New Hampshire’s labor market is currently recovering. Employment rates are recovering quickly and are almost back to pre-pandemic levels. However, the state’s labor force has not kept pace, raising doubts about the overall recovery.

In 2019, New Hampshire had 758,463 employed residents. Today, that number is 745,032, according to the New Hampshire Fiscal Policy Institute (NHFPI).

Nicole Heller, a senior policy analyst at NHFPI, noted that while it is encouraging that New Hampshire’s employment numbers have nearly returned to 2019 levels, employment in the state could have grown even more had it not been for the pandemic.

“We might have exceeded where we are now if it hadn’t been for this decline in employment and the labor force,” she said. “It’s not ideal if our labor force is smaller than it was before the pandemic.”

Heller pointed out that the current labor market is such that for every two available jobs there is only one person who can fill them.

New Hampshire faces several workforce challenges. Surveys from April 2023 to April 2024 show that over 56,500 people are unable to work due to illness or disability, about 15,215 are unable to work due to child care obligations, and 14,567 have chosen not to work.

Heller explained that the shortage of staff to care for a child is due to either the high cost of care or a lack of facilities, which means many parents have to deal with long waiting lists.

According to a recent estimate, a family with two young children in New Hampshire spends at least $32,000 annually on child care, making child care their largest annual expense, exceeding even the cost of housing, food and healthcare.

The availability of housing for workers and the aging population are other problems for New Hampshire’s workforce.

The state’s unique location, bordering Maine, Massachusetts and Vermont, and its small size make it easy for residents to commute out of state for work.

According to the U.S. Census Bureau’s American Community Survey, 12.5% ​​of New Hampshire residents work outside the state, compared to the national average of 3.1%.

This trend is particularly evident in the south of the state, where proximity to the Boston metropolitan area is causing many people to move across the border to Massachusetts in search of better wages and benefits.

“Because we don’t have an income tax, it won’t affect us in the same way as other states, but it does limit the labor pool,” Heller explained.