Newsletter and Subscription Sign Up

Policymakers Fixated on NH’s Workforce

Published Friday Feb 24, 2023

Author Steven Porter

NH Capitol Building

The mixed signals are a bit disorienting. On the one hand, fairly strong demand for goods, services and labor suggests NH is poised for business growth. On the other, rapidly rising costs and well-founded recession fears suggest employers should brace for tougher times ahead. 

“We have some indicators that are at odds with one another, and I think that leaves the business community with some uncertainty heading into 2023,” says Michael Skelton, president and CEO of the Business & Industry Association of NH. “This is truly a unique economic environment.” 

Business leaders are watching closely to see whether inflation and energy costs show signs of easing up. How those factors play out, combined with how consumers respond, should offer a clearer picture of how much growth, if any, to expect in the coming year, Skelton says. 

SununuPolitical leaders are tuned into these variables just the same. Gov. Chris Sununu (Pictured Left) noted during a public hearing in late November that rising costs, including higher interest rates, must be part of the calculus as he prepares the state’s next biennial budget. 

“Unfortunately, with the extreme rise in those interest rates, there’s really no way to avoid some form of a national recession,” he says. “It is real. It is coming.” 

While business leaders and policymakers continue to debate what should be done to maximize NH’s economy, a shared priority has been resonating with Republicans and Democrats alike—workforce. 

Officials right and left are calling for workforce investments both to help Granite Staters and strengthen the state’s economy. 

Voters Make One Big Change

Aware of the rising costs pinching their pocketbooks, voters opted in November for stability. They reelected Sununu, a Republican, along with all three Democrats who were up for reelection in the NH congressional delegation. They also maintained Republican majorities on the state’s Executive Council and in the state Senate and House. 

The one notable adjustment voters made was to the composition of the state House, where Democrats gained seats and left the GOP with the slimmest of majorities. That outcome could temper legislative ambitions in both chambers. 

Soucy“I think it could go one of two ways,” says Sen. Donna Soucy, D-Manchester (Pictured Right), who will serve as Senate minority leader. “I tend to be a glass-half-full kind of person and remain optimistic that it means we can reach compromise on a number of things because we’ll be forced to. But, you know, it could mean that very few things pass the House as a result of the divisions.” 

Sen. Jeb Bradley, R-Wolfeboro (Pictured Below Left), who will serve as Senate president, said state lawmakers have enough in common to join forces on key legislation to support the state’s economy. “I think there are opportunities to maybe not have the broadest of possible agendas but to target things like energy and housing and the competitiveness New Hampshire needs.… I’d like to think those are things that we can find more agreement rather than less,” Bradley says. “But we’ll see.” 

BradleyState leaders can’t do much to ward off macroeconomic trends, but they can proceed with caution and careful planning to weather whatever comes and emerge well-positioned for growth. 

“The question for New Hampshire is how do we cushion the blow of the federal policies that have created the energy situation, inflation situation to the point that New Hampshire maintains its competitive advantage vis-à-vis other states?” Bradley says.

To that end, Skelton says state policymakers need to address two top pain points for NH’s business community: workforce availability and the cost of energy. 

Workforce Constrained 
by Housing Market 

Skelton says BIA members have cited many reasons why the state is dealing with a shortage of workers, including underinvestment in career and technical education, and public colleges and universities. But the biggest factor hampering workforce availability, he says, is the lack of housing. 

The rental vacancy rate across NH fell to 0.5% in 2022, according to a report from NH Housing. A “balanced rental market” has a vacancy rate of about 5%, but that hasn’t been the case in NH since 2010, according to the NH Housing report. 

Meanwhile, the median gross cost to rent a two-bedroom apartment and pay for utilities climbed to $1,584 per month, up 26% in the past five years, according to the report. 

“Without more affordable options,” Skelton wrote in a recent blog post, “New Hampshire’s population will further stagnate, making the current labor shortage even worse.” 

