The national economy has made modest improvements, with  New Hampshire continuing to lead the pack. But unemployment numbers can be misleading, and the economic forecast calls for more hard times in 2012.

November saw the national unemployment rate drop to 8.6 percent, its lowest level since March 2009. The nation added 120,000 jobs during the month, cutting the unemployment rate by .4 percentage points  from October.

But there are still 13.3 million unemployed Americans, according to the U.S. Bureau of Labor Statistics. And the large dip in the unemployment rate last month was due largely to the fact that 315,000 people dropped out of the labor force, meaning they gave up looking for jobs and were no longer counted as unemployed.

Furthermore, 50,000 of the jobs added in November were in the retail trade, including many temporary hires for the holiday season.  

As those numbers demonstrate, employment statistics can be a bit deceptive. That’s also true in New Hampshire, where the state unemployment rate has remained almost four percentage points below the national rate throughout the recession. New Hampshire also has one of the nation’s highest median household incomes.

Looking at those statistics, it’s tempting to think the Granite State’s economy is thriving. But economist Ross Gittell says that’s not the case.

“(New Hampshire) has fared better, but I wouldn’t say so much better,” said Gittell, professor of management at the University of New Hampshire. He said many of the state’s employed residents work part-time or temporary jobs.

Asked if things are likely to get much better in 2012, Gittell replied with an immediate “No.” The global economic forecast calls for low growth over the next year, Gittell said, and that trend will probably be mirrored at the local level.

“We’re still not expected to recover the jobs we lost in New Hampshire in the recession until 2013 or 2014,” he said.

the numbers
As of October, New Hampshire’s unemployment rate was 4.9 percent, while the national rate was 9.0 percent. New Hampshire’s seasonally adjusted unemployment rate of 5.3 percent was fourth lowest in the nation, behind only North Dakota (3.5 percent), Nebraska (4.2 percent) and South Dakota (4.5 percent).

New Hampshire’s average median household income for 2009 and 2010 was $65,948, which was second in the nation, only slightly behind Connecticut. By comparison, Mississippi had the lowest median income at $36,821.

But 36,000 New Hampshire residents were still unemployed in October, including 9,300 in Rockingham County and 3,300 in Strafford County. (State employment numbers for November will become available on Dec. 13, according to Annette Nielsen of the Economic and Labor Market Information Bureau.)

How has New Hampshire managed to keep its unemployment rate so low? There are a number of factors, Gittell said. For one thing, the state has a highly skilled and educated workforce. New Hampshire is toward the top of the nation in terms of the percentage of workers who have a college degree, and people with a degree are about half as likely to be unemployed as people without one.

Also, New Hampshire has a strong hospitality industry, and the weak economy may actually be driving more tourists to the state. Many New Englanders are vacationing close to home to save money instead of traveling long distances.

Another factor is that New Hampshire’s manufacturing industry suffered heavy declines in the late 1990s and early 2000s and, therefore, has not lost as many manufacturing jobs during the recession as some other states. The manufacturing companies that remain offer high-tech jobs that pay good wages.

Also important to New Hampshire’s low unemployment rate is its aging population, said local demographer Peter Francese. The state is filled with well-to-do working people between the ages of 45 and 64.

“New Hampshire is chock-a-block with baby boomers who earn a very good living, and they’re relatively affluent,” Francese said.

In the short-term, that means New Hampshire’s unemployment rate will probably continue to be among the lowest in the nation.

“I’m not terribly concerned about the short-term economic outlook for New Hampshire. I think we’ll probably do quite well in recovering from this recession,” Francese said. “What I would be concerned about is the long-term.”

The problem, he said, is that once members of the baby boomer generation start retiring, there are few young workers waiting to take their place. School populations have been dropping across the state, and college graduates quickly move elsewhere.

“The decline in the working age population is going to mean very serious stuff for the economy 10, 15 years down the road, maybe even five years,” Francese said.

In 2012, though, the economic situation is likely to be similar to 2011, Gittell said. The debt crisis in Europe will continue to stall the global economy, and the housing market will continue to stagnate. Economic growth will be sluggish.

New Hampshire workers who have a job and have paid off a good portion of their mortgage should be in good shape next year, Gittell said. But people who are unemployed, underemployed or in debt may be in for another tough year.

the need
And employment rates aren’t everything. Despite a comparatively low unemployment rate and high household incomes, a great many New Hampshire residents are suffering. The evidence is in the continually growing demand for food and heating assistance across the state.

For the last three months, demand at the Seacoast Family Food Pantry in Portsmouth has been about 80 percent higher than the same three months in 2010. Executive director Diane Giese outlined the grim numbers. In September 2010, the food pantry had 159 customers; this year, they had 272. In October 2010, they had 163 customers; this year, 291. In November 2010, they had 166 customers; this year, 272.

“I have to say that I sort of thought at this point we would be plateauing, and we are not. We get new people coming in every day,” Giese said. “Clearly, based on the number of visits, the need is still growing and still out there.”

