Archive for the ‘NH Economy’ category
February 7, 2013
Back in October I posted about the Federal Reserve Bank of Philadelphia’s leading index for each of the 50 states. The Fed’s leading index for each state contains the same, six, state and national variables so I think they miss some of key indicators that can affect individual states but they are a great way to quickly compare the trends across states. It is also good to get a dispassionate, “outsider’s” view of the direction of every state’s (including your own) economy. Below is the latest summary of what each state’s leading index is saying about the growth prospects over the next six months.
Unfortunately, NH is again showing up in the group of states that is expected to lag in economic growth over the short-term. PolEcon’s NH Leading index contains more NH specific economic indicators than does the Philly Fed’s NH Leading Index but the two indices generally agree on the short-term direction of the NH economy. Not this time. PolEcon’s NH leading Index is signalling an uptick in the rate of NH’s employment growth. As I noted back in October, statistical tests show a stronger relationship between PolEcon’s Leading Index and the rate of NH’s employment growth than the relationship between the Philly Fed NH Index and NH’s employment growth. I wish I could say I was confident my index was going to be more accurate this time but I can’t. I do take some comfort in knowing that whenever I have had the most doubts about the predictive ability of the NH Leading Index it always seems to do the most to confirm its value.
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Categories: employment, Leading Index, NH Economy
Tags: Economy, Leading Index, NH, state
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January 3, 2013
I have been uncharacteristically and uncomfortably gloomy in my assessment of the NH economy lately, but I still hold out hope that New Hampshire’s job growth numbers for 2012 will be revised upward early in 2013 based on the volume of help-wanted advertising in the state and reported growth in aggregate wage and salary income in the state. Even if that doesn’t happen there are encouraging signs that job growth will accelerate. PolEcon’s NH Leading Index increased this month to a value of 13.0, down slightly from 16.7 the prior month, but it has registered its highest three-month reading since early in 2010. At least some uncertainty around the “fiscal cliff” that caused many firms to postpone hiring has been removed. The U.S. Treasury debt ceiling still needs to be raised this month and a repeat of the last debt ceiling antics could produce another big drop in business and financial market confidence, but overall, the national and NH economies appear poised to see accelerating job growth as 2013 progresses.
PolEcon’s NH Index of Leading Indicators is a diffusion index consisting of nine state and national indicators of economic activity designed to predict changes in the rate of employment growth in NH. When index scores are above zero, more of the leading indicators are moving in a positive direction and the NH economy is expanding. The Index has a strong statistical relationship with changes in NH employment, Index scores lead changes in the rate of NH employment growth by 3-6 months. Using statistical techniques, Index scores can also be converted into a probability that NH will be in a recession sometime within the subsequent six months.
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Categories: employment, job growth, Leading Index, New Hampshire, NH Economy
Tags: employment, job growth, Leading Index, NH
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January 2, 2013
It is hard to fix a problem that you don’t know you have. That seems to be the case in NH where I still hear “NH has fared better than most states since the recession.” I disagree and the U.S. Bureau of Labor Statistics is on my side. Just before Christmas the Bureau of Labor Statistics issued its monthly report on November employment and unemployment in the 50 states. Once again the news was not good for New Hampshire. Most media reports chose to report that NH’s unemployment rate dropped slightly during the month without noting that the number of jobs located in the state declined in November (John Nolan of the Foster’s Daily Democrat and Rochester Times was a notable exception).
Compared to employment in November 0f 2011, November 2012 employment in NH was lower by1,700 on a seasonally adjusted basis and lower by 2,500 on a not seasonally adjusted basis. Only five states have fewer jobs located in their state in November of 2012 than they had in November of 2011. As I have suggested before, NH’s job growth goes a long way toward explaining why the state’s housing market isn’t seeing the same recovery in prices that appears to be occurring in many other states.
