What is New Hampshire: Economy

Preface

As this is being written, New Hampshire and the country continue to rebound from the COVID-19 recession, with many questions about the path to recovery and challenges to its success remaining. The long-term impact of the pandemic and its effects on the economy are hard to predict. Will this be an economic inflection point that will have long-term implications? Will remote work become the norm, allowing the state to retain and attract an influx of residents seeking the amenities that New Hampshire has to offer and, perhaps, relief from health fears associated with more densely populated areas? Will the small businesses that have closed re-establish themselves, be replaced soon, or, for some of them, is their niche in the economy gone? Will the job cuts that have occurred at businesses large and small turn into permanent losses, be fully restored, or will those lost jobs be replaced by others? Will inflation return to being the perpetual concern that it was in earlier decades? The answers to these and other questions will take time to unfold.

When looking forward, even in uncertain times, it is important to know where one is coming from. At different points in our analysis, we will focus on (a) 2019 and prior years, to show the economy that we may or may not be returning to, (b) 2020 to show the impact of COVID-19, and (c) 2021 to get a sense of where we are on the road to recovery.

Introduction

The economy of a nation, region, or state is the sum of its people’s economic activities: we work, buy things, save, and invest. The New Hampshire economy primarily consists of the activities of the state’s 1.4 million residents who work, consume, save, and invest in the state. The economic roles of businesses and governments in this economy are as mechanisms for us to join together as workers, investors, and residents for the purpose of achieving our economic objectives—to prosper. Government also plays the role of helping people and businesses when they’re down, whether because of individualized circumstances or because of a public crisis—a global pandemic, for example. When the private economy is failing to provide opportunity, or even sustenance, government steps in.

One can describe the “New Hampshire economy,” but the state is not an economic island. Many of us work, consume, and invest outside of New Hampshire as well as within. Visitors, commuters, and outside investors contribute to the economic success of the state as well as those of us who live and work here. The New Hampshire economy is part of the regional, national, and global economies that have an enormous impact on what happens here—a fact driven home by the impact of a global pandemic.

Every state has an interconnected economy, with its economic well-being more determined by events beyond its borders than within. This is, however, particularly true of New Hampshire with eight of our ten counties, which encompass close to 85 percent of our population, sharing a border with another state. The three counties bordering Massachusetts, where about 60 percent of our population resides, play a particularly outsized role in any statistical analysis of the state’s economy.

This section of What is New Hampshire? describes the major features and trends of New Hampshire’s economy. We welcome feedback on how this section may be improved. Are there areas of the economy that you’d like us to cover in more detail or other challenges that we should highlight? Please let us know by emailing Carsey.WINH@unh.edu.

Throughout this section, supplemental maps, charts, and tables are available by clicking on the small blue boxes with descriptions of the material. In addition, there are larger gray boxes that have additional explanatory text which can be accessed by clicking on the "+" next to its description.

The COVID-19 Recession

The years of 2020 and 2021 were excruciating in a number of ways—not least of which is the economic destruction that has accompanied the world’s public health crisis. The COVID-19 recession has had a huge negative financial impact on the New Hampshire economy. Jobs were lost, production was reduced, and businesses closed. All the problems that result from lost employment and shuttered storefronts ensued. Those problems have been significantly mitigated by aggressive federal government intervention—but the impact has been severe.

Payroll Employment

Of the 689,000 payroll jobs that existed in February of 2020 in New Hampshire, over 116,000 had disappeared by April 2020. The unemployment rate spiked from 2.6 percent to 16 percent. The percentage of the adult population employed fell from over 67 percent to less than 55 percent. The size of the economy dropped by over 11 percent between the fourth quarter of 2019 and the second quarter of 2020.

Of the 116,000 jobs lost between February and April of 2020, 33,000 of them were in the Accommodations and Food Service segment of the Leisure and Hospitality sector. An additional 15,000 were in Health Care and Social Assistance as medical offices and child care centers closed their doors. Retail employment dropped by 17,000. Every industry was down in employment except Finance and Insurance.

The road back has been a bumpy one. The collapse of March and April was followed by a rebound as the initial employment impact of COVID-19 abated. The economy then hit the limit of how fast it could grow as long as the virus was prevalent. With the coming of vaccines there was improvement, but it has not been steady—as economic and health constraints on recovery have varied in their impact from month to month.

Chart 1. Monthly Job Change, Mar 2020 to Dec 2021

Source: Bureau of Labor Statistics, Current Employment Statistics

By the end of 2021 over 80 percent of the jobs lost had been recovered and payroll employment was growing steadily. Businesses are coming back from the short-term alterations to their operations and adjusting to new norms. Closed businesses are slowly being replaced. Many workers have moved on from their pre-pandemic occupations, leaving labor shortfalls in some industries. With so much adjustment and uncertainty and rebuilding, it will take some time for the state to fully establish a new economic footing. The big unknown, of course, remains COVID. Without a more universal commitment to vaccination, the risks of further damage to the economy from recurring spread cannot be discounted. 

