirements. 

The Senate version exempts people under the age of 14 who “are selling soft drinks on family owned or leased property.” 

(The “soft drink” language is intentionally broad enough to cover children who might sell apple cider, powdered sugary drinks, canned soda or other soft beverages instead of lemonade.)

Under the Senate amendment’s language, children selling lemonade on public property (say, at a sports field, basketball court or public park) would still have to obtain a permit if a municipality required one. 

Both the House and Senate versions of the bill met with strong opposition. In the House, 163 members voted against it. On the other side, 10 senators voted against it. 

A major argument against the bill was that no one could produce a case of police shutting down a child’s lemonade stand in the state. Therefore, it was argued, the bill isn’t needed. 

However, the lack of a publicized arrest lemonade or stand shut down does not mean that police interactions aren’t happening. It likely means that officers are exercising their discretion and letting legal infractions slide. 

Several years ago, the author of this story had a police officer stop at his child’s lemonade stand to ask if we had a permit (we didn’t) and to inform us that we probably needed one. But he didn’t order us to shut down the stand. 

The argument that police have not enforced the law is no defense of the law. Having permit requirements that no one intends to enforce is folly, not good governance. What’s the point of keeping broad and enforceable regulations if no one ever intends to enforce them? 

The obvious answer is that municipal officials intend to reserve the power to enforce these ordinances at their discretion should they encounter a situation in which they feel the need. In other words, they intend to enforce these ordinances selectively, rather than apply them uniformly. That is a recipe not only for sewing distrust of government, but also for biased policing.  

The New Hampshire Municipal Association in fact testified against HB 183 by simultaneously arguing that municipalities “are not going to try and regulate kids lemonade stands” and that municipalities would regulate the stands on a case-by-case basis “if kids are doing something that is unsafe and the police should be able to come along and ask them to move,” as described by the committee hearing transcript.

Keeping a broad ban on unlicensed lemonade stands in place on the off chance that police might one day need to tell kids to stop doing something unsafe (something unrelated to the sale of lemonade) offers an extremely weak case for keeping such bans in place. 

License and permit requirements often are drawn too broadly, and legislators legislators are taking notice. For example, it has long been a criminal offense for anyone to cut hair without a state license, even if doing it at home on one’s own friends and family members. 

Legislators recognized this problem (after the Josiah Bartlett Center pointed it out) and this year passed a bill to decriminalize unlicensed hair cutting that isn’t done for money. 

Local food vendor permit requirements often go too far as well, covering children who sell drinks from their own yards. 

House Bill 183 would prohibit these municipal food vendor permits from applying to minors under the age of 14 who sell soft drinks from property their family owns or leases. It is narrowly drawn so that it still allows municipalities to control vending on municipal property and when done by high school students. 

It is one of the bills House members could take up at their session on Thursday. It will be interesting to see if it continues to meet such strong opposition during this week’s heat wave. 

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Legislature votes to decriminalize home haircuts

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In April of 2020, when barber shops and hair salons were closed and people resorted to cutting each other’s hair, we pointed out that this was technically a criminal offense in New Hampshire. 

Barber and cosmetologist licensing is governed by state law, and those laws are written not only to protect public health, but also to protect barbers and cosmetologists from competition.

RSA 313-A:9, part of the chapter governing barber and cosmetologist licensing, states: 

“It shall be a class A misdemeanor for any natural person, and a felony for any other person, to engage in any practice regulated by this chapter without the appropriate license.”

To translate that into plain English: Any person who cuts hair without a license commits a misdemeanor, and any company that has its employees do so commits a felony.

That language is clear and unambiguous. It is a crime to cut hair — even a family member’s or your own — without a license. 

(It’s also illegal to give manicures and pedicures or apply makeup without a license, as those activities are defined in the statute as falling under the definition of cosmetology, the practice of which requires a state license.)

Yet when we pointed out the plain fact that the law criminalizes regular practices that people do for each other every day, some state representatives and journalists said we were wrong. We were accused of stoking fears, and of misrepresenting the law. 

A year later, the Legislature has acknowledged that the law does, in fact, make it a crime to cut hair without a license. 

And it has passed a bill to change that.