I am hoping that in 2013 policymakers focus much of their debates (ideological or otherwise) on policies that strengthen the NH economy. I hope that most of those debates encourage the introduction of solid empirical evidence in support or opposition to any proposals (I tried last year but could not find any data or methodology to determine the impact that allowing pistol duels in the statehouse would have on job growth) and are absent the vitriol and ad hominems that characterized so many debates last year. Policies that can influence job growth can easily accommodate the needs of the two-party system to make the sort of ideological arguments and distinctions that they feel are needed to influence elections.
Whether job growth is slower now than in the past because employers are not willing to add additional workers (supply side arguments) or because they are not able to find enough or enough qualified workers (the human capital and “skills gap” argument) is among the most important issues to understand in setting both national and state-level economic policies. If employers are unwilling to add employees that are readily available, then the efforts to spur job growth focus more on factors affecting businesses (tax rates, regulations, costs etc.). If job growth is constrained because employers are unable to find enough or enough qualified workers to fill open positions, then the focus of efforts to spur job growth will be more effective if they look to influence demographic trends, increase the skills of the labor force, and/or better match the skills of workers to the needs of employers. In reality this is not an either or question because inadequate attention to the needs of either employers or the workforce will produce sub-optimal economic growth. I’ve tried in this blog to introduce some evidence related to the human capital argument for job growth trends and I will bring some supply side evidence in the future as well.
Ideological or not, respectful and civil or not, recent trends in NH’s job growth and the implications for future growth have to be the first and most important policy debate of 2013.
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Categories: employment, job growth, NH, NH Economy, Policy, Politics, Skills Gap
Tags: ideology, job growth, NH, policy, politics
Comments: 3 Comments
December 10, 2012
I know its a tough labor market for young people and recent college grads, but they still represented a larger portion of new hires in NH in 2011 than would be expected based on the percentage of employment by age in the state. The chart below shows the age distribution of employment in NH in 2011 along with the percentage of new hires in the state by age group. Although job growth has been slow this recovery, the chart still shows that among those who have been hired for a new job (that is the hiring that is not a “call back” of a previously laid-off worker), younger workers make up a disproportionate number of the new hires.
This could be more evidence of, as well as a subset of, the “skills gap” debate. Many employers complain that the skills that young workers and recent grads posses don’t match their needs, and this is true for many occupations, but what this data also seems to suggest is that the mismatch between the demands of employers and those seeking work among the existing workforce is even greater than that for younger workers and new entrants to the labor force. It suggests a bigger problem than just getting kids into the right majors and training programs (although that is a big part of it). It points to a larger problem of a fundamental change in the types of occupations in demand (or the skills required of the same occupations) as well as a “twist” in the labor market that results in differences in the occupational make-up of industries. It is a much more difficult , slower, and likely painful process to have the existing workforce adapt to these changes in order to increase their employment prospects than it is to begin with the next generation of workers, although both will challenge future employment and economic growth for some time.
Of course it is possible that employers just prefer younger and perhaps less expensive workers and that is what accounts for their outsized share of recent new hires. Or it could be a function of the type of industries that were hiring in 2011 (I will be examining this hypothesis). It may be more comforting to view labor market trends from those perspectives but it won’t get us any closer to taking the personal and policy actions necessary to create greater alignment between the skills of our workforce and the skills needed for a more prosperous economy.
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Categories: employment, job growth, Labor, NH Economy, Skills Gap
Tags: age, employment, job growth, NH, Skills gap
Comments: 1 Comment
December 5, 2012
A lot of analysts, me included, have been looking for reasons why employment growth has been slower much of this recovery. That prompts questions about whether the slow recovery from recession is the result of cyclical factors (related to swings in the business cycle) or structural factors that fundamentally and longer-term alter the ability of NH and the nation to create jobs. While some wait for cyclical factors to improve job growth, in NH there is a lot of talk about demographics, migration, and too often (by me at least) the skills gap or mismatch between job openings and the skills of job seekers. Much of the demographic story, especially concerns about NH’s ability to attract people from other states, is relevant – except perhaps for the overblown concerns about NH’s “aging” (more about that in future posts). I believe demographics and things like the skills gap play an important role in the slow recovery and more general downward trend in job growth, both before and following the recession. But today, I offer another, simpler thesis, but one that may be no less troubling. If you look at job growth trends in NH by industry, you see that since the recession, employment weakness has really been most concentrated in three sectors of the economy; construction, government, and financial services. The chart below shows job growth trends over the past several years for total non-agricultural employment in NH, as well as total employment minus construction, government, and financial services. Absent the three hardest hit sectors of the economy, job growth following the recession (until recently that is) didn’t look that much different than the recovery from the briefer, milder recession of the early part of the last decade.