Even in the best of circumstances, with COVID behind us, challenges will persist. New businesses need to continue to take the place of old and it takes time for businesses to start and grow. New workers need to replace those who have taken this moment to change career paths. Not every low-paid server or hotel housekeeper spent the last 18 months sitting around waiting for their old job to be available again—people have moved on. Barriers to employment also need to be addressed; parents face particular challenges as the shortage of quality childcare that predates the pandemic has worsened and is a barrier to a fully functional economy. Finally, in this recession, as in prior recessions, employers have adopted labor-saving efficiencies that cost jobs. Eventually other jobs are created, but how quickly depends on the surrounding economy. In this recession, restructuring to reduce labor needs is particularly likely to be an issue, as phenomena such as the shift to online retail have been accelerated and labor-saving approaches such as touchless transactions through the use of QR codes have taken hold.

Table 1. Change in Employment, Feb 2020 to Dec 2021

Source: Bureau of Labor Statistics, Current Employment Statistics

Overall, New Hampshire’s 17,000 job short fall from pre-COVID levels equates to the state having 2.5 percent fewer jobs than it did in February 2020, as of December 2021—worse than the national shortfall of 2.1 percent but better than all other New England states, excepting Maine (2.0 percent). 

The shortfall of  jobs in New Hampshire spreads across most industries but is concentrated in a few. To get back to pre-pandemic employment, either the industries that are still down the most jobs will have to restore those jobs or jobs will have to be created elsewhere in the economy to offset them. For example, the Accommodations and Food Service was still down 4,300 jobs. To return to prior levels of employment either the 4,300 jobs missing in Accommodations and Food Service must be recovered or other industries must pick up the slack.

Chart 2 shows the number of jobs lost and gained by each industry from February 2020 to the end of 2021. Some industries are a bigger part of the problem in New Hampshire and some industries less. The Government sector is down the most jobs at 7,400. In the private sector, the largest shortfall, 6,400 jobs, is found a catchall “other” category that includes mining and logging; arts, entertainment, and recreation; the information industry; and an array of services including repair services, religious institutions, dry cleaning, funeral homes, and others. Following “Other” the largest shortfalls are in Accommodations and Food Service (4,300), Health Care (3,700), Retail (2,900), and Manufacturing (2,600).

The order and relative magnitudes were significantly different nationally with Accommodations and Food Services still down 1.6 million, “Other” down 753,000, Government down 738,000, Health Care down 565,000, Manufacturing down 230,000, Construction still down 78,000, Real Estate down 49,000, and Retail almost completely recovered with a shortfall of only 2,400.

The broad industry categories showing the strongest growth in New Hampshire are also the industries showing the strongest growth nationally.

Chart 2: Jobs Gained or Missing by Industry, as of Dec 2021

Source: Bureau of Labor Statistics, Current Employment Statistics. Author's calculations.

While Chart 2 gives a sense of the relative contribution of each industry to the jobs shortfall relative to before the pandemic, Chart 3 better reflects where each industry stands in its recovery from the standpoint of industry stakeholders. In Chart 2, industries that started with the most jobs are obviously more likely to see larger swings in the number of jobs. From the perspective of an employee, customer, owner, or other stakeholder in a given industry, however, the level of impact to their industry is measured best by the percent of jobs in the industry that have been lost or gained—how likely a job in their industry is to be eliminated, on hiatus, unfilled, or recovered. It’s not just a question of how many of the missing or added jobs are in an industry—but how likely people in the industry are to have been affected. As Chart 3 shows, those in the Government, Accommodation & Food, and Education Services were still feeling the greatest impact as of the end of 2021.

Chart 3. Percent Change in Jobs by Industry, as of Dec 2021

Source: Bureau of Labor Statistics, Current Employment Statistics.

A persistent pattern in initial job loss and ongoing job shortfalls is their concentration in low-wage industries. Accommodation and Food Service was down 4,300 jobs (a 7.1 percent decrease) as of December 2021 with average weekly wages of just $465 in 2020. Government was down 7,400 jobs (a 68.1 percent decline) and had had an average weekly pay of $1,101 in 2020. Health Care and Social Assistance was down 3,700 jobs and Retail was down 2,900 jobs, with average weekly pay of $1,229 and $727, respectively. Meanwhile, Professional Services and Wholesale & Transportation, with weekly pay of $2,103 and $2,181, respectively, have gained significant numbers of jobs. Finance & Insurance—with the highest average weekly pay in 2020 at $2,324—has also gained. Across all sectors, there is a clear divide between industries that pay, on average, less than $2,000 a week and have fallen short in their jobs recovery and those with average weekly pay exceeding $2,000 that have recovered.

This pattern has been seen throughout the period, but the labor market now is particularly complicated. Many of those who lost jobs in the low-paying industries have, for reasons both obvious and subtle, moved on. Among other factors, many low-wage jobs are also jobs that face higher health risk; low-wage workers have found better opportunities and are not returning to previous occupations; and the dearth of affordable quality childcare is a bigger barrier to employment for low-wage workers than higher-paid employees. The market has, to some degree, responded to these issues. The average hourly wage in the Leisure and Hospitality sector has risen more in the last two years than in the prior four. It is still a low-wage industry but presumably one of the reasons the industry has recovered as many of the jobs, even as shortages persist, is that some workers are being drawn into it by the increases.

