Volinsky: New Hampshire's Minimum Wage Is A Tragedy

By ANDRU VOLINSKY, InDepth NH

NH’s minimum wage matches the federal level, which is $7.25 an hour ($15,500 annually if one works 2000 hours). NH is the only state in New England that still uses $7.25 as its minimum wage. Only fourteen other states join NH in this scrimiest of the scrimy status.

MIT has a living wage calculator that estimates a robust living wage for a single adult in NH at $24.78 an hour ($49,560 per year). A “living wage” is the “local wage rate that a full-time worker requires to cover the costs of their family’s basic needs where they live.” The calculator also provides living wages for couples and families. A two-parent family with one child where both parents work requires a living wage of $25.09 per hour for each parent working full time or around $100,000 per year. A single parent family with one child, according to the MIT calculator, requires a living wage of $44.93 an hour ($89,860 per year).

A starting teacher in the Pittsfield, NH school district earns an annual salary of $35,668 or $17.83 an hour. Assuming the teacher earns $5,000 from a summer job, that brings our new teacher to an annual hourly wage of $20.33 an hour, four and a half dollars less per hour than a living wage.

As compared to NH’s $7.25 minimum wage, Maine’s minimum wage is $14.65, going to $15.10 in January 2026. Vermont’s minimum wage is $14.01. Portland (Maine, not the one under siege) has a ballot measure next month that will boost its minimum wage to $19.00 per hour.

NH’s Housing Costs are High

The MIT calculator also “shows its work” by providing the costs used in its calculator. For NH, a single person’s housing costs are $15,473,. Add $6000 if the single person has a child. For Maine, housing is costed out at $12,612 for a single person, add $5000 for a child. For Vermont, the figures are $13,706, plus $5000.

An Income Tax Would Help

If NH adopted an income tax with an exemption tied to the cost of a living wage, NH would go a great distance towards addressing its very high cost of housing because it would cut property taxes. A flat income tax for education of just 3 percent would pay for public schools and take a huge bite out of our local property tax bills.

Wouldn’t an income tax offset any reduction in housing costs? Not for most people who live in NH.

NH’s housing costs are $2-3000 more each year than Vermont’s and Maine’s, $3,000 to $4,000 more for a two parent family with a child. Maine and Vermont both have income taxes, property taxes and sales taxes. Are the Maine and Vermont advantages in lower housing costs offset by higher tax burdens? The answer is a resounding NO.

Maine and Vermont have a real advantage over NH in the cost of housing that is not offset by higher taxes even though Maine and Vermont have an income and sale tax. The difference in state and local taxes, according to MIT, is that NH’s tax burden is $7111 per year for a single person and $9575 for a family of two parents and one child. For Maine, state and local taxes are $7661 for a single person and $10,323 for the three-person family. For Vermont, the same taxes are $6,954 for a single person and $10,891 for the three-person family.

The result is that a flat 3 percent tax for education that exempts the first $35-$50,000 of income for a single person means that housing costs will go down and taxpayers won’t experience an increased tax burden, particularly those who earn at or below the state’s average income. The same advantage holds for a small family with earnings in the $70-100,000 range.

Maine and Vermont have real advantages that show us how this works even though Maine’s and Vermont’s income deductions are far less than $35-$50,000 and their current income tax rates are much higher than 3 percent. Housing costs go down with a broad-based tax structure and, for most families, the tax burden either doesn’t go up or goes up by less than the decrease in property taxes.

Let’s start talking seriously about a 3 percent income tax with a $35,000 deduction for NH residents coupled with a SWEPT on second homes. A well-balanced tax system where everyone pays their fair share will reduce housing costs and most NH residents will pay less in state and local taxes.

This article first appeared on InDepthNH.org and is republished here under a Creative Commons license.