NH Job Market Improves, but Wages Lag Behind Inflation

The analysis, published ahead of Labor Day by NHFPI researcher Ben Reynolds, shows that the 2026 job gains represent a partial recovery from 2025, when state nonfarm employment contracted by 1.1%. Even with this rebound, average private-sector wages failed to keep pace with consumer prices in the Northeast during both 2024 and 2025. During the first seven months of 2026, that persistent gap reduced estimated worker purchasing power by 1.6% relative to the previous year, according to institute data drawn from New Hampshire Employment Security and the U.S. Bureau of Labor Statistics.

“On Labor Day, we recognize the contributions workers make to New Hampshire’s economy, and the data show there is a lot to be encouraged by,” Gene Martin, executive director of the New Hampshire Fiscal Policy Institute, said in a statement. “But having a strong economy means more than simply having more people employed. It also means workers can see their earnings keep pace with the cost of living and that Granite Staters across ages, industries, and income levels have opportunities to thrive.”

Productivity Gains Outpace Compensation

The disconnect between worker output and financial reward extends across a multi-decade timeline in New Hampshire. Between 2007 and 2024, labor productivity in the state climbed 32.8%, while inflation-adjusted hourly compensation increased by only 20.3%. That trajectory created a 12.5 percentage-point productivity-pay gap, according to the NHFPI study.

While the state’s broader economy generates higher output per hour, rising living expenses challenge household stability. The median single-family home sale price reached $535,000 in 2025, while average annual center-based childcare for an infant and a four-year-old hit $30,000, according to Institute figures. These steep costs complicate efforts to attract and retain working-age families.

Uneven Industry Growth and Changing Labor Demographics

Employment gains across New Hampshire remained heavily concentrated in specific sectors during 2026. Health care and social assistance maintained its position as the state’s largest employment sector. Conversely, employment declined across manufacturing, retail trade, and wholesale trade.

Small businesses served as a primary engine for job creation. Companies with fewer than 20 employees accounted for 79% of net job growth across the state in 2025, according to employer surveys cited in the report.

Demographic shifts within the workforce also emerged over the 12-month period ending in June 2026. New Hampshire stood out as the only New England state to experience overall labor force growth during that timeframe. However, the internal composition shifted: workers aged 20 to 34 declined in the labor force, while participants aged 35 and older increased their share. Researchers noted this trend indicates that young adults and families face acute affordability barriers that may drive them out of state.

Longer Job Searches Despite Low Unemployment

Although the state unemployment rate remained under 3% through mid-2026, workers who lost their jobs encountered greater difficulty securing new employment. Ongoing unemployment claims during the first seven months of 2026 ran 23% higher than during the same period two years earlier, even though new unemployment claims held relatively steady. According to the NHFPI, this divergence indicates that unemployed residents spent significantly longer periods searching for work as the labor market recovery took shape.