I know construction, government, and financial services are important but they still represent just over 20 percent of employment in the state, so the weakness in employment isn’t as broad-based as pessimists (including me at times) suggest. But what is more troubling is that the weakness in these sectors are more structural than cyclical and thus we may be waiting for a rebound that may never occur. I don’t think that is true for construction, where at least some rebound will occur as the housing market improves, as business investment strengthens, and whenever the fiscal health of governments improve enough for infrastructure spending to pick up. But weakness in government and financial services employment is likely more structural. New financial services regulations are likely to be an impediment to job growth in that industry for some time and there is no end in site for the budgetary impediments that will likely continue to weigh on job growth in the government sector. I, and others, will continue to look at the implications of such things as demographics and skills gaps on recent and prospective job growth, but we can’t fail to recognize that sometimes answers are less complex than the questions.
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Categories: employment, job growth, NH Economy
Tags: construction, economic recovery, Financial services, government, job growth, NH, recession
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November 28, 2012
Small businesses fared the worst during the recent recession and hiring by small businesses has been slower to recover after this recession than it was following past recessions. Robust economic growth does not occur unless small businesses are confident, healthy, and hiring. With a fragile national recovery from recession that has not quickly helped to repair the balance sheets of most small businesses, and with a number of important public policies (regulatory, tax, health care etc.) still uncertain, it is not surprising that small businesses have been less than sanguine about the prospects for the economy and reluctant to hire. That may be changing, however, as the NFIB’s national index of small business optimism has begun to increase. The NFIB index is a pretty good predictor of the direction of job growth in NH and its latest up-tick is consistent with last month’s increase in payroll employment in New Hampshire.
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Categories: job growth, NH Economy, Small Business
Tags: employment growth, NFIB, NH, optimism, Small businesses
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November 21, 2012
A quick review: The “skills gap” explanation for slower employment growth this recovery posits that there are large numbers of jobs waiting to be filled but hiring is sub-par after the recession because of a lack of qualified candidates to fill those positions. Twice I have presented some evidence on the issue, here and here. Most of the concern and evidence about the existence of a skills gap addresses very high-skill technical, scientific, computer, and engineering occupations because our nation, and by extension our state, seem to perpetually be unable to produce enough individuals in those fields to satisfy industry demand. As a result we “import” a lot of that talent from foreign countries (more about this – I promise – in a future post). There is some evidence of this in NH. As the chart below shows, professional, scientific, and technology occupations are the largest, broad category of help wanted ads in the state. But they have also evidenced the smallest increase (a decrease actually) since the recession. There is still a significant demand but it may be that an inability to find qualified applicants has companies in need of those occupations from considering more hiring in the Granite State. A quick review of data for Massachusetts shows that demand for professional, scientific and technical occupations has increased during the same time period.
But more direct evidence of a skills gap comes from the demand for construction and production workers. I am especially interested in the potential skills gap for production workers. The chart above shows that demand for construction, production, and transportation workers has increased significantly since the recession. Although still a much smaller category of help-wanted ads than professional and technical jobs, the increased demand is consistent with anecdotal evidence I heard this week at a roundtable discussion of the Seacoast economy. At that discussion, representatives from industry, higher education, and economic development organizations cited specific examples of companies frustrated at their ability to hire skilled production workers. Some are forming partnerships with NH’s community college system to increase the supply of needed occupations. Those initiatives show promise and I hope the state’s four-year colleges and universities develop more partnerships to address the skills gap in professional, scientific and technical occupations as well because, increasingly, job growth in NH appears to depend on it.
