Are low-wage businesses being subsidized in N.H.?

Study finds that 64% of N.H. assistance goes to working families


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Are the state and federal governments subsidizing employers’ low wages? That’s what a study by the Berkeley Center for Labor Research and Education at the University of California suggests.

According to the report, “The High Public Cost of Low Wages,” each year the federal government and states collectively spend $152.8 billion on four public assistance programs. Of that amount, 56 percent of combined state and federal spending goes to working families.

The report found that New Hampshire is one of 11 states whose share of federal dollars to working families exceeds 60 percent. It’s the only New England state in that category.

The report examines four public assistance programs: Medicaid/CHIP (Children’s Health Insurance Program), TANF (Temporary Aid to Need Families), the Earned Income Tax Credit and food stamps (Supplemental Nutrition Assistance Program, also known as SNAP).

Between 2009 and 2011, the federal government spent $127.8 billion per year on the four programs while states spent $25 billion per year on Medicaid/CHIP and TANF.

The study examined the share states spent of federal dollars and state funds on working families. (A working family was defined as having one family member who works 27 weeks or more per year with 10 or more hours per week.)

Texas sent the largest share of federal aid to working families, at 67 percent. But New Hampshire spent the most of its own public assistance dollars, with 65 percent of state funds going to working families.

Of the $160 million in state funds New Hampshire paid into Medicaid/CHIP and TANF programs from 2009 to 2011, $104 million went to working families.

The Granite State also ranks high when it comes to the share of federal dollars going to working families. Of the $539 million New Hampshire received in federal funding, from 2009 to 2011, $344 million went to working families – that’s 64 percent.

And these numbers don’t count the implementation of the Affordable Care Act in 2014, with New Hampshire among the 28 states that will expand Medicaid.

As of 2011, New Hampshire had 94,000 individuals enrolled in Medicaid/CHIP. It has 60,000 families enrolled in EITC and 27,000 families enrolled in SNAP.

The study blames wage stagnation and the decline in employer-provided health care. Real hourly wages of the median American worker were just 5 percent higher in 2013 from 1979, a 34-year-span, the study finds. But the report points out that those in the bottom tenth of the workforce saw their wages decrease by 5 percent over that time period. And the share of non-elderly Americans receiving insurance from an employer fell from 67 percent in 2003 to 58.4 percent in 2013.

“Higher wages and employer-provided health care would lower both state and federal public assistance costs, and allow all levels of government to better target how their tax dollars are used,” concludes the study.

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