House Bill 606, introduced by Rep. Carol McGuire, R-Epsom, simply inserts “for remuneration” into RSA 313-A:9 so that it reads: 

“It shall be a class A misdemeanor for any natural person, and a felony for any other person, to engage for remuneration in any practice regulated by this chapter without the appropriate license.”

HB 606 passed the House 200-166 in April. No one testified against the bill in committee. On Thursday, May 27, the bill passed the Senate on the consent calendar, which means it was considered so non-controversial that it was passed with a slate of other bills by voice vote with no debate.

If the bill becomes law, as expected, it will remove an offensive and absurd criminal penalty from the books. But the criminal penalty for performing unlicensed hair cuts for pay remains.

And it remains a criminal offense to perform other services without a license. There are criminal penalties for the unlicensed appraisal of real estate, unlicensed auctioneering, unlicensed junk or scrap metal dealing, and the unlicensed sale of lightning rods. 

(Legislators passed a bill in April to remove the entire section requiring a license to sell lighting rods. Gov. Chris Sununu signed the bill, and it takes effect next January.)

Removing the criminal penalty for doing your family’s hair and makeup is long overdue. But it’s a small step. Unnecessary criminal penalties remain woven throughout New Hampshire’s occupational licensing laws. And unnecessary occupational licensing remains rampant in general. Much more work is needed to remove needless, anti-competitive and economically harmful occupational licensing requirements. 

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State replaces mandates with guidance — a year late

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On April 29, Gov. Chris Sununu announced that the state’s long list of mandated COVID-19 restrictions for various industries will expire on May 7, to be replaced by a Universal Best Practices Guidance.

This is a welcome and long overdue change, which the Josiah Bartlett Center for Public Policy advocated in our reopening guidelines on April 30th — of 2020. 

Almost exactly a year later, the state is finally switching from a set of strict mandates to a set of recommended best practices for all industries. 

As we wrote last April;

To slow the spread of the virus and avoid overwhelmed hospitals, it isn’t necessary for the state to dictate which industries get to stay open. It’s necessary only for people to behave in ways that suppress the spread.

Dividing businesses by industry and ordering whole sectors closed forces many businesses to shut down even though they could operate with minimal risk by adopting and enforcing effective mitigation practices. A better framework would be “safe” vs. “unsafe” practices.

Under a safe practices model, a business would risk closure only if it couldn’t enforce strict mitigation protocols such as social distancing, surface disinfecting, and mask wearing. There is no justification for closing a business that can enforce such protocols, regardless of its industry.

Rather than the governor dictating which industries can and can’t open, a safe practices model would encourage and reward responsible behavior, including the widespread adoption of rigorous safety protocols throughout the economy.

One important reason for preferring guidance to mandates is that COVID-19 is a new virus that did not come with a long history of study by researchers. Epidemiologists and other experts weren’t quite sure how best to slow the spread, as became obvious when numerous health organizations, government agencies and medical professionals offered different prescriptions for handling the virus. 

Organizations needed the flexibility to adapt to rapidly changing information and guidance. 

Mandated behaviors restrict that flexibility. And they can be extremely harmful when wrong. Just ask the families of the thousands of New York nursing home residents who died as a result of Gov. Andrew Cuomo’s order to move infected COVID-19 patients from hospitals to nursing homes. Or the millions of students (and their families) who suffered academic and financial losses because of schools that stayed closed long after it was clear they could reopen safely. 

Instead of ordering organizations to adopt rigid practices that might or might not work as intended, the state’s new guidance educates managers about basic best practices that can be adopted in multiple environments and situations. 

Even so, it fails to incorporate some of the latest research.

For instance, the guidance states that organizations should:

“Work to maintain a distance of at least 6 feet or more of physical separation between people or related groups when possible.”

Not only has the six-foot rule never been supported by a strong body of research proving its effectiveness (the World Health Organization has always recommended three feet, not six), a new MIT study concludes that it is largely useless and gives a false sense of security.

The study concludes that occupancy and time in a room are what matter, not distance, because the virus is carried on tiny air particles that circulate throughout an entire indoor space under normal ventilation scenarios. 

Using a school classroom with 19 students as a case study, the authors wrote:

“For normal occupancy and without masks, the safe time after an infected individual enters the classroom is 1.2 h for natural ventilation and 7.2 h with mechanical ventilation.”