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Categories: Help Wanted, job growth, NH Economy, Skills Gap
Tags: help-wanted, job growth, NH, occupation, occupational demand, Skills gap
Comments: 1 Comment
November 20, 2012
The U.S. Bureau of Labor Statistics released its monthly report on state and local employment today and the good news is that, preliminarily, New Hampshire added 1,000 jobs in October. The bad news is that this is just 1,200 more jobs than the state had one year earlier in October of 2011. For optimists, the most recent trend is likely to be the most important and the monthly report is consistent with the rise in PolEcon’s NH Leading Index.
Nevertheless, the longer-term job growth trend in NH has been weak. Looking at growth in just private sector employment, the situation is no better for NH. As I have noted here, I believe job growth in NH is being underestimated but even if that is true, it is hard to see how the recent past will be revised enough to make NH’s job growth picture look comparable to that of our neighbor to the south or the U.S. as a whole.
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Categories: job growth, NH Economy, U,S, Economy
Tags: employment, employment growth, job growth, jobs, NH
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November 2, 2012
A good national job growth report was released today that showed private sector job growth was up 184,000 in October. With government job losses at -13,000, total employment increased nationally by 171,000. We have to wait a few weeks to see NH’s job growth for the month but regardless of the number, the underlying causes of the state’s relatively slow recent job growth still need to be debated . A solid and empirically-based understanding of the factors influencing job growth rates is the only way to formulate effective economic policy in the state. I am on record as saying (probably too often) that I believe NH’s job growth numbers will be revised upward at some point (probably with the annual revisions released early next year). But even if that is true (errr, when it is conformed to be true), by historical standards, recent job growth in NH will still have underperformed. Whether job growth is slower now than in the past because employers are not willing to add additional workers or because they are not able to find qualified workers (the “skills gap” argument) is among the most important issues to understand in setting both national and state-level economic policies. If employers are unwilling to add employees that are readily available, then the efforts to spur job growth focus more on factors affecting businesses (tax rates, regulations, costs etc.). If job growth is constrained because employers are unable to find qualified workers to fill open positions, then the focus of efforts to spur job growth will be more effective if they look to increase the skills of the labor force, and/or better match them to the needs of employers. In reality this is not an either or question because inadequate attention to the needs of either employers or the workforce will produce sub-optimal economic growth. But in today’s polarized policy environment whatever light is shed on these issues is too often separated by an ideological prism that produces policy proposals aimed at either the needs of business or the needs of the workforce to the exclusion of the other. If job growth is slowed because there are too few qualified workers to meet the needs of businesses then it is not policy maker’s fault but they can help alleviate the problem by adopting more “human capital” policies. Businesses bear some of responsibility for any skills gap because studies have shown that businesses spend less time and money training workers than they did decades ago, and that more of the training that does occur is concentrated on management positions rather than mid- and lower- level positions. In an age when job turnover has accelerated, and the tenure of workers with one businesses continues to decline, it is understandable that businesses would be less willing to invest in workers who may only be with their firm for a short while. But who is more responsible for the decline in employer-employer loyalty and tenure? The labor market has been signaling strong demand increases in many occupations – especially technical and scientific occupations and increasingly skilled production occupations. Older and experienced workers may have difficulty responding to these demands if their experience, education or training is in occupations in less demand but why are younger and new entrants to the labor market not responding to these labor market signals by selecting the majors or training programs that would qualify them for more occupations in demand? One reason is that regardless of whether or not the labor market is signaling many job opportunities in technical and scientific occupations (or skilled production occupations), if large numbers of the emerging workforce don’t have the intellectual and academic rigor to study these subjects the positions will increasingly go unfilled, go elsewhere, or as I will document in a later post, be filled by foreign born workers.
