New Hampshire

Basic Needs and a

Livable Wage

Daphne A. Kenyon, Ph.D.

President, The Josiah Bartlett Center for Public Policy

Project Directors:

North Country Council, Inc.

NH Small Business Development Center

UNH Office of Economic Initiatives

USDA Rural Development

June, 2000

New Hampshire Basic Needs and a Livable Wage

TABLE OF CONTENTS

Table of Contents........................................................................................................................................ i

List of Figures and Tables........................................................................................................................ ii

Foreword.................................................................................................................................................... iii

Acknowledgements.......................................................................................................................... Page 1

Findings of Study.............................................................................................................................. Page 1

Appendix....................................................................................................................................... Page A-1

Definition of North Country...................................................................................................... Page A-2

Methodology............................................................................................................................ Page A-17

Child Care......................................................................................................................... Page A-17

Clothing/Household Expenditures................................................................................... Page A-18

Food.................................................................................................................................. Page A-18

Health Care........................................................................................................................ Page A-20

Personal Expenses............................................................................................................. Page A-21

Rent & Utilities.................................................................................................................. Page A-21

Saving................................................................................................................................ Page A-22

Taxes................................................................................................................................. Page A-22

Telephone.......................................................................................................................... Page A-22

Transportation................................................................................................................... Page A-22

References .............................................................................................................................. Page A-24

New Hampshire Basic Needs and a Livable Wage

LIST OF TABLES AND FIGURES

Findings of Study

Estimated Livable Wage for New Hampshire, 1999; North vs. South.......................................... Page 2

Estimated NH Livable Wage by County by Household Type, 1999.............................................. Page 3 Composition of Budget for Single Parent with Two Children........................................................ Page 4

Composition of Budget for Two Parents, One Child, One Parent Nonworking............................ Page 4

Estimated Livable Wage, 1999 – County by County Map,

Single Parent with Two Young Children.................................................................................. Page 5

Estimated Livable Wage in Northern New England States,

Single Parent with Two Young Children................................................................................. Page 6

Appendix

Estimated Cost of Basic Needs and Livable Wage, 1999 – North vs. South

Two parents with two children (both parents working)....................................................... Page A-3

Two parents with two children (one parent working) ......................................................... Page A-4

Two parents with one child (both parents working)........................................................... Page A-5

Two parents with one child (one parent working).............................................................. Page A-6

Single parent with two children........................................................................................... Page A-7

Single parent with one child................................................................................................. Page A-8

Single person........................................................................................................................ Page A-9

Estimated Cost of Basic Needs and Livable Wage, 1999 – County by County

Two parents with two children (both parents working).................................................... Page A-10

Two parents with two children (one parent working)....................................................... Page A-11

Two parents with one child (both parents working)......................................................... Page A-12

Two parents with one child (one parent working)............................................................ Page A-13

Single parent with two children......................................................................................... Page A-14

Single parent with one child............................................................................................... Page A-15

Single person...................................................................................................................... Page A-16

Methodology

Cost of child care in New Hampshire by household type................................................. Page A-18

Cost of clothing/household expenditures by household type........................................... Page A-18

Health care cost per month for Healthsource by household type...................................... Page A-20

Miles traveled per year by household type......................................................................... Page A-23

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FOREWORD

New Hampshire Basic Needs and a Livable Wage

This study is part of a larger examination of the North Country’s economy. During the 1998 Overall Economic Development Planning Process led by North Country Council, North Country residents expressed concern regarding the lack of quality job opportunities and an adequate labor pool in the region. In response, representatives from the North Country Council, UNH Office of Economic Initiatives, the NH Small Business Development Center, and USDA Rural Development decided to study the problem through a business and worker opinion survey. It soon became apparent that quantifying the North Country’s cost of living, in general and relative to the rest of the state, was essential to defining quality employment. And, despite the initial focus on the cost of living in the North Country, it was decided that cost of living estimates for the whole state would be valuable as well.

Livable wage data have become essential in informing economic development goals and policies. A number of other states, including Idaho, Maine, Massachusetts, Minnesota, Montana, Oregon, Pennsylvania, Vermont and Washington, have prepared livable wage studies.

Daphne A. Kenyon, Ph.D., an economist and President of The Josiah Bartlett Center for Public Policy in Concord, was hired to undertake New Hampshire’s livable wage study. She has an extensive background in economic analysis and was, until recently, the Chair of the Economics Department at Simmons College. We would like to thank those experts who served as reviewers of the draft study: Martin J. Capodice, Research Analyst, Economic and Labor Market Information Bureau, New Hampshire Employment Security; Tom Deans, President, Northern NH Foundation; Douglas E. Hall, Executive Director, New Hampshire Center for Public Policy Studies; Roberta Harold, State Director, US Department of Agriculture Rural Development; Douglas R. Hoffer, Research Director, Peace & Justice Center, and co-author of the Vermont livable wage study; and Christopher St. John, Executive Director, Maine Center for Economic Policy and co-author of the Maine livable wage study.

