First Published in the Business NH Magazine, March 9, 2022

There is no shortage of discussion about the lack of workers in this economy. National statistics describing the number of job openings exceeding the estimates of people looking for work reflect reality for many employers.

The need for workers has contributed to wage increases in an effort to attract more talent. Those increases mean that some small businesses and nonprofits, which cannot reduce profits or adjust prices to increase employee pay, can be at a disadvantage relative to larger or more profitable entities.

Many workers have juggled pandemic challenges—maintaining careers while providing care and support for family members. These constraints have limited workforce growth, particularly for older workers and younger workers.

Older Workers Retiring Earlier

A smaller number of Granite Staters are participating in the workforce than were before the pandemic. In October 2021, about 38,000 fewer NH residents were working or looking for work than were in October 2019, a 4.9% decline over two years.

Data suggest older adults leaving the workforce is a particularly significant factor in the state. The labor force participation rate for adults aged 55 to 64 years fell 5.1% from the 12-month average before the pandemic in NH to the 12-month average between September 2020 and August 2021, and fell 3.6% for those aged 65 to 74 years. These were among the largest declines for any age group. The number of residents age 55 and older who indicated they did not want a job increased by 42,000 between September 2019 and 2021.

New Hampshire’s demographics, with a relatively high median age and an estimated 214,000 Granite Staters between the ages of 55 and 64 years in 2019, meant workforce constraints were likely to continue to grow over time, even without the pandemic. Whether temporarily or through permanent earlier-than-expected retirements, older workers appear to have left the labor force due to COVID-19 in larger numbers than their younger counterparts.

Younger Workers and Caregiving

While older workers may be a disproportionate share of people leaving NH’s labor force compared to the nation, younger people have also left the workforce, particularly Granite Staters at ages more likely to have young children. The labor force participation rate for those aged 20 to 24 years dropped 4% from the 12 months before the pandemic to the 12 months ending August 2021, and 2.5% for 25- to 34-year-olds.

Survey data from the U.S. Census Bureau suggests that between mid-July and early October of 2021, the most common reason Granite State adults said they were not working, other than being retired, was due to caring for children who were not in school or day care. Other respondents commonly identified being sick or having a disability, or caring for an older adult as reasons they were not working.

These data suggest the lack of access to child care in NH is a significant strain on workforce growth and that caring for people who are ill or who are older adults contributes as well.

Policy Support for Labor Force

State public policy can support child care and caregiving, and by doing so support families, individual’s careers, employers and the economy overall. Appropriations from the federal government for specific purposes and flexible federal funds granted to states offer opportunities to make investments in key areas to support the labor force.

The American Rescue Plan Act (ARPA) allocated money for child care, both to organizations providing child care and families with low incomes seeking access to it, and to home and community-based services to help older adults and those with disabilities who need care.

New Hampshire has access to flexible funds from ARPA that can be deployed through the end of 2026, including premium pay for health care and child care workers. These and other temporary federal funds can be used to reinforce and upgrade the current systems of care and provide a foundation to support future needs. However, long-term challenges will require sustained resources to be addressed comprehensively and to support labor force growth as the population ages, including through enhancing access to health care, child care, education and housing.

Some of the pandemic’s effects are transitory, but constraints on the labor force in the state are structural and long term. New Hampshire has an opportunity to make significant investments now, in a time of acute need, and help ensure labor force supports are in place to benefit the economy for all Granite Staters.

     – Phil Sletten, Senior Policy Analyst