A new Josiah Bartlett Center for Public Policy study finds that switching to an online reverse auction for the state’s pharmacy benefits management contract can save New Hampshire taxpayers save up to $22.2 million a year.

The study by Dr. Wayne Winegarden, director of the Center for Medical Economics and Innovation at the Pacific Research Institute, finds that New Hampshire can expect to save an estimated $17.8 million — $22.2 million a year by using an online reverse auction to generate more competitive bids for pharmacy benefits management. Over the three-year life of the state’s existing pharmacy benefits management contract, the savings would total an estimated $42.5 million — $53.1 million. (Under the contract, the annual costs are different from year to year.)

“At a time when budget savings are needed, New Hampshire could save millions of dollars annually by adopting an online reverse auction to purchase PBM services,” Dr. Winegarden said. 

Josiah Bartlett Center President Andrew Cline emphasized the value of always looking for cost savings through improved systems, not simply cutting budget line items.

“This study shows the importance of always looking for opportunities to increase taxpayer value by improving system operations,” Cline said. “Adopting a modern, internet-based bidding system for the state’s pharmacy benefits management is a great example of how taxpayers and public employees can save money without reducing services.” 

Pharmacy benefit managers (PBMs) administer prescription drug benefits for commercial and government health plans. PBMs negotiate prices with drug manufacturers, maintain the plan’s drug formulary (the list of approved drugs), and process claims. 

New Hampshire used a traditional Request for Proposal (RFP) process when it signed a three-year, $212.5 million PBM contract with Express Scripts in 2018. Using an online reverse auction rather than a traditional RFP process could have saved the state tens of millions of dollars over the life of the contract, this analysis shows.

In an online reverse auction, pre-qualified suppliers provide competing bids (typically over multiple rounds) to a single buyer. It is the reverse of the more familiar forward auction, in which buyers compete to purchase a product or service from a single seller. For PBM services, New Hampshire would be the single buyer inviting several PBMs (the multiple sellers) to bid on providing PBM services to the state over a defined time period.

Online reverse auctions have saved governments and private businesses billions of dollars and have become a standard procurement method for large organizations. New Hampshire should adopt them for its PBM contracting as well as any other services for which they could produce savings. 

The full study can be read here (pdf): JBC Reverse Auction For PBM services Study Winegarden

New Hampshire’s economy spent March and April of 2020 rapidly contracting. Cell phone data and reported restaurant and retail store revenue show that consumers voluntarily began staying home in the early March. Then on March 27 the governor issued a stay-home order and ordered “non-essential” businesses closed to in-person interactions.

That one-two punch put nearly 160,000 Granite Staters out of work in a matter of weeks. The state’s unemployment rate rose from less than 3% in March to approximately 15% in April, according to state figures released this week. 

Those numbers are not just statistics on a financial spreadsheet. Each application for unemployment benefits represents a real person who has been made idle involuntarily. 

Those Granite Staters — our friends, neighbors, and family members — have lost the ability to provide for themselves and their families. Some of their employers have stayed open with skeleton crews, some have closed temporarily, some permanently. 

New Hampshire’s economy is in serious long-term danger because roughly 96% of New Hampshire businesses are small businesses. Small businesses tend to have low cash reserves. A JP Morgan Chase study of nearly 600,000 small businesses in 2015 found that the median small business holds less than one month’s worth of cash reserves. A quarter hold less than two week’s worth. If small businesses remain closed by state order much longer, many won’t survive. 

Again, that’s not just a financial story. It’s a human one. Businesses provide the goods and services people need, and the revenue businesses generate pays the rent, the mortgage, the grocery bills, the gas bills, etc., for all of their employees. 

Free economic exchange is not a luxury to be disregarded in times of crisis. It is how Americans feed, clothe, and shelter themselves. It is how most of us define who we are. It is how people generate the business profits that fund scientific research and the tax payments that fund government services. It is, by itself, essential for the creation and maintenance of any prosperous and healthy society.  

Getting people back to work, then, ought to be an urgent priority for state and local policymakers. 

The government has a vital role to play in minimizing the possibility that a deadly new disease will overwhelm our health care system. But achieving that goal can and should be done in a way that produces the smallest possible negative impact on the economy. Here we suggest five ways to achieve both of those important goals. 

To reopen the economy with minimal risk to the health care system, government policy should follow five guidelines:

  1. Exercise the minimum intervention necessary
  2. Focus on safe practices, not categories of businesses
  3. Enable innovation and adaptation
  4. Reduce costs and burdens on employers & business owners
  5. Prioritize information and flexibility over control

Read the full report here: JBC Reopen Report

On public policy, New Hampshire should always beat Vermont, as a matter of principle. That goes double for the handling of money. The state that sends a self-proclaimed “socialist” to the U.S. Senate should never get to say it’s more responsible with a dollar.

New Hampshire has bragging rights here. The Granite State is 12th in the Mercatus Center’s ranking of states by fiscal condition. Maine is 34th, Vermont 39th, Massachusetts 47th. 

And yet there’s one area where New Hampshire and Vermont are uncomfortably close: the Pew Center’s national ranking of the best-funded state retirement systems. Both states are down in the 30s, with less than 70 percent of their pension liabilities funded. 

So Vermont officials might have watched approvingly on Wednesday when the House advanced a bill that would worsen the financial position of the New Hampshire Retirement System. 

Instead of edging the State Employee Retirement System closer to the point at which it might some day have enough money to pay what the state owes its retirees, House Bill 1205 would edge us slightly in the opposite direction.

