The Most Important Ideological Debate of 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.
Tags: ideology, job growth, NH, policy, politics
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Trend Lines 
January 2, 2013 at 4:29 pm
Lack of job growth in NH from 2011-2012 in absolute and relative terms is scary indeed, and don’t see any special circumstances as in some of the other states that would indicate that NH’s numbers are an aberration – especially as the data is not inconsistent with that from the past several years.
Would hope – as you suggest – that legislators, business leaders, etc. would change their lenses from ideological ones focused more on scoring political points, name calling, and simplistic (in a non-simple world) “blame games” to pragmatic reality-based problem-solving ones so we can together figure out how best to solve the problem – because without job growth, our economic prospects are not pretty.
Part of this would be to put all solutions on the table, including ones making new public investments and other governmental initiatives in everything from expanding fiber optic networks to passenger rail (maybe one way to address NH’s possible “non-urbaness” problem below) to lowering health care costs. If these are the solutions we need and they are off the table because we refuse to pay for them or create the governmental programs they require, then won’t we risk locking ourselves into a tragic lose-lose economic future?
On the supply side, while I have a healthy skepticism of many employer claims of a skills gap (when looked at objectively), based on my own kids and their peers (late 20s and early 30s), I think there may be something to NH being unattractive now to the young professionals that are an important component for job growth just because we are not urban. Both my sons headed to urban areas not only because of the wider range of job opportunities but just because cities are “in” and where many of the most talented people want to live – and it would require a significant premium in wages to get them to move to rural NH regardless of tax and housing cost advantages. Also thinks this may hold with younger entrepreneurs.
This is a much different situation than when I moved here 35 years ago when the cities were decaying economically and physically and unsafe and more rural areas like NH were a draw and “in.” (If we had job growth in relatively ‘”in” NH urban areas like Portsmouth, this would provide some support to this hypothesis.)
(Don’t know how much the rigidity in the housing market is a cause on the supply side here and contributed to cutting off the immigration of skilled workers to NH. If this is a significant factor, then the pick up in families moving with the improvement in the housing market should help on the supply side.)
March 8, 2013 at 11:10 am
[…] also inconsistent with estimated job growth trends. In that post and in subsequent posts (here and here) and others as well, I talked about a potential “skills gap” as a contributor to the […]
April 18, 2013 at 1:30 pm
[…] may not be as prominent an explanation for slower job growth as some believe. I’ve also noted the larger economic policy debate that engulfs the skills gap issue. The data I’ve presented in this blog only hints at […]