Chart 4. Average Weekly Wages and Change in Number of Jobs, Feb 2020 to Dec 2021 

Source: Bureau of Labor Statistics, Current Employment Statistics; Quarterly Census of Employment and Wages

Unemployment

The unemployment rate is a widely used measure of labor market health, but its technical definition has imbued it with mixed utility during this period. Unemployment is calculated by dividing the number of people currently not working but available for and actively seeking work, by the number of people in the labor force. It is the question of how many people are available for and actively seeking employment that has been challenging. Many people who have wanted to work have not actually sought employment, constrained by health fears, child-care challenges, and other impediments to seeking work. Those people are not counted as “unemployed” and their exclusion can make a state’s unemployment rate lower than would reflect the actual state of the labor market. In addition, large numbers of workers have left the labor force via early retirement and other decisions which also makes the unemployment rate difficult to compare to historical levels. 

The impact of these factors that are undermining the unemployment rate as a measure of labor market health is not consistent for all populations. In New Hampshire, men and women’s labor force participation declined similarly between the beginning of 2020 and the beginning of 2021. Disaggregated by age, however, gender gaps emerge: among men, the largest Labor Force Participation declines were among those age 55-64, whereas among women, the largest decline was among those age 35-44. The exit of prime working age women suggests that, given their disproportionate responsibility for child caregiving, these women may have been constrained by a lack of childcare for young children or a commitment to supervising remote learning for older children.

Chart 5. New Hampshire Unemployment Rate, Jan 2020 to Dec 2021

Source: Bureau of Labor Statistics (Local Area Unemployment Statistics), www.bls.gov/data/#unemployment

Employment-to-Population Ratio

A measure of employment that avoids the problems with the unemployment rate is the employment-to-population ratio, which shows the portion of the population age 16 and older that is employed. In the long run, this measure is influenced by factors such as the aging of the population out of prime working years. The dramatic economic impact of COVID-19, however, currently dominates this measure. The employment-to-population ratio fell sharply along with all other economic measures in March and April of 2020, partially rebounded, and has held relatively steady, with between 64 and 65 percent of New Hampshire residents 16+ employed between October of 2020 and December 2021—a share of employed Granite Staters that is still below its pre-pandemic level. Nationally this ratio has been more steadily rising, but also still lags behind pre-pandemic levels.

Chart 6. New Hampshire Employment-to-Population Ratio, Jan 2020 to Dec 2021

Source: Bureau of Labor Statistics (Local Area Unemployment Statistics), www.bls.gov/data/#unemployment 

Gross Domestic Product

A broad measure of economic activity, Gross Domestic Product (see explanation of “GDP” below), has, not surprisingly, followed a pattern similar to the jobs measures—although, because it is only reported quarterly and with a substantial lag, it is a less current and fine-grained measure. It collapsed in the first quarter of 2020 and has rebounded since through the second quarter of 2021, but fell again slightly in the third quarter of 2021. It remains below its pre-pandemic trend. 

Chart 7. New Hampshire Real GDP, 2019 Q4 to 2021 Q4

Note: Real GDP is in millions of chained 2012 dollars. Industry detail is based on the 2012 North American Industry Classification System (NAICS).
Source: GDP data from Bureau of Economic Analysis, Chained 2012 dollars, www.bea.gov/data/gdp/gdp-state 

Real GDP is in millions of chained 2012 dollars. Industry detail is based on the 2012 North American Industry Classification System (NAICS). Calculations are performed on unrounded data. Chained (2012) dollar series are calculated as the product of the chain-type quantity index and the 2012 current-dollar value of the corresponding series, divided by 100. Because the formula for the chain-type quantity indexes uses weights of more than one period, the corresponding chained-dollar estimates are usually not additive. For the All industry total and Government and government enterprises, the difference between the United States and sum-of-states reflects overseas activity, economic activity taking place outside the borders of the United States by the military and associated federal civilian support staff.

Before COVID Back to Top

What happened during the COVID-19 recession was layered onto pre-existing trends in the state, just as the recovery and reconstruction of New Hampshire’s economy will be affected by those pre-COVID trends and the events of the COVID-19 recession. This section describes some of the economic trends over the decade prior to COVID-19 dominating the New Hampshire economy.

In 2019, a decade after the Great Recession, the New Hampshire economy comprised more than 750,000 jobs of all types. Few in the state were unemployed and poverty levels were low relative to other states, although the average hourly wage was below the national level. New Hampshire residents worked in a diverse set of industries. Most of us both lived and worked in New Hampshire, but, as of 2017, 19 percent (roughly 123,500 people) of our workers commuted to jobs in other states with most of them (97,000) employed in Massachusetts. Median income, which includes in-state wage income, the out-of-state wage income of commuters, as well as income from investments, pensions, and other sources, was high in the state compared to the nation and about at the median for the region. The sections below describe in more detail what the New Hampshire economy looked like as of 2019 and the trends that had led it to that point.

Jobs

Since 2010, after the Great Recession, the number of jobs in most of New Hampshire’s industries had risen through 2019, the biggest exception being in government (Chart 8). Professional, Scientific, and Technical Services and Management of Firms, combined here under “Professional Services,” had seen the largest increase of over 10,700 jobs. Data limitations prohibit exploration of New Hampshire’s industrial change in greater detail, but nationally about 30 percent of the growth in this category from 2010 to 2019 was in computer-related services, 20 percent in management consulting, and 20 percent in corporate management (companies that manage other companies). The rest of the growth in this category was sprinkled among other professional business, technical, or scientific services. It is notable that this area, which had grown considerably before COVID-19 hit, has been one of the areas that was up in jobs at the end of 2021 relative to before the COVID-19 recession struck.