State officials have been working to solve this problem. Recent efforts include the allocation of $100 million in federal funds for the InvestNH program to support development of rental housing and incentivize affordable housing. 

Soucy says efforts to build more affordable housing are well underway in some communities, such as Manchester. “But that’s not true around the state, and I think we need to do more to incentivize affordable housing,” she says.  

Bradley says the legislature passed parts of a bill he advanced last session to expedite approval processes, but the state needs to do more for workforce housing. “I think that’s a top-tier issue for attracting new and younger workers to New Hampshire that we clearly have to continue to do,” he says. 

WilhelmRep. Matthew Wilhelm, D-Manchester (Pictured Right), who will lead the Democratic caucus in the House, says he’ll push for representatives to connect with housing advocates and business leaders in a systematic fashion. “It may require that we establish either a standing committee or a special House committee on housing … where we can get some lawmakers who have been around for a couple of terms who are open to compromise and working across the aisle developing bipartisan policy solutions to figure out what’s going to work,” he says.

Wilhelm and Soucy say promoting access to affordable child care is also important to boost workforce availability. A spokesperson for Republican leaders in the House declined an interview request before Organization Day. 

Energy Costs Hit Hard

Tackling the other top pain point for NH businesses, rising energy costs, will be tricky. For one, the state’s power supply is plugged into a regional grid, so some problems and potential solutions are inherently regional. But even within the state, bipartisan initiatives on energy policy have faltered before the finish line.

Soucy says Sununu vetoed bipartisan legislation that would have boosted renewable energy. (The governor’s office did not respond to requests for an interview.)

“I still firmly believe the more rapidly we move towards renewable sources, the more potential for savings across the board,” she says. “So, I think you’ll see some of those proposals coming forward once again. I’m hoping that the governor will look upon these a little bit differently so that we can do something to try to deal with the increasing costs. … I guess we’ll have to wait and see if the governor weighs in earlier in the legislative process on those issues in particular.” 

On the campaign trail, Sununu said leaders should push toward renewable energy sources but stay wary of potentially high upfront costs. 

Skelton says energy policy is, by its nature, a long-term consideration, so the state took an important step in the right direction by releasing a 10-year energy strategy this year. 

In recognition of the near-term pain people will feel when they pay their bills this winter, Bradley notes that state leaders dedicated $42 million to expand energy assistance and $20 million to continue rental assistance. That’s possible, he says, because of the state’s smart approach to budgeting. 

Refocusing Time and Attention

Skelton says lawmakers, advocates and business leaders spent a lot of time last session discussing proposals related to COVID-19 safety protocols. He hopes to leave those discussions in the past and let businesses implement best practices as they see fit.  

“I think our time is a resource, and it would be best spent on issues like workforce, housing and energy, rather than those types of pandemic-related issues,” he says. 

There are other areas, too, where lawmakers might free up time to focus on shared priorities. 

Bradley says the unfortunate reality is that so-called “right-to-work” legislation would probably pass the Senate but fail in the House again this session. “I’ve supported right-to-work. But just look at the political reality. I think it’s a tough sell,” he says.  

Bradley says the state budget will be “the single most important piece of legislation” lawmakers produce in 2023, “and it’s going to require collaboration.” The key, he says, will be to maintain the tax policies and governance principles that give NH its competitive edge. 

Soucy says she expects the budget process will include reauthorization for Medicaid expansion. “That has implications across all systems,” she says. “It definitely impacts businesses in that we need a healthy and stable workforce.” 

Wilhelm says it’ll be incumbent on the governor to ensure leaders from both parties are heard in the budget-crafting process. The days of tacking controversial social policies onto the budget without a public hearing and an up-or-down vote in the House are over, he says. “That’s the old way of doing business,” he says. 

The important thing to keep in mind, Wilhelm says, is that there’s a balance that needs to be struck between giving free markets free rein versus protecting the people whose labor powers the economy. 

“We can be a strong state for businesses while also making sure that workers are supported with a living wage, with affordable housing options, with reasonable energy prices, with affordable child care,” he says.

All Stories