What’s Wrong With the New Hampshire Economy and What Can Be Done About It? Joint Economic Briefing New Hampshire House and Senate Finance and Ways and Means Committees January 14, 2015 Brian Gottlob PolEcon Research bgottlob@poleconresearch.com
Outline • NH’s Recent and Current Economic Performance in Context • Factors Influencing NH’s Outlook • Implications for NH Revenues • Implications for State Policy
The Pace of Employment Growth Has Been on a Long, Downward Trend Nationally. After Decades of Faster Growth, NH Spent Much of the Past 10 Years Lagging U.S. Employment Growth Annual Rate of Employment Growth 10% 8% �H U.S. 6% 4% 2% 0% 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 -2% -4% -6%
Three Full Years After the Recession Ended, NH Was Near the Bottom 10.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% New Mexico Arkansas Note: Annual 2014 Data Not Yet Available. ME Maine Alabama Mississippi West Virginia Pennsylvania New Jersey �H New Hampshire Missouri VT Vermont RI CT Rhode Island Connecticut Wyoming Total Emp. Growth 2010 Thru 2013 in Total Job Growth Virginia Maryland Wisconsin Illinois Delaware Kansas South Dakota Nebraska Louisiana Alaska Kentucky Iowa New York MA Massachusetts Ohio Georgia Oregon Indiana Montana North Carolina Oklahoma South Carolina Tennessee Minnesota Nevada Hawaii Washington Arizona Florida Idaho Michigan California Colorado Texas Utah
But Private Sector Job Growth in NH Has Been Stronger - Below the 10.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% U.S. Average but Better Relative to Other Northeastern States Arkansas New Mexico ME Maine West Virginia Mississippi Alabama VT Missouri Vermont New Jersey Pennsylvania RI Rhode Island Virginia Private Sector Job Growth 2010 Thru 2013 Wyoming CT Maryland Connecticut �H Delaware New Hampshire Kentucky Wisconsin Illinois Nebraska Kansas South Dakota Iowa MA Massachusetts Ohio South Carolina New York Georgia Alaska Louisiana North Carolina Indiana Minnesota Nevada Oregon Oklahoma Montana Hawaii Tennessee Washington Arizona Idaho Florida Colorado Michigan California Utah Texas
-1.5% -1.0% -0.5% 0.0% 0.5% 1.0% Percent From NH’s Job Growth Since 2010 – More Than in all But Austerity Cuts to Govt. (Primarily Local Govt.) Shaved About One Louisiana Michigan �H New Hampshire Pennsylvania Alaska New Mexico New York Oregon New Jersey Impact of Change in Govt. Emp. on Total Emp. Growth Maine California Indiana Alabama Florida Tennessee Georgia Montana Texas Ohio Two States Illinois Kansas 2010 Thru 2013 Connecticut Rhode Island Wisconsin South Dakota Mississippi Arizona Nevada Washington Arkansas Minnesota North Carolina Nebraska Hawaii Idaho Oklahoma Vermont Massachusetts Delaware West Virginia Maryland North Dakota Missouri Virginia Iowa South Carolina Wyoming Kentucky Colorado Utah
Business & Professional Services Added the Most Jobs (But only 25% are in Highest Skill Industries – Prof./Sci/Tech), While Local Government Shed the Most Jobs Since 2010 NH Job Growth January 2010- November 2014 Other Business Services 6,400 Accomodations & Food Services 6,400 Retail Trade 6,300 Health Care & Soc. Srvcs. 3,100 Other Services 2,700 Ed. Services 2,500 Prof. Sci. &Tech. Srvcs. 2,200 Construction 1,500 Manufacturing 1,200 State Government 300 Financial Activities 0 Wholesale Trade 0 (100) Information Arts, Entertainment, & Rec. (100) Federal Government (300) (5,800) Local Government (8,000) (6,000) (4,000) (2,000) 0 2,000 4,000 6,000 8,000
There are Large Regional Differences in Job Growth – Some is Related to Differences in Industry Composition but as Much or More is Related to Labor Force Trends Labor Force Job Growth 2003 to 2013 8.0% Portsmouth �ECTA 8.0% Dover/Rochester 7.2% �ECTA 5.8% 4.4% �H 3.6% 4.5% Manchester �ECTA 3.2% 3.9% �ashua �ECTA 1.4% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9%
Differences in Growth Across NH are Largely Attributable to the Ability to Keep and Attract “Talent” – Today Businesses Follow Labor, a Resource Shortage They Can’t Compensate For Labor Force Growth (Index Jan 2001 =100) 120.0 115.0 110.0 105.0 12 Mos Moving Average 100.0 Manchester Portsmouth 95.0 Dover/Roch. �H 90.0 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Key Current Economic Indicators Suggest Job Growth Should be Stronger