Chart 8: Change in Number of New Hampshire Jobs by Industry, 2010 to 2019

Note: Point at each bar to see the 2019 average weekly wage for each industry. 
Source: Bureau of Labor Statistics, Current Employment Statistics, Quarterly Census of Employment and Wages

Table 2. Government Employment Decline in New Hampshire, 2010 to 2019

Source: Bureau of Labor Statistics, Current Employment Statistics

Other industries with characteristics of note are:

  • Health Care and Social Assistance with 9,300 more jobs. About 60 percent of this growth in the state was in Ambulatory Care, which includes the offices of doctors and dentists and outpatient services, and another 20 percent of the growth was in hospital employment.
  • Administrative and Support and Waste Management and Remediation Services in which 8,300 jobs were added. Nationally, about half of the new jobs in this broad category were in temporary help services during this period and about 20 percent in building-related services such as landscaping and janitorial services. Five percent of the new jobs had been in waste management.
  • Retail jobs were up but the trend had not been steadily upward. After a rise through 2015, jobs declined every year after 2016, even before the pandemic. From 2016 to 2019 they fell by 1,900 and then fell another 5,400 in 2020, ending the year with about 90,000 positions—which is about the level as of December 2021.
  • Government saw the largest decline in employment in New Hampshire from 2010 to 2019. All levels of government saw declines, but local government experienced the largest with all of the net losses in education. Local government education jobs include teachers, administrators, and other support staff in school districts. These reductions are likely driven by reductions in state support for education between 2010 and 2019 as well as declining student population in many regions of New Hampshire.

Which industries have the strongest job growth has important implications for the living standards of state residents since growth in high paying industries can translate to growth in high paying jobs. Chart 8 also shows the average weekly wage in each industry for 2019 (to see the average weekly wage for an industry, mouse over its bar). Prior to the pandemic, job growth had been spread out between industries with weekly wages above and below the statewide overall average of $1,128 per week. Professional services, with the high average weekly wage of $1,960, has seen strong growth, but other areas of significant growth such as health care, hotels and restaurants, and administrative services pay much less ($1,123, $435, and $995, respectively).

One cautionary note on using these wage levels to compare industries. They are average weekly pay levels, which are affected by the number of hours worked—which varies by industry. For example, those working in construction work an average of about 39 hours per week nationally, while those in retail work 31 hours per-job. That said, the average weekly wage is the best data available by industry for New Hampshire over time. It should be noted that typically low-hour jobs are low-wage jobs—nationally, the average hourly wage in construction is about $30, compared to about $19 in retail. The lack of negotiating power in industries affects the ability of workers to gain both higher wages and regular working hours.

To further complicate matters, wages can vary greatly within industries. For example, in food service in New Hampshire, the median hourly wage for chefs and head cooks is $24.90 per hour, while for fast food cooks it is $10.03 and for servers it is $9.44.

Notwithstanding these complications, as a broad indication of which industries’ growth leads to higher average standards of living for those who work in the state, Chart 8 is good snapshot.

Chart 9. Industry Shares of Jobs in New Hampshire, 2019

Source: Bureau of Labor Statistics, Current Employment Statistics

Chart 9 shows the distribution of jobs by industry as of 2019. It is notable how much of what makes up the New Hampshire economy, as with most economies, is simply the buying goods and services by residents and visitors. The Retail industry provided 14 percent of the employment in the state in 2019. The Accommodations and Food Service industry made up 9 percent. The Wholesale, Transportation, and Warehousing sector that supports those industries made up 6 percent. The healthcare services we pay for provided another 14 percent of jobs. There are also portions of other industries—Real Estate, and Finance and Insurance, for example—that are fueled by our personal purchasing power. Even the industries that serve businesses are, to a significant degree, working for  businesses that directly serve consumers. Lawyers, accountants, and other professional service providers whose clients are stores, restaurants, and hospitals are also part of the economy driven by our personal spending.

While directly providing goods and services to residents and visitors accounts for the bulk of the employment in the state, this isn’t to say that the attention that is often paid to new or growing industries that serve customers beyond our borders, or primarily cater to business customers, is misplaced. There is no question that these are important: those businesses bring income and talented employees to the state, they are customers for other businesses in the state, and their employees’ wages are important to the consumption side of the economy.

Note that even with the massive disruptions caused by the recession, and the economic suffering that has resulted, the proportions seen in Chart 9 are little changed as of December 2021. Retail is still 14 percent of employment. Accommodations and Food has dropped from 9 percent to 8 percent. Other industries have seen similarly small changes in their shares or none at all. The COVID-19 recession has shrunk the size of the employment pie, with devastating consequences, even as it has left the basic patterns of employment little changed. Selecting the slices in Chart 9 shows the shares as of December 2021.

Chart 9 paints a picture of a New Hampshire economy with a diverse mix of industries that allow for multiple paths for growing prosperity and makes the state’s economy more resilient than that of states which are dependent on fewer industries. In fact, New Hampshire’s mix of industries looks similar to that of the nation as a whole in its variety (US shares are displayed in the chart and the accompanying table). The state isn’t immune to economic downturns, but it is less vulnerable to widespread economic turmoil from the failure of a single industry. In the COVID-19 recession, for example, the industries hardest hit nationally are well-represented in New Hampshire (Accommodation and Food Services being the standout example) and the state has been seriously wounded. We have, however, been spared the pain experienced by states such as Nevada and Hawaii that are more dependent on the single hardest-hit sector than is New Hampshire.

