The COVID-19 pandemic created a range of health, economic, and social policy challenges for New Hampshire. Changes in economic conditions have deepened existing challenges for vulnerable populations and communities, while other households have faced new challenges around decisions regarding employment and child care that they had never anticipated. As New Hampshire seeks to accelerate its economic recovery, this study focuses on key factors that impact the decision-making of households and may serve as constraints to returning to the workforce or expanding their participation.
This study began in December 2019 pursuant to a legislative requirement to understand the economic implications of benefit cliffs. These “cliffs” result from situations in which increases in earned income lead to decreases in net resources for households due to a loss of program benefits, disincentivizing workforce participation. These cliffs can lead to either short-term losses for these households or long- term losses if households opt for (rational) short-term choices to forgo potential wage increases that lower their long-term earnings trajectory and economic mobility, which thereby also limits economic growth, particularly important in a state like New Hampshire with an aging workforce and historically low (at the time) unemployment levels.