The NH Economy Can’t Seem to “Fire on All Cylinders.” While Most Industries in the U.S. are Adding Jobs, In NH, Only About One-Half of Major Industries Are. 12 Private Sector Industry Diffusion Index (3 Mos Moving Avg.) 100% 90% 80% 70% 60% 50% 40% 30% U.S. Industry Difussion 20% Index �H Industry Difussion 10% Index 0% 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
A Sharp Decline in Initial Unemp. Claims is Usually Followed by a Sharp Rise in Hiring –This Time Hiring Has Not Kept Pace Average Weekly New Unemp. Ins. Claims & Yr. Over Yr. Job Growth in NH 0 6.00% 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 4.00% (500) Correlation = -.85 2.00% (1,000) 0.00% (1,500) -2.00% (2,000) Avg. Weekly �ew Claims (Inverted) -4.00% Yr. Over Yr. Job Growth (1 Month Lag) (2,500) -6.00%
Help Wanted Ads are Growing at a Much Faster Rate Than are Jobs in NH –Employers are Not Able to Fill Openings 32 7.0% 30 5.0% 3 Mos. Moving Average 28 3.0% 26 1.0% 24 22 -1.0% 20 -3.0% Help Wanted Ads in �H (000s) 18 -5.0% Year-Over-Year Private Sector Job 16 Growth in �H (%) 14 -7.0% 09 10 11 12 13 14 15
The Largest Number of On-Line Job Postings in NH are for Prof./Scientific & Tech. Occupations but Job Growth in Industries Employing Them Has Not Grown as Fast – Evidence of a Supply Rather Than a Demand Problem? Avg. # of Help Wanted Ads In NH by Broad Occupational Grouping 12,000 Avg. Sept./Oct/�ov. 2010 10,000 Avg. Sept./Oct/�ov. 2013 Avg. Sept./Oct/�ov. 2014 8,000 6,000 4,000 2,000 0 Mangement Transportation Construction & Service Prof./Sci./Tech Business & Sales & Office Production & Maintanence Finance
Whether Job Growth is a Matter of Lack of Demand for Labor or a Lack of Supply of Labor is the Most Fundamental Issue Confronting Policymaking – An Accurate Assessment is Critical for Determining the Best Course of Action to Boost the Performance of the New Hampshire Economy
For More than Two Decades an Influx of Skilled Labor Provided NH With an Advantage for Growing Employment. Slow Labor Force Growth is Now Capping Potential Employment Growth Avg. Annual Labor Force Growth Over Three Time Periods 4% 3.2% 3% 3% �H U.S. 2.0% 2% 2% 1.4% 1.2% 1% 0.7% 0.5% 1% 0% 77-90 91-00 00-13
Slower Labor Force Growth (Some Due to Demographics, Some Structural, and Some Cyclical) Caps the Amount of Job Growth that is Possible in New Hampshire and the Nation Annual Rate of Labor Force Growth 6% 5% �H U.S. 4% 3% 2% 1% 0% 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 -1% -2%
Labor Force and Emp. Grow in Tandem. NH’s Slow Labor Force Growth Implies Lower Rates of Employment and Economic G rowth Annual Rate of Labor Force & Employment Growth 10% 8% �H Emp Growth 6% �H Labor Force Growth 4% 2% 0% 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 0 1 2 3 4 5 6 7 8 9 10 11 12 13 -2% -4% -6%
0.0 0.5 1.0 1.5 2.0 2.5 Than in all but 5 States - if Unemployed Don’t Have the Skills in Demand They The Number of Advertised Jobs for Each Unemployed Person is Higher in NH Remain Unemployed or Drop Out of the Labor Force – Job Growth Suffers North Dakota South Dakota Nebraska Utah Colorado Minnesota NH N.H. Montana Iowa Number of Help Wanted Ads per Unemployed Individual Vermont Idaho Hawaii Maine Wyoming Alaska MA Massachusetts Oklahoma Wisconsin Kansas Delaware Virginia Pennsylvania Washington Ohio Texas CT Connecticut United States Maryland NewYork Oregon Illinois Michigan New Mexico Rhode Island New Jersey Nevada Arizona Florida Missouri Indiana North Carolina South Carolina Louisiana California West Virginia Kentucky Georgia Tennessee Arkansas Alabama Mississippi
The Number of Help Wanted Ads for Every 100 in the Labor Force is Higher in NH than in Most States, Suggesting Job Growth Should be Higher (Unless there is not 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 Mississippi Alabama Kentucky Indiana West Virginia Number of Help Wanted Ads Per 100 Individuals in the Labor Force. Louisiana Enough Labor Available, there is a Skills Gap, or Both) Arkansas Florida Missouri South Carolina North Carolina Tennessee Kansas Texas Georgia California New Jersey New York Ohio Arizona Oklahoma Illinois Hawaii Maryland Pennsylvania New Mexico Virginia Nevada Michigan Idaho Rhode Island Wisconsin Wyoming Connecticut Washington VT Oregon Vermont NH N.H. Iowa Delaware Utah Minnesota Nebraska MA Massachusetts South Dakota Montana Alaska Colorado North Dakota
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