Value of Goods and Services

Overall growth 

“Gross Domestic Product” (GDP—described more fully below) is a widely used measure of the size, growth, and composition of economies. Coming out of the Great Recession, the people of New Hampshire joined the rest of the country in recovery. Since that recession wasn’t as deep for New Hampshire’s resilient economy as for the rest of the country, it is perhaps not surprising that the recovery was less dramatic. In 2016, the state growth rate exceeded that of the nation for the first time since 2010, but then again lagged. New Hampshire’s trailing position continued into the COVID-19 recession, when the state’s GDP shrunk by a larger percentage than did the nation’s through 2020—although it since recovered that lost ground (Charts 10 and 7).

Chart 10. Real GDP Growth in New Hampshire and United States, 2009 to 2021    

Source: Bureau of Economic Analysis

Industry Composition

The shares of the value of goods and services produced by industries resemble the shares of jobs, though there are some significant departures. For example, Finance and Insurance comprise only 4 percent of employment but produce  8 percent of state GDP. Accommodations and Food Services provides nine percent of jobs but only three percent of GDP. This results from  certain industries—such as Finance and Insurance—that employ relatively few people but produce high-value  goods or services, as well as the converse.

Chart 11. Value of Goods and Services Produced by Industry in New Hampshire, 2019

Notes: These data are shares of state GDP as reported by the Bureau of Economic Analysis. See note below: "What GDP Measures in the Economy." The "other" category includes agriculture, forestry, fishing, and hunting; mining, quarrying, and oil and gas extraction; construction; information; educational services; arts, entertainment, and recreation; and other not otherwise categorized services. Each of these is less than 5% of the New Hampshire economy. Source: Bureau of Economic Analysis

In 2019, the state was similar to the nation in the portion of value each industry produced in goods and services, as measured by Gross Domestic Product (GDP). Comparisons between New Hampshire and overall country are shown in the chart and the accompanying table.

Gross domestic product (GDP), a widely cited economic statistic, is defined as the market value of goods and services produced by labor and property. It is calculated for the economy as a whole and separately for each industry. If you hear “the economy grew by 2 percent,” it means that GDP grew by 2 percent. If you hear “11 percent of the economy is in manufacturing,” it means that the value of goods and services produced in manufacturing makes up 11 percent of economy-wide GDP.

We use GDP to measure of economic growth and to describe the financial significance of different industries.

It is important to understand that GDP is not just the total amount spent on purchases in the state. What counts in a state’s GDP is the “value added” within the state. For example, take a car bought in New Hampshire but made in Ohio. The part of the price that is due to what the dealer did in New Hampshire counts in New Hampshire’s GDP. The part of the price due to assembling the car is in Ohio’s GDP.

Table 3. New England and U.S. Workers in Small Businesses, by Business Size, 2018

Source: U.S. Census Bureau, 2018 Statistics of U.S. Businesses

Small Business

Granite Staters work in a range of industries and for employers of a range of sizes, from giant corporations to family-owned shops. In 2018 businesses with fewer than 20 employees employed 18 percent of New Hampshire workers, and enterprises with fewer than 100 employees employed 36 percent (inclusive of those with fewer than 20 employees). This is slightly higher than nationwide, where 33 percent of workers were in enterprises with fewer than 100 employees (Table 3). On both a national and state-wide scale, small businesses constitute an important part of the economy and many were severely hit by the COVID recession. The extent to which they will fully recover remains  one of the key questions regarding the path forward.

Income

Median household income, defined as the point in the income distribution where half of households receive more and half receive less, is a commonly used measure of the financial health of a population. Here, we use a measure of income that includes wages, business and investment income, and cash transfer payments such as Social Security, unemployment, and child support. 

Trends in New Hampshire largely mirrored the country from 2008 to 2016 but growth slowed relative to the rest of the country from 2016 to 2019. Incomes dipped during and after the Great Recession in New Hampshire and the country before beginning to recover around 2013. From 2008 to 2013 incomes dropped nationally at an annual rate of 1.7 percent and in New Hampshire by 1.6 percent. From 2013 to 2016 income grew nationally and in New Hampshire at an annual rate of 2.4 percent. From 2016 to 2019, however, New Hampshire lagged, with median household income growing at 1.2 percent annually, compared with 2.5 percent nationally (Chart 12).

Chart 12. Median Household Income in New England and United States, 2008 to 2019

Source: American Community Survey, 2008-2019 one-year estimates

Because Chart 12 shows only overall median income, it does not capture the substantial variation in income shifts along the full income spectrum. Chart 13 shows the change in income for different New Hampshire household income groups between 2007 and 2019. Accounting for inflation, the 20 percent of households with the lowest incomes saw their median income decline by $1,952 and the middle-income group saw its income decline by $370, while the highest 5 percent income group saw its income jump by $43,418.

