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Why New Hampshire’s low jobless rate might not be a good thing

Marco Melgrati

PORTSMOUTH, N.H. — New Hampshire has long boasted some enviable economic statistics: low poverty and crime rates, high median income. And lately, there’s been an especially eye-popping number: an unemployment rate that has dropped to 2.6 percent, the lowest in the country after South Dakota (2.5 percent).

However, not everyone in New Hampshire is cheering the news, least of all employers who are struggling to fill hundreds of vacancies and experts who are concerned the low unemployment number represents a major crimp on economic growth. As impressive as it might appear, the state’s low unemployment rate does not reflect a surge in hiring so much as it does the fact that employers are having to draw on a shrinking pool of skilled workers.


The minuscule unemployment number has “become a barrier for growth,” said Ross Gittell, the chancellor of the state community college system and a former University of New Hampshire economics professor. “We need to have that skilled workforce.”

“Obviously, it’s good news from one perspective — it means people who are in the labor market and want to work have a very good chance of finding a job,” said Brian Gottlob, a financial analyst whose firm, PolEcon Research, closely monitors state economic trends. “It’s not such great news if you happen to be a businessperson and happen to be looking for workers to operate a business.”

The problem is familiar to Gillian Tierney, the vice president of human resources for Newmarket, a software company in Portsmouth that has is seeking to fill more than a dozen openings for programmers and other high-tech professionals. “It certainly poses challenges,” Tierney said. “We have to be very creative and devote time and resources to recruiting.”

In some cases, positions have gone vacant for as long at six months at Newmarket, which occupies a spacious and immaculate office building a short drive from a charming downtown that brims with nightlife and buzzy eateries.


Although New Hampshire has seen modest job growth in recent years, the state’s labor force grew by less than 1 percent since 2010, well below the national average and the Massachusetts rate of 3 percent.

While the state once attracted thousands of professionals from Massachusetts and elsewhere with the promise of low taxes, safe suburbs, and a high quality of life, these don’t seem to exhibit the same draw for more recent generations, least of all car-averse millennials.

Since 2007, the state has experienced net out-migration of about 13,000 people, reversing a trend of in-migration that peaked in 2001 with more than 12,000 people moving to the state, according to research by PolEcon.

And so far, the tightness in the labor market hasn’t led to a significant boost in salaries, as might be expected. Last year, hourly wages in New Hampshire rose in the range of 2 percent to 4 percent, comparable to the national average.

To be sure, there are sectors of the New Hampshire economy that have seen robust growth in recent years, in particular health care, education, and high tech. As boosters will point out, the state is home to growing tech clusters in and around Portsmouth, Nashua, and Manchester, which is home to Dyn, the Internet-performance company that has been referred to as the “Google of the North.”

But no one is mistaking the current economic climate in New Hampshire with the boom years of the 1980s and 1990s, when financial services and high-tech corporations flocked to the state, and employees readily followed. From 1977 to 1990, New Hampshire was a national job growth leader, and the labor force grew by 3.2 percent, outpacing the national average.


Officials in New Hampshire are well aware that the state needs fresh blood; one recent report warned of a “silver tsunami” as the current population ages.

Gittell has been at the forefront of an effort to use the community college system as a training ground for advanced manufacturing, another sector that has seen strong growth in the state. And government and business leaders have launched programs aimed at getting young professionals to stay in New Hampshire or move there. One of them, “Live Free and Start,” aims to aims to boost the technology startup scene.

In the meantime, New Hampshire companies are increasingly turning to staffing and recruiting agencies to fill positions.

“We’re in an economy that is very candidate-driven,” said Matt Nagler, managing partner with Alexander Technology Group, a staffing firm with offices in New Hampshire and Massachusetts.

Newmarket, which is a division of Amadeus, a Spain-based information technology corporation serving the hospitality industry, has begun recruiting and training college graduates. And, to a limited extent, the company also sought to bring in workers on foreign visas, Tierney said.

Despite the concerns, New Hampshire’s low unemployment rate remains a point of pride for some officials, one that distinguishes it from Massachusetts and other Northeastern states.


“It’s a population that tends to have a strong work ethic,” said Bruce DeMay, the director of the state’s economic and market information bureau. “It’s a small state; when there is a problem, people try to resolve that problem.”

And DeMay noted that having such a low unemployment rate could itself boost New Hampshire’s economy. “That sometimes serves to attract people to the state. That happened in the mid-’80s, when the unemployment rate was very low and people were moving to New Hampshire,” he said. “That may serve as a magnet again.”