We would also like to thank the Anne Slade-Frey Charitable Trust, NH Community Development Finance Authority; NH Small Business Development Center; North Country Council, Inc.; Northern NH Foundation; UNH Office of Economic Initiatives; US Department of Agriculture Rural Development; and the US Economic Development Administration for their generous support of this study. North Country Council, Inc. and the UNH Office of Economic Initiatives contracted directly with The Josiah Bartlett Center for Public Policy.

Jeffrey R. Hayes, Economic Development Director, North Country Council, Inc.

Janice B. Kitchen, Director, UNH Office of Economic Initiatives

Mark D. Koprowski, Community and Business Outreach Specialist,

US Department of Agriculture Rural Development

Elizabeth A. Ward, Research Director, NH Small Business Development Center

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New Hampshire Basic Needs and a Livable Wage

Researchers

Daphne A. Kenyon, President, The Josiah Bartlett Center for Public Policy

Bethany R. Peragallo, Intern, The Josiah Bartlett Center for Public Policy

Marina Skaperdas, Consultant, The Josiah Bartlett Center for Public Policy

Administrator and Editor

Lisa Jo Steiner, The Josiah Bartlett Center for Public Policy

Funders

Anne Slade-Frey Charitable Trust

NH Community Development

Finance Authority

NH Small Business

Development Center

North Country Council, Inc.

Northern NH Foundation

UNH Office of Economic Initiatives

US Department of Agriculture

Rural Development

US Economic Development

Administration

Reviewers

Martin J. Capodice, Research Analyst, Economic and Labor Market Information Bureau, New Hampshire Employment Security

Tom Deans, President, Northern NH Foundation

Douglas E. Hall, Executive Director, New Hampshire Center for Public Policy Studies

Roberta Harold, State Director, US Department of Agriculture Rural Development

Douglas R. Hoffer, Research Director, Peace & Justice Center

Christopher St. John, Executive Director, Maine Center for Economic Policy

FINDINGS OF STUDY

A livable wage can be defined as income sufficient to meet a household’s basic needs. This report estimates the cost of basic needs in New Hampshire for different household types. These basic needs include:

food, but not restaurant meals

rent, and utilities such as heat, lights, and water, but not cable TV service

basic telephone service

clothing and household expenses

transportation

child care, assuming that children are between 4 and 6 years

health care

a small allowance for personal expenses (3% of a household’s budget)

savings (5% of a household’s budget).

In recent years, the livable wage has been estimated for a number of states including Idaho, Maine, Massachusetts, Minnesota, Montana, Oregon, Pennsylvania, Vermont, and Washington. This is the first such study for New Hampshire, although a cost of living study done for the New Hampshire legislature in 1991 uses much the same methodology (Bailis and Burbridge 1991).

Although many of the living wage studies across the country have been used as a springboard for a political action campaign to raise the minimum wage, there is no such objective for this study (The Wall Street Journal 1999). The aim of this study is to gather statistical data for the state of New Hampshire, and for subregions of the state. First, the North Country is compared with the rest of New Hampshire. The North Country includes all of Coos County and the northern parts of Carroll and Grafton counties (for a listing of towns included, see the Appendix.) Next, data for each county are compared to each other and the state average.

Although this study follows most closely the format of the Vermont study, it does include some innovations (Peace and Justice Center 1997 and 1998). Residential rent, utility, food, and telephone cost data are more detailed, state-based data for the New Hampshire study than were available for the Vermont study.

1

Since the New Hampshire Housing Finance Authority (NHHFA) does an annual survey of residential rents and utility costs by county, it seemed sensible to use this detailed state data for the study. These utility costs, which are sometimes included in residential rents, and were estimated by the NHHFA when they were not, include heat, hot water, cooking fuel, and lights. Because food is the next largest expenditure after rent and utilities, we decided to collect data on grocery prices around the state in order to obtain detailed state data on this component of basic needs as well. Basic telephone rates were obtained from tariffs provided by the Public Utilities Commission of New Hampshire and from telephone books published this year by Bell Atlantic. Thus, we have detailed, state data on the manner in which costs of rent, utilities, food and telephone vary across the state.

New Hampshire Basic Needs and a Livable Wage

We have also used recent state data on child care and health costs in this study. The 1998 child care survey which we used had insufficient sample size to identify costs by location in the state (Wallner 1998). There are now only two large insurers in the New Hampshire health insurance market, so that health insurance costs do not vary across the state.

