The Bulletin Board

Policy analysis sees investment in aid programs as key to economic recovery

By: - September 3, 2021 3:21 pm
A now hiring sign

There’s been much celebration over the state’s latest 2.9 percent unemployment rate, but in its brief released Wednesday the New Hampshire Fiscal Policy Institute warned the rate masks the true drop in the labor force. (Joe Raedle | Getty Images)

The New Hampshire Fiscal Policy Institute’s latest look at the state’s pandemic employment recovery draws a good news, bad news, good news conclusion.

Unemployment numbers are dropping. We’re still not where we were pre-pandemic, however, largely because of a lack of child care – and lower-wage workers have been particularly hard hit. But, we could turn things around – for the state and struggling residents – with the billions in pandemic relief money flowing into the state.

There’s been much celebration over the state’s latest 2.9 percent unemployment rate, but in its brief released Wednesday the institute warned the rate masks the true drop in the labor force. Unemployment claims don’t reflect the people who’ve stopped looking for work, largely because they can’t find child care. Many of those harmed the most are the ones who can least afford it: lower-income workers earning $27,000 a year or less. According to the institute’s analysis, as of late June, lower-income employment levels were 16.4 percent below pre-pandemic levels. 

A graph of uneven changes in employment
(Source: New Hampshire Fiscal Policy Institute)

That’s left not just those would-be workers struggling. Their absence from the workforce has employers across all sectors so desperate for staff some are limiting hours and services.

“The uneven impacts of the pandemic on certain groups of workers and industries, and the recovery not yet reaching all of those most affected, has resulted in lingering economic challenges in New Hampshire,” wrote Mike Polizzotti, policy analyst with the New Hampshire Fiscal Policy Institute and the brief’s author. 

Here’s where the institute sees some good news: The pandemic that put the state in a financial and health crisis could also be its salvation. The over $9 billion the federal government has provided local businesses, nonprofits, individuals and families, and state and local government has been a lifeline, it said. 

Emergency rental assistance kept the most vulnerable people housed. The expansion of the child tax credit and earned income credit have provided people critical support, and adults and children have benefited from a 15 percent increase in the Supplemental Nutrition Assistance Program, known in New Hampshire as the food stamp program. The institute pointed to a 2009 study done during the initial recovery from the Great Recession that showed food stamps were the most effective federal economic stimulus, generating $1.74 in economic activity for every dollar invested. 

State and local governments have an opportunity to keep this recovery going, Polizzotti wrote, by carefully targeting the latest round of $1.47 billion in federal funding headed to the state and local governments under the American Rescue Plan Act. 

“The American Rescue Plan Act provides policymakers with significant latitude to respond to the immediate needs faced by many workers disproportionately impacted by the pandemic,” it said. Many local governments say they intend to use the aid for investments in infrastructure like water and sewer, but the allowed uses are much broader.

In his brief, Polizzotti urged governmental leaders to take advantage of that flexibility. One recommendation included hiring “public benefit navigators” who could connect people with public assistance and benefits, as well as social assistance programs they may not know about. Manchester has incorporated this into its plan by creating a community outreach program that will deploy outreach workers to each of the city’s wards.

The trajectory of the ongoing recovery is dependent in part on how public policy directs resources to support the recovery,” Polizzotti wrote.

In an interview Friday, he noted that state and local communities have three years to decide how to use this new federal money and five to spend it. Asked if the state should use its portion of the latest federal aid to continue the newly expanded aid, Polizzotti responded by citing past research of the positive impact public benefits can have.

“These programs and a lot of this aid will directly support those individuals that were impacted and unevenly impacted the most,” Polizzotti said in an interview Friday. “The state has a lot of flexibility. The funds don’t need to be allocated until 2024 and (the state has) until 2026 to spend it. There’s also more opportunity for longer term investments as well.” 

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Annmarie Timmins
Annmarie Timmins

Senior reporter Annmarie Timmins is a New Hampshire native who covered state government, courts, and social justice issues for the Concord Monitor for 25 years. During her time with the Monitor, she won a Nieman Fellowship to study journalism and mental health courts at Harvard for a year. She has taught journalism at the University of New Hampshire and writing at the Nackey S. Loeb School of Communications.