“Benefit cliffs” and a shortage of child care are among the most significant factors holding back the post-pandemic recovery of New Hampshire’s workforce, according to a consultant’s report released Tuesday by three state agencies.
Since the waves of layoffs in the spring of 2020, recovery has been uneven, the report noted. Suburban workers have bounced back while those who live in the most rural areas and in the cores of New Hampshire’s cities have continued to struggle. Women lost their jobs and have left the workforce in higher numbers than men after losing jobs in the decimated retail, hospitality and health care sectors, and to stay home to care for children.
These issues threaten to hold back the state’s recovery, the report said.
“Not addressing these barriers negatively impacts New Hampshire’s economy,” said Richard Lavers, deputy commissioner of employment security, in a statement. “The reasons why someone is filing for unemployment together with the issues surrounding child care are so important to better understanding our continued path to economic recovery and growth.”
The report, conducted by Econsult Solutions and the National Center for Children in Poverty, was commissioned by the New Hampshire Department of Health and Human Services, the Division of Economic and Housing Stability, and New Hampshire Employment Security.
Because of the number of business closures over the last year, the report predicts the “new normal” in the restaurant, hospitality and health care sectors will not much resemble the tight labor market of 2019.
More than 6,500 women who filed for unemployment between April and September 2020 said they were out of the workforce because they had to care for children.
Child care was a heavy burden on poor and working-class families before the pandemic, the report said.
The average cost for one year of care for an infant was $13,000 in 2019. That sum would have eaten up 12% of the pay for a two-parent household making the state’s median income — about $76,000, according to U.S. Census data. A year of care for an infant would cost 40% of the annual income of an average single parent in New Hampshire, the report said.
If the family had a 4-year-old and an infant in day care, the report estimated the average cost for a year of care was $23,600 in 2019.
The state’s shortage of high-quality, affordable child care has only gotten more acute.
Pre-pandemic, the report estimated there was only enough child care for about 60% of the children under age 6 who needed day care. In October 2020, the report estimated there was enough space in child care for 50% of children under 6. More than 6,000 child care seats have been lost to closed child care businesses, the report estimated.
Parents of school-aged children were not spared child care headaches this year: the report estimated 34,000 families where all adults were working also had to supervise remote learning.
The other major barrier identified in the report to rejoining the workforce was the “benefit cliff” effect: when a family starts making enough money to no longer qualify for public assistance, but the new income doesn’t make up for the lost benefits, like health insurance or aid to buy food, pay rent and cover utility bills.
Workers considering a job that would pay enough to make them ineligible for Medicaid health insurance, but that does not come with its own health insurance and does not pay enough for a private insurance plan, might make the choice to remain unemployed.
State Economic and Housing Stability Director Christine Santaniello said in a Tuesday statement that it would be important to look at the real incentives people have to take a job, or turn one down. “Instead of a benefits cliff, we envision more of an offramp where families can gradually move away from public assistance and toward upward economic mobility,” she said.