New Hampshire labor market recovery lagging behind country, says Moody’s
New Hampshire’s labor market has recovered some of the ground lost during the COVID-19 pandemic, but it remains below its pre-pandemic highs, economists testified to lawmakers on Friday. And the state is lagging behind the rest of the country when it comes to the percentage of residents participating in the workforce, according to an analysis by Moody’s Analytics.
During an all-day series of presentations before the House and Senate Ways and Means committees Friday, Dan White, director of government consulting and fiscal policy research at Moody’s Analytics, and Phil Sletten, senior policy analyst at the New Hampshire Fiscal Policy Institute, said the data points to a mixed picture for the state’s recovery from the worst days of the pandemic.
While the “gross state product” for New Hampshire has bounced back to around $78 billion in the third quarter of 2021 – roughly the same level as in the months ahead of the emergence of COVID-19 in 2020 – the number of residents employed has struggled to return with equal force. As of the end of last year, the total number of employed people in the state has hovered just below 740,000, about 20,000 fewer than in early 2020. And growth in the number of employed in the state appears to have flattened out since early 2021.
New Hampshire’s recovery also appears to be slowing compared to the rest of the country. While the national labor force participation rate has gradually climbed toward 99 percent since it dropped in 2020, New Hampshire’s labor participation rate has fallen several percentage points since early 2021 and continues to fall, most recently landing at just under 97 percent.
“That’s not something we’re seeing in a lot of states,” White said in a virtual presentation to Republicans and Democrats Friday.
White and Sletten have pointed to a number of potential factors suppressing the Granite State’s labor recovery. The number of people working in the state has dipped despite the fact that the overall number of jobs has nearly returned to pre-COVID levels, suggesting that a smaller group of people may be working multiple jobs, White said.
Another reason, Sletten said: Older workers and younger adults appear to be dropping out of the workforce in New Hampshire. Adults aged 55 to 74 and 25 to 34 have shown the greatest drops in labor participation, New Hampshire Employment Security numbers show.
“For people entering traditional retirement age, this is not necessarily a surprise,” Sletten said. “But there may also be some health factors associated with people saying, ‘I’m potentially more at risk than other age groups; I’m going to take myself out of the labor force over the course of the pandemic.’ So we don’t know how much of this is temporary and how much is permanent.”
Different industries have seen different rates of people returning to work, too. While the number of jobs in the arts, entertainment, and recreation sector, and the accommodation and food services sector, has dramatically increased since its 2020 dip, jobs in other state industries such as manufacturing and retail have not seen recoveries, according to data from New Hampshire Employment Security.
Speaking to the state’s broader economy, White warned that Russia’s invasion of Ukraine had upended economists’ previous projections that high inflation in the United States might subside by the end of year. Depending on how long the war continues, food and gas prices could remain high for months longer.
New Hampshire, he suggested, could experience a slightly greater impact than other areas of the country.
“I think the bigger impact will be the fact that New Hampshire is in the Northeast,” White said. “Most of New Hampshire’s global trading partners are in Europe. Europe is being hit by an outsized impact from the Ukraine conflict. So as the European economy starts to stutter a little bit as a result of this conflict, a lot of the trading partners for New Hampshire firms are going to be having trouble as well.”
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