Column: Ends Don’t Meet on $7.25 an Hour

Sunday, April 27, 2014
In national surveys and reviews, New Hampshire is frequently touted for its high quality of life, scoring well relative to other states for its low poverty and crime rates, measures of health and other indicators of well-being.

Yet a pair of recent national analyses highlight just how expensive it can be to live in the Granite State and the challenges the high cost of living poses for low-wage workers.

For 25 years, the National Low-Income Housing Coalition has examined housing affordability in each of the 50 states through its series of “Out of Reach” reports. In particular, it calculates a “housing wage” for hundreds of communities across the United States — how much someone must earn on an hourly basis to be able to afford a nearby two-bedroom apartment without spending more than 30 percent of his or her income, a widely accepted guideline for affordability. For 2014, it finds that, on average, the housing wage in New Hampshire is $20.18 per hour, making it the 11th most expensive state in the nation for renters. Not surprisingly, the housing coalition also finds that only 47 percent of renters in New Hampshire actually earn that wage.

These findings underscore just how difficult it can be for low-wage workers to make ends meet in New Hampshire, especially if they are paid only the state’s current minimum wage of $7.25 per hour. Indeed, someone earning the minimum wage would have to work 111 hours per week — the equivalent of 2.8 full-time jobs — just to be able to afford the statewide fair-market rent of $1,049 per month without squeezing out every other part of his or her budget.

Notably, in Grafton County the situation is only slightly less dire. The housing coalition estimates that the average fair-market rent for a two-bedroom apartment in the county is $1,016 per month, which works out to a housing wage of $19.54 per hour or the equivalent of 2.7 full-time jobs at minimum wage.

Governing magazine earlier this year asked a similar question about just how far the minimum wage might go and discovered some equally troubling answers for New Hampshire — or at least for its largest city. Based on statistics developed by the Council for Community and Economic Research to compare the cost of living among urban centers, Governing calculated that the $7.25 per hour that minimum wage workers earn in Manchester would allow them to purchase just $6.01 worth of goods and services relative to other cities. In other words, New Hampshire’s minimum wage doesn’t put nearly as many groceries in the cabinet or shirts in the drawer in Manchester as it does in other cities. In fact, Governing performed this calculation for 308 other metropolitan areas across the country and found that Manchester’s cost-adjusted minimum was the 15th lowest in the United States.

New Hampshire policymakers have an opportunity, before the end of the current legislative session, to help bridge the gap between what minimum- wage workers earn and the cost of basic necessities such as rent, food and clothing. More specifically, legislation now before the state Senate would raise New Hampshire’s minimum wage to $8 per hour in 2015 and then to $9 per hour in 2016; beginning in 2017, it would automatically adjust the minimum wage for inflation each year as well. If enacted into law, the bill would increase the pay, either directly or indirectly, of more than 75,000 workers across the Granite State — or roughly 12 percent of the state’s work force. Of that total, more than 7,500 workers call Grafton or Coos counties home.

Importantly, those workers who would be affected by a minimum wage of $9 per hour would experience an average annual pay increase of $870, meaning that a total of $64 million in additional wages would be paid out over the next two years. Since low-wage workers spend every dollar they earn, by necessity, these wage increases would benefit small businesses and communities across the state.

In the end, New Hampshire isn’t alone in experiencing a high cost of living. In many respects, New England as a whole is a more expensive place to live than other parts of the country. Each of the other New England states has responded by setting minimum wages above the federal floor of $7.25 per hour. It’s time for New Hampshire to join them.

Jeff McLynch is executive director of the New Hampshire Fiscal Policy Institute. Elissa Margolin is executive director of Housing Action NH.