Mass Appeal

Jeanette Riendeau of Manchester prepares to take the bus back home to NH from her job in Boston. Courtesy photo.

Most weekdays, Jeanette Riendeau boards a bus to Boston to her job as director of marketing and business development for the law firm Bernkopf Goodman. She uses the time to catch up on email, work or television shows she’s missed. And she’s not alone. Riendeau joins 106,000 Granite Staters who commute out of state daily—the vast majority of whom, 83,589, work in Massachusetts.

This defies conventional wisdom. After all, living here and working there means commuters (if also homeowners) pay NH’s notoriously high property taxes plus the 5.1 percent Mass. income tax, which we don’t have in NH. Add to that a painful commute through congested highways and unpredictable traffic jams. So why do it?

For Riendeau, the answer is simple: opportunity. After working as a marketing professional for a couple of law firms in NH, Riendeau was ready in 2014 to advance her career.  Her challenge was how few NH law firms offered the type of position she wanted. So she looked to Boston and discovered many more firms with in-house marketing.

“There were significantly more opportunities. The firm I went to is a perfect fit; it is midsized, and I have an opportunity to have a great relationship with every single one of our attorneys, which makes me better at my job,” says Riendeau, who was recently honored by Massachusetts Lawyers Weekly with an Excellence in the Law Award in the marketing category. “The cherry on top is the salary. I’m making twice what I made in New Hampshire.”

While the distance a commuter travels from NH to Massachusetts may be inconsequential, depending on where you live, the salary gap is wide. The largest county in Mass., Middlesex County, borders NH’s largest county, Hillsborough. Middlesex County, which does not include Boston, has 53,900 businesses, 889,400 people employed and an average weekly wage of $1,555, according to the third quarter 2016 County Employment and Wages Report from the U.S. Bureau of Labor Statistics.

Compare that to Hillsborough County, which has 12,300 companies and 200,400 employed with an average weekly wage of $1,137, or 27 percent less income.

Rockingham County, the other NH county with a high commuter rate,  has 11,000 businesses and 149,500 workers making an average weekly wage of $989, or 36 percent less income.

“Middlesex County has somewhat more jobs than all of New Hampshire,” says Russ Thibeault, founder and president of Applied Economic Research in Laconia. “The range of quality jobs available in Massachusetts is broader and deeper than in southern New Hampshire.”

Statistics from DataUSA show just how wide the opportunity and wage gaps are. Hillsborough County has a median household income of $74,323, while that of Middlesex County is $90,267, per DataUSA, which notes the two counties compete for talent in the same top five industries: health care and social assistance; manufacturing; retail trade; professional; scientific and tech services; and educational services.

Judging by commuting numbers, Massachusetts may be winning the talent battle. While NH attracts 29,952 Mass. residents to work here, the Bay State has 83,589 Granite Staters streaming over its borders.  

“If you are a skilled person, you are more likely to find that sweet job in Massachusetts than in New Hampshire and when you do, it probably pays more in Massachusetts than in New Hampshire,” Thibeault says.

Thibeault also points to census figures that show while 106,000 Granite Staters find work outside NH, only 65,000 residents of other states come to NH for jobs, resulting in a net loss of 41,000 workers.

The Cost Myth
But what about higher taxes, crazy traffic and added automobile expenses?

Thibeault says plenty of people in border communities, like Nashua, Salem and Windham, endure the commute for better pay. “More than 100,000 people are saying, ‘See you later, alligator,’ I’ll do the commute and pay the taxes,” he says. “It’s a combination of job availability and wages. On a combined basis, they offset the economic friction of taxes and commutes.”

And those income taxes are significant. Vermont’s income tax is 8.95 percent. Maine’s taxes range from 5.8 to 7.15 percent and Massachusetts is at 5.1 percent, per the Tax Foundation. And both Maine and Massachusetts reduced their income tax rates last year.

Riendeau has done the math. Even with paying income tax and the $5,000 in annual commuter expenses (bus fare, gas when she drives and parking), she says she still makes more than working in NH. “I factored all of that into it, and I still come out way ahead,” she says. “My biggest concern was the commute. I wasn’t sure taking that much time out of the day, how it would impact my family life and myself. Would it be too much a long day every day?”

Three years later, she is still commuting. “People say you spend all this money to commute and pay taxes; that doesn’t make sense. But when I make twice the salary, it does make sense for me,” she says. Of her bus trip, she says, “I love it. It’s quiet. You’re not really allowed to talk or use your phone.” And she notes she appreciates the “forced” down time on the bus.