By failing to incorporate the latest research, the state’s guidance could recommend practices that are not effective, while not informing managers of practices that are more effective. 

Because these are recommendations and not mandates, however, managers are free to adopt on their own initiative practices that are guided by newer research. 

The state’s switch from mandates to guidance is a good development. Had it come earlier, perhaps some of the economic damage from restrictions on businesses could have been avoided. 

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How N.H. hurts craft brewers — and consumers — to protect other businesses

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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. 

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Over-regulating small businesses, cigar bar edition

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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.

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State study: A $15 minimum wage would make N.H. poorer, less populous

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Raising New Hampshire’s minimum wage to $15 an hour would cost the state nearly 6,000 jobs and more than 9,000 residents, raise consumer prices, reduce economic output, and cause serious harm to small businesses and the leisure and hospitality industries, a new report from New Hampshire Employment Security concludes.  

The study, released Monday by the Labor Market Information Bureau, examined in detail how a minimum wage increase would affect employers and employees in the state, across all industries. It projected the impact of raising the minimum from $7.25 an hour to $9.50, then $12, then $15 by 2026. 

The findings show that, although some lower-wage employees would experience an increase in earnings, the overall economic impact on the state would be negative.

Among the report’s findings:

  • New Hampshire’s gross domestic product will be more than $800 million lower by 2031 than it would have been without a $15.00 minimum wage.
  • The state’s population will be 9,630 lower and its labor force will include 6,023 fewer individuals in response to a $15.00 minimum wage and the resulting diminished employment opportunities in the state.
  • Increases in personal income over the baseline forecast will peak at $873 million in the year the minimum wage reaches $15.00 but will decline in subsequent years in response to employment losses. The increase in personal income will, however, remain positive, and be $228 million above baseline forecast by 2031.
  • Workers in the lowest wage categories will see the largest increases in income but also experience the highest number of job losses in response to a $15.00 minimum wage.
  • Industries such as food services and drinking places, and other leisure and hospitality industries, as well as retail trade, are forecast to experience the largest job losses. These reductions in employment offset much of the benefits of increased wages for low-wage workers in those industries.
  • Aggregate price levels will increase by less than one percent across the New Hampshire economy in response to the $15.00 minimum wage, but specific industries most affected by the increase, such as the food services and drinking places industry (+7.0%), and the retail industry (+3.4%) will see substantial price increases.

Wage costs would hit some industries much harder than others, the report finds. Wage costs would rise by 1.4% in manufacturing, but 10.8% in accommodations, 18.6% in leisure and hospitality, and 20.1% in food service and drinking places.

On the economy as a whole, the study finds that “GDP will be lower in New Hampshire as a result of a $15.00 minimum wage than it would have been without the minimum wage increase, by approximately $806 million dollars by the end of the forecast period in 2031.”

If the state adopts a $15 minimum wage, the study predicts that over the next decade retail prices would increase by 2.41%, accommodations prices by 3.14% and food service & drinking places prices by 6.86%.

The report also warns that a $15 minimum wage would reduce teen employment, which could have a broad cultural and economic impact in New Hampshire.

“New Hampshire has traditionally had among the highest percentage of teenage and youth under the age of 22 participating in the labor force of any state in the nation. Opportunities for work for young people help teach solid work habits at an early age and have been important in developing New Hampshire’s reputation for having a high-quality workforce. A high minimum wage will reduce employment opportunities for youth, exacerbating trends in the decline of the youth labor force and further disadvantaging industries that are already most affected by the minimum wage hike (food services, retail, recreation) that rely on youth labor.”

The report finds that “the negative job impacts resulting from a minimum wage increase are concentrated in the lowest wage occupations, precisely the occupations that a minimum wage increase is designed to benefit.”

Furthermore, job losses for the poorest fifth of the population would not be distributed evenly throughout the state. Grafton, Coos, Rockingham and Carroll counties would experience larger job losses among their lowest-income residents, the study found.

Overall, the study concludes that raising New Hampshire’s minimum wage to $15 an hour would make the state poorer and less populous than it would have been without the minimum wage increase. Those are results lawmakers should strive to avoid, not achieve.

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