Chart 13. Change in Median New Hampshire Household Income 2007 to 2019, by Income Percentile

Note: Percentiles created at the household level, using household-level weights, among New Hampshire households only.
Source: American Community Survey 2007, 2009, 2017, and 2019-year estimates

Table 4. Median Household Income, New England and United States, 2019

Source: American Community Survey, 2019 one-year estimates

Save icon  Household Income by State

This uneven growth follows national patterns dating from the late 1970s. For instance, using a somewhat different measure of income available for the country over a longer time frame, the Congressional Budget Office finds that the middle 20 percent of the U.S. income spectrum saw its average market income rise by $6,900 between 1979 and 2018. By comparison, the wealthiest 1 percent saw its market income rise over $1.4 million, from an average of $579,100 in 1979 to $1,987,500 in 2018 (inflation adjusted).

Despite the disappointing growth in recent years, prior to the COVID-19 recession, New Hampshire ranked as one of the ten highest-median-household-income states nationwide and had the third-highest median income in New England. As explained below, this ranking comes despite lower wages in New Hampshire; household income likely is significantly boosted by the wage income of residents who commute for their employment to other states.

It is worth noting that in 2020 and 2021 incomes have been substantially supported, in the face of large drops in employment income, through the federal government’s boost in unemployment compensation and stimulus checks. These sources of income hugely mitigated the economic devastation on households that loss of earnings would usually entail.

Poverty

The poverty rate is a measure of the share of people whose incomes fall below a specific threshold determined by their family type ($26,000 for a family of two adults and two children in 2020, for example). In New Hampshire, as in the United States more broadly, the share of people living in poverty has been remarkably stable over time. This is true for the official definition of poverty—households below 100 percent of the official federal poverty line—but also for other metrics based on that definition; the share of people living below half the poverty line (about $13,000 for a family of four) and the share living below twice the poverty line (about $53,000 for a family of four) have also been persistent (Chart 14).

Chart 14. Variation in New Hampshire Poverty Levels, 2008-2019

Source: American Community Survey, 2008-2019 one-year estimates

Table 5. Poverty Rate, New England and United States, 2019

Source: American Community Survey, 2019 one-year estimates

Save icon   Poverty Rate by State

Save icon  Poverty Rate by N.H. County

Although poverty has been stable, there is growing evidence that opportunity has declined—that the prospects for children to rise in economic status above their low-income or impoverished beginnings have diminished relative to the past. Importantly, research shows that children who are otherwise very similar do better when they are born in higher-income communities than when they are born in lower-income communities. The Opportunity Atlas, created in partnership with the U.S. Census Bureau, Harvard University, and Brown University, shows that while New Hampshire children do fairly well in adulthood, those raised in lower-income Sullivan and Coös Counties have lower household incomes in adulthood than their more affluent Hillsborough and Rockingham County counterparts.

As of 2019, New Hampshire had the lowest poverty rate in the country (Table 5). Of course, having over 7 percent of the people living in poverty in a relatively wealthy state in a wealthy country is short of ideal. Poverty rates are higher in the northern parts of the state, but most of those who are poor live in the southern, more densely populated area.

While the official poverty rate increased slightly in 2020, the income measures used to calculate it does not include all forms of special payments provided by the government during the recession; when those are included in an alternative measure of poverty, the rate declined substantially. The pattern is likely similar in 2021 because, among other factors, the child tax credit passed in 2021 is projected to cut child poverty in half if sustained.

Wages

Wage growth in New Hampshire after the Great Recession through 2019 fell short of national trends overall. From 2008 to 2019, real average wages rose by just 0.3 percent in New Hampshire compared to 9.3 percent nationally. Even from 2010, when differences in the recession’s impact on the state and the nation had dissipated, wages rose 5.8 percent nationally compared to just 0.2 percent in New Hampshire. Over these periods, New Hampshire moved from exceeding the national average hourly wage to falling below it. In 2018 and 2019, inflation-adjusted hourly wages in the state actually declined (Chart 15).

Chart 15. Real Average Hourly Wage Growth in New Hampshire and United States, 2009 to 2019

Source: Bureau of Labor Statistics, Current Employment Statistics

Between 2008 and 2019, wages in New Hampshire lost ground compared not only to the nation but also to other New England states (Chart 16). Rhode Island moved from having an average hourly wage below New Hampshire’s to having a wage above it.

Chart 16. Real Hourly Average Earnings in New England and United States, 2008 to 2019

Note: Wages are displayed in 2019 dollars. The scale does not start at $0 to make the change over time more visible.
Source: Bureau of Labor Statistics, Current Employment Survey, 2009-2019

Table 6. Percent of Employees Covered by a Union, New England and United States, 2019

Source: Bureau of Labor Statistics, Current Population Survey 2019

While 2020 saw strong average wage growth (not shown in chart), it was an artifact of so many low wage jobs being lost, rather than anything positive in the labor market and is not necessarily indicative of long-term trends. Wages in some industries were boosted in 2021 across the country as employers sought to restore their lost workforces. It is unclear at this point, however, what that will mean for sustained real wages, how New Hampshire will fare relative to other states, or the breadth of industries that will be permanently impacted.

In short, improved overall economic performance between the Great Recession and the COVID-19 Recession, including wide availability of jobs, benefited those who would otherwise be unemployed and investors who profit from a strong aggregate economy. This performance, however, didn’t translated into meaningfully higher wages for the average worker in New Hampshire. It is worth emphasizing that the weak wage growth described here is an average for all workers. When average wage growth is low, some are doing well but many are falling further behind.