Ok, that was a bit of a rant, now back to the core issue. Is there evidence of a skills gap in NH that is constraining job growth? The answer of course, as it is with almost all economic issues, is both yes and no and also something in-between and with a twist. I will share this evidence across several postings, today I offer one, small bit of evidence that suggests the skills gap is playing a larger role in disappointing job growth trends. I noted in an earlier post that help-wanted advertising has generally been on the rise in NH, while job growth has not. Some of this will be corrected with job growth revisions, but evidence that a skills gap is playing a role comes in the form of the percentage of help-wanted ads each month that are “new ads”. If help-wanted ads are rising and the number or percentage of new ads is rising similarly each month, that means positions are being filled at a fairly consistent rate, but if the number of ads is increasing, but the percentage of ads that are “new ads” is declining, that suggest that positions are not being filled or taking longer to fill – perhaps suggesting employers are having a harder time filling the positions or a skills gap. The chart below shows that indeed, the percentage of monthly help-wanted ads in NH that are :new ads” for the month has been slowly declining, providing some small bit of support for the skills gap explanation for job growth. A lot more evidence is needed, but given the importance of the issue in policy making, it is worth the effort to find or refute it.
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Categories: Educational Attainment, Help Wanted, job growth, NH Economy, Skills Gap
Tags: help-wanted, job growth, NH, Skills gap
Comments: 1 Comment
November 1, 2012
I’ve written often about how important the ability to attract skilled, well-educated individuals is to NH’s past and future economic success. Appropriately, there is much concern over NH’s recent population losses resulting from movements of residents into and out-of the state and what it says about NH’s relative attractiveness. Not surprisingly, that concern results in many simplistic, inaccurate, and analytical flawed explanations for the patterns of migration to and from NH. I don’t have a book, video, seminar, or anything else to sell that depends of any particular explanation for NH’s migration patterns so I will let the data , as it becomes clearer, shape and evolve my theories on the phenomenon.
Here is the basic scenario: NH has traditionally been a magnet for residents moving from another state (most prominently from another Northeastern state – especially MA). During the past decade NH has attracted less net in-migration from other states, especially during the second half of the decade, culminating in net out-migration at the end of the decade. The resulting concern by many (including me) is that NH may be losing its fundamental attractiveness relative to other states. Because NH has relied on in-migration to fuel growth in “human capital” and the economy, this would imply very bad things about the future of our state. I worry a lot about NH’s attractiveness but my answer to the question of whether the state has lost its attractiveness is: “no…….not yet“. Lets look at migration to and from the state during the recession (chart below). During the recession the patterns of the past several decades were largely the same – albeit with different magnitudes. NH gained and lost a lot of residents from other Northeastern states, and smaller numbers from other states in the South and West.
The difference in recent years has been that the positive net flows to NH have been smaller for states that traditionally send NH a lot of residents (the Northeast), while the states with whom NH traditionally has net negative outflows have been larger (largely states in the south and west). But is this a sign that NH is now less attractive? I don’t think so (yet) and here is why. Since the housing and financial crisis and subsequent recession, the U.S. Census Bureau reports that state-to-state movement in the U.S. (on a % basis) has been about as low as it ever has been. One reason for that, many economists believe, is the fact that there were fewer places to move to that had stronger economic growth that often drives migration. But another important factor has been the phenomenon of “housing lock.”
Because of the housing market bust and subsequent housing equity, credit and financial issues, both the selling and buying of homes were disrupted or impossible for large numbers of homeowners in NH and across the country. That has especially profound impacts on net migration to NH. I can’t explain in detail here, but migration patterns in NH indicate that the state has been especially attractive to and a magnate for 30-44 yr. old, two wage-earner married couple families with children. To move to NH they typically have to sell a house in their native state and buy one in NH. Each of those was a lot more difficult at the end of the last decade. I believe this reduced our core demographic of potential in-migrants. At the same time, the housing market crash had less of an effect on the ability of the young, and non-homeowners to move from state-to-state. This is the demographic group that traditionally has shown net out-migration from NH. So the groups most likely to choose NH were most constrained from doing so during the last half of the 2000s, while the groups most likely to leave NH were not constrained from doing so by “housing lock” or other housing market issues. The result – much lower rates of net in-migration to the state. This explanation doesn’t account for all of the recent decline in net migration to NH, but it surely has played a significant role in the trend.
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Categories: Demographics, immigration, in-migration, NH, NH Economy, out-migration, Recession
Tags: Housing, housing lock, in-migration, migration, NH, state-to-state
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