Are We Hypochondriacs?

No one has to remind the presidential primary candidates hanging around diners and factories in NH this month that It's about the jobs, stupid! 

January will mark the beginning of the fourth year of this painful downturn. On the national front, despite more than a year of consistent, if tepid, job growth, we're still short 6 million jobs from our peak, and national unemployment remains stubbornly above 9 percent. At the rate we are going it will take us six years to recover the jobs we've lost since the downturn began, not to mention jobs for people just entering the workforce. If you add in people working part time because they can't find a full-time job, and those who have given up looking, national unemployment is more than 15 percent or nearly one in six Americans.

The figures for NH are much less onerous. Our unemployment rate, at about 5 percent, is the lowest in New England and one of the lowest in the nation. We've regained more than a third of the 32,000 jobs lost in the downturn. If we continue adding them at the recent rate, we'll be back to where we were when the downturn began in just 18 months.  Reflecting this improved job picture, personal income in NH is rising once again after an unprecedented dip in the past few years.

So, if things are so great here, why don't Granite Staters feel better? Everywhere I go, people have nothing good to say about our economy. Are we a state of economic hypochondriacs or is something bothersome underlying our enviable numbers? 

Quality, Not Quantity

The answer, like the devil, is in the details. In economics, as in many aspects of life, our sense of how we are doing is influenced by our past expectations. By this measure, NH is underperforming. In 2002, NH Employment Security projected that between 2002 and 2012 we would add more than 100,000 jobs. By the time 2012 ends, we'll be lucky if total employment grows by 20,000 during that period. Overall, the last decade witnessed the fewest jobs added since the 1960s. We've been missing our internal target for a decade or more and that disappointment colors our current perceptions.

Then there's job quality. In 2000 we had 102,000 manufacturing jobs. Those jobs were among the highest paying in the state, with weekly wages 30 percent higher than the state average. Today, despite some modest gains, there are only 65,000 of these breadwinner jobs. Similarly, we've lost 3,500 construction jobs and 2,500 jobs in the high-paying technology sector. Some other sectors of the NH economy did show strength to offset these losses. During the last decade, we saw significant growth in professional services, education, health care and government jobs. But it's hard to see these now-challenged sectors growing as fast in the coming years. 

Job growth in recent years has been in tourism-dependent sectors-lodging and food services, for example. But these jobs pay a lot less than the jobs the state lost. That means there are a lot of blue-collar workers with nowhere to go but down the food chain. This is an aspect of underemployment that is not tallied, but is a major part of the economic story and a source of frustration as income and wealth are increasingly concentrated with fewer people. 

Diagnosis and Treatment

So, then, it seems we are not economic hypochondriacs. We are in better shape than the nation, but nonetheless troubled, as NH experienced an unprecedented loss of jobs in important, high-paying sectors of the economy. So while our numbers seem healthy, many of our people continue to suffer.

Our ills are real and there are no easy fixes. We have to recognize that the days of large manufacturing enterprises hopping the border from Massachusetts into NH are probably over, at least for a while. We should adapt to slower growth and grow our own businesses, which we're pretty good at. Despite the decade-long economic malaise, we experienced a net gain of 2,150 businesses during the last 10 years. Two thirds of these have fewer than 10 employees. New Hampshire firms with fewer than 10 people employ 80,000 people and more of their economic activities start and stay in NH than is the case with many larger enterprises. 

There's also plenty of help for these budding entrepreneurs through chambers of commerce, SCORE and other business resources, but I'm not sure the outreach is all it could be. Plus, in many cases, the services are reactive to problems, rather than proactive. The skills a budding entrepreneur needs are basic-developing a business plan, bookkeeping, marketing, advertising and negotiating a lease to name a few. The state needs to guide these new businesses to the help they need as we depend on them to help our economy. n

Russ Thibeault is the president of Applied Economic Research, an economic and real estate consulting firm he founded in Laconia in 1976.  He has completed assignments in more than 30 states. He can be reached at russwt@metrocast.net or 603-524-1484.