John Shea, executive director of NH Fiscal Policy Institute in Concord, says commuting decisions are not just about salary. “There is workforce tightness in New Hampshire, but it’s at all levels. It’s not just computer programmers but lower skilled as well. I don’t think it’s necessarily salary that’s the impetus to draw people over the border. It may be more of the appropriate types of jobs in Massachusetts,” Shea says, explaining new jobs being added in NH tend to be service jobs. “State borders are no longer as intimidating as they once were for workforce movement.”

Shea says housing here has become more expensive and a family of two adults and one child in a rural area need roughly $60,000 to make ends meet. “That is not an insignificant income. The areas where we [New Hampshire] have job growth are not jobs with that amount of money,” he says, which may contribute to NH residents seeking better and higher paying jobs over the border.

Critical Mass
The influence Massachusetts has on the NH economy is significant.

A February blog from the Maine Center for Economic Policy proclaimed, “Much of New Hampshire is a bedroom of Massachusetts.” The Maine Center points out that NH experiences a 3.1 percent decline in daytime population—one of the largest daily fluctuations in the country, trailing only Maryland.  

With NH’s low unemployment and lack of skilled talent topping the list of concerns of NH employers, losing that much talent to other states is a big issue for NH. It raises questions about the much-touted figures that NH enjoys a higher level of per capita income when it appears the Granite State may have other states to thank for that.

“One result of tens of thousands of New Hampshire residents commuting to work in Massachusetts every day is that per capita income in New Hampshire is higher than it otherwise would be, since wages and salaries for jobs located in Massachusetts are about 25 percent greater than in New Hampshire,” the Maine Center for Economic Policy states in its blog, adding that the two counties with the highest per capita income—Hillsborough and Rockingham—also happen to see 20 percent of their wage earners working in Massachusetts.

Another area of concern, Thibeault says, is that Massachusetts firms once had a bigger presence in southern NH with major operations, field offices and subsidiaries.

“Those firms are gone and we haven’t really replaced those jobs very effectively,” Thibeault says.

Also playing into the number of commuters are those who used to live in Mass., moved to NH for the quality of life but kept their higher income jobs south of the border. Among them is Joanne Burke, a quality assurance supervisor at Thermo Fisher Scientific in Chelmsford, Mass. who has worked at the company for just over three years but moved from Westford, Mass. to Nashua over two years ago with her husband.

“Our taxes were really skyrocketing in Westford, and we just decided we wanted to move to New Hampshire. We knew property taxes would be a little higher there, but we decided to downsize, and we were able to get a house cheaper in Nashua than we could have in Lowell or Dracut,” Burke says, adding the house they bought would have cost $50,000 to $70,000 more in Mass. The couple also liked NH, having vacationed here for years at a lake house they own.

The move to Nashua added about 12 minutes to her commute, and Burke and her husband both kept their jobs in Massachusetts, allowing them to enjoy a better quality of life.

Thibeault says these factors mean NH employers need to raise wages to compete for workers. “We have to outpace the wage growth in Massachusetts in order to make a dent in that. Equally important, we have to show growth in good paying jobs so people say, ‘I don’t have to do this anymore. I can get a good job in NH’,” he says. “New Hampshire is a great place to live, but unfortunately we don’t have enough good paying jobs.”

Taxes Versus Quality of Life
Shea says investing in affordable housing, more transit options, affordable childcare or full-day kindergarten could encourage more people to work in NH. “If New Hampshire invests in this type of social services and human capital, it could offset most of those issues we have with the draw of Massachusetts,” he says.

Tax policy may actually be less influential. The Center on Budget and Policy Priorities, a Washington D.C.-based research and policy institute focused on federal and state policies designed to reduce poverty and inequality, released a report in May 2014 noting state taxes have a negligible effect on Americans’ interstate moves.

Instead, the report goes on to show that the top reasons for moving are jobs and family.

“Its lack of income tax did not prevent some 373,000 households from moving out from 1993 to 2011, only slightly fewer than the 389,000 who moved in. All of New Hampshire’s net in-migration was attributable to in-migration from Massachusetts, mostly from the Boston metropolitan area. More than a quarter of the workers in such households continue to work in Massachusetts, and their migration is not driven by the absence of an income tax in New Hampshire since they would still pay income taxes on their wage and salaries to Massachusetts. Finally, Maine, which imposes the ninth-highest top income tax rate of any state, experienced net in-migration from New Hampshire from 1993 to 2011,” the report states.