Workforce Challenges Three Years into the Pandemic – Business NH Magazine

First published in Business NH Magazine, June 8, 2023

Despite the economic turbulence of the last three years, factors slowing the growth of the economy in NH today are similar to those holding the state back in 2019. The well-being of Granite Staters continues to be constrained by a lack of available and affordable housing and child care.

Consequently, workforce participation and growth are lower than they would be without these constraints. While housing and child care challenges existed before the pandemic, they have been exacerbated by the health and economic shocks from COVID-19. Public programs to support current workers and develop future Granite Staters’ skills are increasingly important.

Bigger Economy, Fewer Workers

The labor force constraint has become more severe in NH since the pandemic. The size of the economy has grown, but the number of Granite Staters participating in the labor force is smaller.

Gross State Product rose to $83 billion in 2022 (inflation-adjusted to 2012 dollars). That is about $6.2 billion (8.1%) higher than the inflation-adjusted Gross State Product in pre-pandemic 2019.

However, the average number of NH residents participating in the labor force in 2022, which counts people either working or actively looking for work, was lower than in 2019. While the labor force averaged 780,540 people in the last full year before the pandemic, an average of 13,868 (1.8%) fewer Granite Staters participated in the labor force in 2022.

A different survey shows employers reported the number of jobs filled in 2022 within NH’s borders was 2,400 (0.4%) higher than in 2019. This suggests the state may be either losing fewer workers to jobs across state lines or is attracting more workers from other states, relative to before the pandemic. Even by this measure, however, the increase in filled jobs is still well below overall economic growth.

Aging Out of the Workforce

One of the key impacts the pandemic may have had on the labor force is the acceleration of plans for retirement. Many Granite Staters may have exited the workforce earlier than they originally intended due to the pandemic and its threats to the health of older adults.

About half of the adults surveyed by the U.S. Census Bureau who do not have a job say they are retired. Other survey data estimate that the number of Granite Staters age 55 and older who indicated they did not want a job in the 12 months ending February 2023 was 37,300 higher than in 2019. New Hampshire residents aged 25 to 54 who said they did not want a job increased by 9,700, while there was little change among workers younger than 25.

While some of the increase for older adults may be due to people retiring or no longer looking for work, more people have also aged into this group since 2019 as well.

According to U.S. Census Bureau estimates, about 110,300 Granite Staters were 60 to 64 years old in July 2021, followed by nearly 108,700 aged 55 to 59 years. Combined, these groups were approximately 15.8% of the state’s population. Another 166,700 (12%) were 65 to 74 years old.

These figures suggest the state’s labor force would have declined substantially over this time period regardless of the pandemic’s impacts. COVID-19 appears to have accelerated this building workforce constraint.

Factors Holding Back Younger Workers

Survey data identify a few key reasons why younger adults in NH may not be working. The leading reason, provided by about 9.7% of adults between June 2022 and February 2023, was being sick with an illness other than COVID-19 or experiencing a disability. While disabilities have long-term effects, these data show that temporary, seasonal illnesses can substantially affect workforce participation.

About 4.8% of adults indicated they did not want to be employed, while another 3.7% cited a lack of employment because they were caring for children who were not in school or child care. With average child-care center prices in NH rising to $13,151 for a toddler and $14,245 for an infant in 2021, and accessibility limited even when it can be afforded, many parents may be choosing to forgo work to care for children.

The list of reasons provided for not working also included either being sick with COVID-19 or caring for someone who was, with short or long-term symptoms; caring for an older adult; and lacking transportation.

– Phil Sletten, Research Director