With Unemployment Low, N.H. Firms Struggle To Hire (& Grow)

Nov 15, 2016

New unemployment figures came out Tuesday and at 2.8%, New Hampshire's rate remains the lowest in the nation. On paper, that may sound like a very good thing: nearly everyone who wants a job has one. But if you are an employer trying to fill a vacancy or a company trying to expand, these can be frustrating times.

The offices of SilverTech, a digital marketing firm in Manchester, are going for that Silicon Valley mystique. There’s skeeball in the hallways, a huge screen to play old school video games on, and no shortage of well-compensated coders walking around in jeans.

Derek Barka is Senior Director of Technology at SilverTech. They’ve got about 70 employees and lots of contracts in the pipeline. One problem, though: they are constantly scrambling to find new workers.

"The average wage has certainly  gone up, Even the starting wage, has gone up probably $10,000 in the past four or five years," Barka says.

"It hasn’t happened yet, but we’ve come to situations where work coming in, we have a certain amount of people in the building and if there is not people in the building doing the work, you have to turn the work away."

There are lots of New Hampshire companies in SilverTech’s shoes right now, and not just those that need highly educated, highly skilled workers. Take the Edgewood Center, a nursing home in Portsmouth. They have 20 job openings posted. Jobs that are considered low-skill, like in food service and cleaning.

Patricia Ramsey, the CEO, says she’s bumped up entry level wages to $12, even $13 an hour, but still can't fill the posts.

"We run ads, we’re lucky to get anybody to respond to those ads," she says.

The math here is simple: there are just more jobs than people. At least in the state’s southern tier, where Ramsey hears similar complaints from her peers.

"They can’t hire housekeepers, they can’t hire wait staff, kitchen staff. I’m losing kitchen staff to the local restaurants that are paying even more than we are. It is a wage war right now out there."

And that makes it good times to be an employee. Salaries, for the first time in what seems like a long time, are finally inching up. In manufacturing, for instance, average pay is up 7% since last year.

The problem is, when employers can’t hire, businesses can’t expand.

"Right now, if a company is really growing, chances are they are looking outside of the state for expansion," says Val Zanchuk, president of the industrial parts maker Graphicast in Jaffrey.

He says if you are a big manufacturer looking to, say, build a new plant, New Hampshire is not where you are going to do it. The workers just aren’t here.

"Some companies are just going to throw in the towel and move someplace else, where there are people available," says Zanchuk.

So, how exactly did we get here? How did we go from 10% unemployment nationally and 6.6% in New Hampshire during the Great Recession, to this, a labor shortage?

For starters, take the state’s population, which has been fairly flat during the past decade. But in the 1980s and 90s, it was a completely different story.

"We were importing people at a pretty rapid clip about a generation ago," says Carmen Lorentz, director of the State’s Division of Economic Development, which works to attract and retain businesses.  

"Our population was growing very fast, there were people moving here who were working in high tech companies, who were starting their own high tech companies at that time. And that in-migration of people has really slowed down."

Another factor is New Hampshire has what economists like Russ Thibeaux with the firm Applied Economic Research call a high labor participation rate. That is, most people who can work already do, meaning there’s little slack during boom times.

"If you can’t get more labor out of the people that are already here, and you have a hard time pulling more people in. It really creates a problem," Thibeaux says.

He adds that many younger people are choosing cities when deciding where to live and work, and that New Hampshire’s relatively high housings costs also stand in the way.

None of this is necessarily easy to fix.

"It’s a tough nut to crack."

There are plenty of programs, though, trying to address the labor shortage. Community colleges and businesses are partnering to create pipelines so that employees arrive with the needed skills.

The state is also busy marketing itself through tourism campaigns. 

Overall, Russ Thibeaux says compared to the depths of the recession, nobody should be complaining too loudly right now.

"We’re fortunate to have this problem," he says. "This is actually a pretty good problem to have, as compared to the opposite which is very high unemployment."