The weak wage growth has left New Hampshire close to the middle among states in overall wages, which raises the question of how the state can rank so high in median income and be near the middle of the pack in wages. The most likely explanation for this discrepancy is the fact that many high-income earners who live in New Hampshire earn their wages in other states, particularly Massachusetts. New Hampshire ranks second only to New Jersey in the share of earnings by its residents attributable to commuting to jobs in other states—with net earnings by commuters accounting for 12 percent of total earnings by employed state residents. Only two other states exceed 10 percent—Connecticut and Maryland—and only 3 more exceed 5 percent—Rhode Island, Virginia, and Mississippi.

One final factor that relates to wages is level of unionization. New Hampshire has a lower share of workers covered by union contracts than most of the New England states but stands at about the national level. This is a similar pattern to the relative wage levels described above (Table 6).

Long-term Challenges Back to Top

There are long-term challenges to the New Hampshire economy that have persisted through the COVID-19 recession, others that have been exacerbated by it, and still others that have yet to be identified that will emerge from it. Both at a national and state scale, there has been great destruction but the economy is rebounding . Will it end up more-or-less where it was or have things fundamentally changed? For policymakers it is important to keep an eye on what areas are lagging to protect  the workers and customers who depend on those sectors and to help the businesses themselves if the problems are transitory but the market is failing to provide a satisfactory path back. Listed here are a few of the longer-term challenges that we know now will need to be addressed for the New Hampshire economy to flourish.

Labor Force

As described in the demographics section of What is New Hampshire?, New Hampshire is getting older, and its aging workforce will pose a challenge for the state’s businesses in terms of recruiting, retaining, and expanding their workforces. The problem is compounded by childcare shortages and housing costs, both challenges that pre-dated the pandemic but have been greatly exacerbated by it. In addition, nationwide, many have left the labor force to retire early or for other reasons. It is uncertain how many of them will return. The demographic section explores the role of migration into the state as new residents fill open jobs left by the state’s existing population that ages out of work or leaves the labor force for other reasons. Concerted efforts by organizations such as Stay, Work, Play NH to both recruit and retain young Granite Staters might mitigate some of these workforce needs and help the New Hampshire economy to succeed. Addressing other challenges mentioned in this section can also help attract a younger workforce.

Physical Infrastructure

Serious problems in physical infrastructure are widespread in the country and New Hampshire is no exception. The Granite state received a C- on its most recent Infrastructure Report Card from the American Society of Civil Engineers. As of 2020, nearly 9% of the state’s bridges are structurally deficient and over half of the roads are in fair, mediocre, or poor condition []. Much of New Hampshire’s infrastructure is over a half-century old. The average age of bridges in the state is over 50 years, and the average age for dams in New Hampshire is over 100 years old []. While the state may save money in the short term by deferring maintenance costs, waiting to repair roads until they are in extremely poor condition can cause repairs to cost three or four times as much as regular maintenance [].

Poor infrastructure is an economic burden. Since transit infrastructure is key to commerce and bad roads cost drivers in repair costs, delaying infrastructure repair often raises the cost of both repair and of the disruption caused. The passage of a major infrastructure bill at the national level will help meet this challenge but the work and some funding will be needed at the state and local levels.

Childcare

Since the pandemic hit, few human infrastructure issues have received more attention than early childhood care and education (ECCE). As in many arenas, the pandemic didn’t start the significant problems in the ECCE landscape, but rather morphed and magnified them. Like every other state, New Hampshire has long struggled with too few ECCE slots, of varying quality and with high costs for families. The following pressures in New Hampshire are often in conflict, causing turmoil for families and within the childcare industry:

  • A desire to enhance the quality of care leads to ever-higher standards for early childhood educators which, coupled with a stubbornly low pay scale and other negative job features, creates shortages of these educators and of available ECCE slots.
  • Licensing regulations, put in place to ensure a safe and enriching ECCE environment, mandate low child-staff ratios and minimum square footage for children, effectively putting a floor on what ECCE providers can afford to charge.
  • Although subsidies exist for low-income families, research shows that these subsidies reach a fraction of those who would benefit and that families with incomes much higher than the eligibility threshold also struggle with the cost of care.

Housing Costs

According to the New Hampshire Housing Finance Authority, median gross rent for a two-bedroom unit in the state was $1,498 in 2021, having increased 24 percent in five years, and marking the eighth year in a row of rising rent costs []. Costs are rising for those seeking to own a home as well: in October 2021, the median single-family home price in New Hampshire reached $375,000 up 13 percent from just a year earlier, and August 2021 saw a record high median sale price of $392,000 [].Rising housing costs were a problem prior to the pandemic, partly in response to the state’s constricted housing supply. COVID-19, however, exacerbated the existing challenge by delinking work and residency, increasing interest in outdoor recreation, and driving an uptick in early retirement among higher-income older adults who are more likely to migrate to amenity-rich regions such as New Hampshire [].

This continued pressure on the housing market has been long identified as a challenge for New Hampshire's capacity to attract and retain younger workers, but also drives challenges for other working demographics. It makes finding housing difficult for those who wish to stay in the state but need or want to change accommodations; it drives up the pay levels for businesses that need to offer nationally competitive salaries; and it motivates long commutes which have infrastructure and other economic costs associated with them.

