There is a south-facing bench on Concord’s Main Street, one not infrequently occupied by people who appear to be homeless. Look left from the bench and a sign on a building says, “Wealth Management.” Look right and a sign across the street on another building says, “Wealth Management.” Up and down the street, though not always announced on facades, are many buildings whose occupants offer wealth management services.
A few years back the Legislature adopted laws that make the state one of the most attractive places in the nation for wealthy people to park money where it will be safer from creditors, less likely to be nibbled away by taxes and more likely to be passed on to future generations. Institutions whose business is managing money took advantage of the changes. Whether that’s good or bad for Concord or New Hampshire is a question for another day.
What the view from the bench highlights is the gap in incomes between the people who sit on the bench or pass by on the sidewalk, and the people who pass through the doors of wealth management companies. From the bench you’ll see the State House, where earlier this fall New Hampshire Gov. Chris Sununu vetoed a bill that would have created a state minimum wage higher than the federal $7.25 per hour. The low minimum wage, economists say, is one reason why income inequality increased more in New Hampshire than in most states between 2017 and 2018. Income inequality in America is now at its greatest level in a half-century, according to the Census Bureau.
Though New Hampshire, at 7.6%, has the lowest poverty rate of any state in the nation, about 100,000 of the state’s 1.35 million residents are poor, a number the nonpartisan New Hampshire Fiscal Policy Institute says is roughly equal to the combined populations of Keene, Berlin, Exeter, Lebanon, Milford and Portsmouth.
The institute, in a report revised last month, said that the rising economic tide has not lifted all boats. Weekly wages in all counties stayed relatively flat from 2009 through 2018, the report said.
“With high costs of living and a very tight housing market, the state may be on a course of increased levels of economic insecurity. . . . In straightforward terms, those individuals in the state making the median wage ($20.95 per hour) or less actually have less purchasing power than individuals in the same situation did before the Great Recession,” researchers reported.
Why did the income gap grow? The decline in unionization played a role. So did the president’s failure to embark on a plan to rebuild the nation’s crumbling infrastructure, an effort that would have created a wealth of high-paying jobs.
Tax policy widened the gap. The pay gains of recent years went primarily to those who were already in high-paying jobs. Trump administration changes allowed the well-off to keep more of their earnings while doing little for those in the middle class and below. The fastest way to reduce the income gap, of course, would be to reverse that.
Automation eliminated millions of well-paid manufacturing jobs and led to reduced wages. Cuts at state and federal levels in support for higher education made it harder for people to acquire the skills needed to move up in the world. New Hampshire’s reliance on property taxes to fund government contributes to high rents and housing costs, making it harder for people of modest means to save.
The income gap can be narrowed. Change could start just yards from that Main Street bench, where someone making the minimum wage can sit and decide whether to spend an hour’s earnings on two lattes.