ESI was commissioned by the New Hampshire Department of Health and Human Services to study the potential for graduated assistance programs to help mitigate benefit cliffs. The study follows up on a 2021 study by ESI for the New Hampshire Benefits Cliff Working Group that resulted in several recommendations that have been implemented by the state.
Benefits cliffs arise when increases in earned income cause a reduction in or loss of benefits, leaving households worse off financially and disincentivizing labor force participation. With an aging population and historically low unemployment, New Hampshire’s economic growth is constrained by its ability to attract the workforce needed to meet demand in growing industries. As New Hampshire residents age out of the workforce, the state’s working age population is stagnant and shrinking in some areas of the state.
This study expands upon prior research on the topic, conducting research on potential options to mitigate benefits cliffs along several tracks:
- Analysis of additional benefit programs (including WIC) through a detailed review of the rules governing each program and economic modeling of how household composition and earned income levels impact the dollar value of benefits received.
- Outreach led by the consulting firm Pear Associates, who interviewed employers and led focus groups of workers and individuals who receive benefits to get their perspectives on how benefits cliffs affect people’s lives and decisions.
- Review of efforts to date in New Hampshire and other states to identify common or promising policy approaches to mitigating certain key benefits cliffs and workforce participation challenges.
- An analysis of policy options that New Hampshire might employ to address benefits cliffs, including modeling that estimates how new policies could affect people’s labor market decisions, the level of economic activity in New Hampshire, and the fiscal costs and benefits to the state.