Wage Stagnation

Leading into the pandemic, average wages had barely kept up with rising costs in New Hampshire or not kept up at all. To some degree, wage levels reflect the mix of industries in a state—the extent to which it has more workers in higher- or lower-paying industries. Prior to 2020, the number of jobs in the state was increasing in both higher-paying and lower-paying industries. The loss of jobs in low-wage industries in the face of COVID-19 drove up average wages, but massive layoffs of low-wage workers is not an equitable approach to increase average wages. Since then, wages have been on the rise in general, but there are two important questions. First, will inflation undermine the buying power of the wage gains? Second, will the wage gains sustain as the economy fully recovers and stabilizes?

The ideal scenario moving forward is that higher-paying sectors will grow, a greater share of the state’s population will be prepared for the jobs in those sectors, and pay levels will increase for all jobs, especially those that are currently low paying. Wage stagnation, wage growth, and the impact of inflation are national phenomena that are beyond the scope of this report to solve—and to a significant extent beyond the ability of New Hampshire to address alone. The state can, however, ensure that its education system is preparing a workforce aligned with the opportunities that emerge and industries it is able to attract, and that work-supporting systems like affordable housing and quality childcare are in place to enable participation in those opportunities.

Struggling Households, Declining Opportunity

Families and individuals in New Hampshire face a range of economic challenges. Although the poverty rate is low in the state, there are pockets of the state with poverty rates that are considerably higher than the statewide rate and families that are not formally “in poverty” face serious economic challenges—struggling to pay rent, access quality childcare, buy food, or save for education, retirement, or an emergency.

New Hampshire also faces the challenge of declining economic mobility, the rate at which people change their economic status. One contributor to this challenge is disparity in educational opportunity. Research shows that income disparities have widened among New Hampshire families with children and that academic outcomes are worse for New Hampshire children living in lower-income families. []. The state as a whole ranks high in overall student college readiness and standardized test scores []. Despite this, there are troubling gaps in educational attainment between lower-income and higher-income students, as well as between students in districts with higher or lower amounts of taxable property. A 2020 report from the legislatively-created Commission to Study School Funding and the American Institutes for Research found significant inequities for both students and taxpayers under New Hampshire’s current education funding system, with property-poor districts unable to adequately fund schools at levels necessary to help their students achieve similar educational outcomes to those achieved by wealthier districts despite much higher property tax burdens in poorer communities.

7. Carsey School of Public Policy, University of New Hampshire, “Gaps in Youth Opportunity by State,” Durham, NH, 2015, https://carsey.unh.edu/sites/default/files/new_hampshire.pdf

Conclusion Back to Top

As the state, nation, and world hopefully emerge from the COVID-19 pandemic and the economic carnage it created, New Hampshire is, to some extent, subject to economic forces beyond its control. There is also much that it can achieve on its own. The healthier its population, the stronger it is economically. Hospitalized people don’t go to restaurants. Neither do the ill, fearful, or deceased. Health, however, is not the only factor that is within control of the state that will determine its economic path forward. Addressing the interconnected issues described above in the Long-Term Challenges section would make a huge difference to the people who are the driving force behind the New Hampshire economy.

New Hampshire has many economic advantages that position it well as it seeks to address the challenges of wage stagnation, childcare shortages, educational inequity, an aging workforce, housing affordability, struggling families, and C- infrastructure. It has a strong and diverse economic base from which to grow, and its workforce is well-educated. With foresight and will, New Hampshire can chart a course to a productive, prosperous economy that addresses these challenges and enhances the well-being of all who live here.

Throughout this section, we rely on various sources of survey-based data. Readers should be cautious when comparing estimates between groups or time periods because these surveys are asked of a sample of the population, rather than the total population. Although some estimates may appear different from one another, it is possible that any difference is due to sampling error. Further, in some cases very small differences may be statistically significant due to the large sample size of certain surveys. While it is not realistic to provide statistical testing results for each possible comparison that readers might make, we focus on differences that are substantively meaningful and statistically significant in the text.


[1.] http://saferoadsnh.com/resources/TRIP/New-Hampshire-Transportation-Dashboard----Road-Conditions--%5b2%5d.pdf; http://saferoadsnh.com/resources/TRIP/New-Hampshire-Transportation-Dashboard----Bridge-Conditions.pdf
[2.] https://www.wmur.com/article/more-than-50-state-owned-dams-need-major-repairs-environmental-officials-say/36745319#
[3.] https://www.nhpr.org/the-exchange/2017-05-16/series-new-hampshires-aging-underfunded-infrastructure
[4.] https://www.nhhfa.org/wp-content/uploads/2021/07/NH-Housing-Rental-Survey-Report-2021.pdf
[5.] https://www.nhhfa.org/wp-content/uploads/2021/05/HMS-Spring-2021.pdf
[6.] https://crr.bc.edu/briefs/how-have-older-workers-fared-during-the-covid-19-recession/
[7.] Carsey School of Public Policy, University of New Hampshire, “Gaps in Youth Opportunity by State,” Durham, NH, 2015, https://carsey.unh.edu/sites/default/files/new_hampshire.pdf
[8.] https://www.usnews.com/news/best-states/rankings/education/prek-1