We included one additional category of expenditure that was not included in the Maine or Vermont studies but in an updated study for the Vermont legislature (Kavet et al 1999). This is an allowance for savings. Without some savings any family is vulnerable to economic emergencies. Furthermore, the family needs savings to prepare for retirement. For those reasons, we allowed a 5% addition to monthly expenditures for savings. Thus, all else equal, the New Hampshire living wage estimates are going to be about 5% higher than the estimates for other states that do not make an allowance for savings.

Living costs have been estimated for seven household types:

^·^{Single
person}

^·^{Single
parent and one child}

^·^{Single
parent and two children}

^·^{Two
parents with one child and one parent working}

^·^{Two
parents with one child and both parents working}

^·^{Two
parents with two children and one parent working}

· ^{Two
parents with two children and both parents working.}

The following table summarizes our estimates of what constitutes a living wage for the seven family types, reported as an hourly wage, comparing the North Country to southern New Hampshire and the state average:

These estimates range from $8.04 for a single person in the North Country to $18.92 for a single person with two children living in southern New Hampshire. When both parents work, the hourly wage reported is the wage that would be required for each parent.

2

The next table summarizes our estimates of what constitutes a living wage for the seven family types, reported as an hourly wage, for each county and the state average. Now the variation in livable wage estimates is even greater. The minimum is the $7.63 hourly wage needed for a single person in Coos County to be self-sufficient. The maximum is the estimated $19.56 hourly livable wage for a single person and two children in Rockingham County.

New Hampshire Basic Needs and a Livable Wage

It is also interesting to note how the composition of household budgets varies. The pie charts below show two of the polar cases. If a New Hampshire family has two parents and one child, with one parent out of the labor force, we estimate that 32% of their basic needs budget goes to rent and utilities, but they need no funds for child care. In contrast, a single parent (assumed to be working) with two children would spend 27% of her budget on child care, which exceeds the 25% estimated to be needed for rent and utilities.

Some of the more important assumptions made in estimating living costs include the following. We assumed that the children were young and required paid child care unless one parent did not work. As other studies have done, we estimated only the cost of eating at home, and did not include estimates of the proportion of food eaten at restaurants or the cost of those meals. Since our goal is to estimate the costs of meeting a household’s basic needs this omission appears sensible. We assumed that there was at least one worker in each household and that the workers receive employer-provided health insurance. We assumed that a single person lived in a one-bedroom apartment, and that all other families lived in two-bedroom apartments. Finally, the method for estimating transportation costs assumes that the household owns a car.

The first seven tables in the Appendix report the estimated cost by category of expenditure, annual income, and equivalent hourly wage for each of the seven family types for the North Country, southern New Hampshire, and the state as a whole. According to these estimates, depending upon family type, the cost of living in the North Country is from 6-11% lower than the cost of living for the rest of New Hampshire. The only expenditure category for which costs are higher in the North Country is food. This arises because there are fewer large supermarkets, which are the stores with the lowest grocery prices. However, rent and utility costs are much lower in the North Country.

It is important to note that although living costs are lower in the North Country, wages are lower as well. The North Country Business and Worker Opinion Survey reported that wages in the North Country labor market areas averaged 20-40% less than the state average (North Country Council, Inc. et al 2000: 11).

The next seven tables report the equivalent estimates for each of the seven household types for each county in New Hampshire. On the following page is a map that summarizes the county estimates for one family type—a single parent with two young children. The hourly livable wage ranges from a low of $16.57 in Coos County to a high of $19.56 in Rockingham County. It is clear that living costs increase as one moves from the northern tip of the state to the south and east.

4

New Hampshire Basic Needs and a Livable Wage

The table below compares estimated living wages in New Hampshire, Maine and Vermont. The estimates for New Hampshire are higher than for the other northern New England states and there are several reasons for this. In the case of Vermont, the table compares 1998 Vermont estimates with 1999 New Hampshire estimates, and estimates are going to be higher for the most recent year. Further, New Hampshire’s estimates will be about 5% higher because savings is included as an expenditure category. In addition, New Hampshire has the most robust economy of the New England states, which will tend to increase prices. There may be other methodological differences that also contribute to differences in living wage estimates.

The next study, The Availability of Livable Wage Jobs in New Hampshire, will compare the wages of jobs offered in the state to the estimated livable wages presented in this report. The basic question raised is: What percent of available jobs in the state pay a livable wage? We look at the different family types and jobs available by labor market area to conduct the analysis. To the extent that jobs do not pay a livable wage, there are many possible implications. The North Country Business and Worker Opinion Survey found that twice as many workers held more than one job in the North Country than in New Hampshire as a whole (North Country Council, Inc. et al 2000: 10). This may be one reaction to a lack of livable wage jobs.