Prior to the recession, she said, a busy month would bring about 60 people to the pantry. Recent months have brought close to 300.

“It’s very dramatic,” she said.

Demand for heating fuel assistance has been equally dramatic. The N.H. Office of Energy and Planning received just shy of 52,000 applications for fuel assistance in the winter of 2010-2011, and they’re on pace to match that number this year. As of early December, the office had received more than 32,000 applications.

“It’s very comparable to last year. It’s been around the same, which means that the demand is high,” said fuel assistance program manager Celeste Lovett.

Even more alarming, the state currently has about $14.7 million in funding available for the program, which is less than half the amount they had last winter. And federal reports project the cost of home heating oil will be at an all-time high this winter.

'All state funding for fuel assistance program comes from the federal Low-Income Home Energy Assistance Program (LIHEAP). It’s unclear whether the federal government will direct more funding to New Hampshire in the coming months. 

“We are definitely needing additional money,” Lovett said. “We are looking for a better idea of what our final appropriations will be.”

The ailing economy is one of many factors that affect demand for fuel assistance. Lovett said demand leapt dramatically between 2007 and 2008, when fuel prices spiked. Two-thirds of the program’s applicants have an elderly or disabled person in the household, she said, while the others simply fell on hard financial times.

The Seacoast Family Food Pantry, too, sees many elderly or disabled customers. In fact, the number of senior citizens that visit the pantry has increased by roughly 700 percent over the past few years, Giese said.

The food pantry does not ask its customers to explain why they need assistance, but many tell their stories anyway, and Giese has found that a large portion of them are underemployed.

“These are folks that have part-time jobs or temp jobs or had jobs but the hours have been cut back and they haven’t been increased again,” she said.

Right now, the pantry’s shelves are well stocked, but the food can go fast around the holidays. 

“If you have 20 families come through in a day, suddenly the shelves don’t look so full anymore,” Giese said. “I lie awake at night thinking sometimes, ‘Will we always be able to meet the need?’”

Giese, along with Byron Grant of Operation Blessing and JR Ferguson of the Salvation Army, served as grand marshals of the Portsmouth Holiday Parade on Dec. 3. Volunteers from Portsmouth High School pushed shopping carts to collect food donations from parade attendees.

But Giese said donations tend to decline after the holidays, leaving the shelves relatively bare in the summer. That’s a problem, because demand typically goes up in the summer, when kids don’t get free school lunches.

“My New Year’s wish would be for people to remember us in the spring and the summer,” Giese said.

the solution
With the New Hampshire primary looming and the presidential election less than a year away, the economy will be a hot topic of debate in coming weeks. The numbers do not bode well for President Obama. Although the unemployment rate dropped in November, the number of long-term unemployed—those who have been jobless for at least 27 weeks—remained steady at 5.7 million. That’s a lot of disgruntled workers.

The economy will remain a major issue in New Hampshire, as well, as the Legislature considers an array of bills in January. According to Gittell, the most important thing for the long-term health of the local economy is to retain a skilled and educated workforce. That means providing ample funding for education at all levels, as well as funding for workforce training and development.

“The last thing you want is to reduce investment in our workforce,” Gittell said. “That’s really going to undermine any chances for good economic growth when the global economy stabilizes.”

The House of Representatives recently sustained Gov. John Lynch’s veto of a right-to-work bill that would have reduced the bargaining powers of unions, but Republican leaders vowed to introduce similar legislation next year. Proponents say limiting union power would attract more large companies to New Hampshire, but Gittell contests that notion. What keeps large companies away, he said, is that New Hampshire lacks a large pool of young workers who are trained in math, science and engineering.

Peter Francese agreed. He said the idea that right-to-work legislation would bring more companies to the state is “absolute, total nonsense.” Furthermore, states that currently have right-to-work laws have suffered economically.
“Right-to-work states’ wages are lower,” he said. “They go down by a lot. That essentially takes money out of the economy.”

If New Hampshire wants to attract more large companies, Francese said, it must first attract more young people, and that will only happen if they can afford to live here. The state would benefit immensely from adding up to 20,000 workforce housing units, he said. But individual municipalities are reluctant to embrace workforce housing because of the “incredibly powerful mythology” that it will drive up school taxes and drive down property values—an utterly false belief, he said.

Until municipalities do accept workforce housing developments, though, young people will find it financially advantageous to go elsewhere, and large companies will not be able to find the skilled workers they need.

“That’s really the long-term issue,” Francese said. “I’m just hoping against hope that sometime in the next 10 years the smart people that inhabit the state of New Hampshire—and there are lot of smart people—will collectively get together and say, ‘We’ve got to do something about housing.’”

Francese also raised concerns about the idea of expanded gambling in New Hampshire. He said allowing casinos in the state would “absolutely cripple our economy.” New Hampshire currently has several advantages over other New England states, he said, including its lack of a sales or income tax—and its lack of casinos.

“We have prospered immensely by being different, and we should continue to be different and understand that that difference is what makes us strong and what makes our economy really cook, and I think it’s important to recognize that.”