The state’s retirement system ended the 2019 fiscal year 64.8% funded. The system hasn’t been above 70% funded since 2004. Vermont has two state retirement systems, one for state employees, which is just over 70% funded, and a separate system for teachers, which is funded at about 54%. Pew’s latest ranking (using 2017 data), puts Vermont at 64.3% funded.

By contrast, Maine is a Northern New England lighthouse beacon of frugality, with 82% of its obligations funded. 

HB 1205 would nudge New Hampshire downward by eliminating an existing 10% reduction in retiree benefits that kicks in for Group 1 employees (general government employees and teachers) at age 65. The bill would cost the retirement system $37 million, according to its fiscal note. It would cause a slight (less than half a percentage point) increase in government contributions to the system (that is, taxpayer contributions).

When the mandatory cut was passed into law in 1988, 65 was the Social Security retirement age. The age has since inched up to between 66 and 67 years for retirees born in 1938 or later, but state law has kept the pension reduction pegged to age 65.

As a technical update, one can see the logic behind HB 1205. But that logic doesn’t generate its own money. The bill includes no funding to pay for its increased cost.

It’s a $37 million “giveaway,” Rep. Carol McGuire said when speaking against the bill. 

McGuire wasn’t able to convince her colleagues to vote against the bill. But she did succeed in tabling a bigger one, HB 1341. That bill contains a lot of changes, the largest being that it would raise the contribution rate for a large chunk of Group II employees by changing the formula for calculating their pensions. Municipalities would be hit with a large, mandatory increase in their retirement contributions. 

The bill as originally drafted would have added $142 million in unfunded liabilities to the State Retirement System. An amended version on the House floor on Wednesday had no fiscal note, but legislators say it would cost less than the original. 

Supporters tried and failed to remove the bill from the table on Wednesday, so it remains in limbo for now.

Though New Hampshire’s general frugality has kept the state from issuing the sorts of lavish unfunded promises to state employees that have made jokes of the retirement systems in Connecticut, Illinois and New Jersey, most state pension funds are more fully funded than ours. 

Recent returns indicate that loading the system with more unfunded promises would be particularly risky this year. The retirement system’s rate of return on investment was only 5.7% last year, below the assumed 7.25% and well below the previous year’s 8.9%. That translates into a $229 million (32%) drop in investment income from 2018 to 2019.

The retirement system has a plan to move toward full funding over the next two decades, but it relies on hitting investment revenue targets. Consistently lower market returns, like last year’s, and adding large unfunded liabilities would throw off the plan.

Last year’s U.S. Supreme Court ruling in Janus v. AFCSME triggered a 5.9% reduction in New Hampshire state employee union membership, state payroll data obtained by the Josiah Bartlett Center for Public Policy show. The sudden drop reversed a years-long trend of rising union enrollment in state government.

Prior to the Janus decision, New Hampshire was one of 22 states plus the District of Columbia that forced non-union employees to pay union fees. Janus forbade states from collecting those fees.

New Hampshire halted this “agency fee” collection immediately after the ruling last June. In the following 12 months, state employee unions collectively lost 420 members, or 5.9% of their enrollment.

The vast majority of those losses (92.4%, or 388 members) came from the State Employees Association, according to state payroll figures.

Because the state withholds union dues from paychecks, union membership is trackable through payroll records. Those records show that in the previous five years, state employee unions had grown steadily, adding an average of 184 members a year.

Twelve months later, payroll records show that the Janus decision wiped out nearly half of those gains in just one year. The Josiah Bartlett Center obtained the data through right-to-know requests.

The inescapable conclusion is that hundreds of New Hampshire state employees had been joining labor unions only because they were being forced to hand over their money whether they joined or not.

Finally free to decide for themselves whether to support a union, they’ve chosen, along with more than 2,000 other state employees, to keep their money.

“Agency fees” and free speech

“Agency fees” were withheld from state employee paychecks and given directly to the unions on the theory that collective bargaining agreements benefitted all employees.

In Janus v. AFCSME, the Supreme Court held that state government “extraction of agency fees from nonconsenting (sic) public-sector employees violates the First Amendment.”

The court concluded that agency fee collection “violates the free speech rights of nonmem­bers by compelling them to subsidize private speech on matters of substantial public concern.”

As of the date of the Janus decision, 2,161 non-union N.H. state employees had been compelled to pay $1,012,055.83 in agency fees during the previous 12 months, payroll data the Josiah Bartlett Center obtained last year showed.

Instead of seeing those employees rush to join, unions lost withholdings from another 420 employees the next year. The figures show that agency-fee payers were not the only ones bankrolling unions reluctantly, in violation of their First Amendment rights. So were hundreds of union members.

The Janus drop

To see whether the decline in membership since the Janus ruling was an outlier, we obtained the union membership figures for the five years leading up to the court’s decision.

Conveniently, the Janus decision was handed down on the final week of New Hampshire’s fiscal year, which gave us the ability to look at union membership at the end of each state budget year.

State payroll data show a steady increase in union dues withholdings from 2013-2018. During those five years, state employee unions gained 922 dues-paying members. In no year did union membership drop.

Then, in the fiscal year following the Janus decision, state employee unions lost 422 dues-paying members, or 45% of the enrollment they had gained during the previous five years.

The financial losses that accompanied this membership decline appear to be small, however. According to state figures, unions lost only $5,388.50 for the year.

A drop, not a disaster

The drop in membership is not the financial catastrophe some advocates on both sides had predicted. Long-term effects won’t be known for years, but the immediate effect, though notable, is less dramatic than many had anticipated.

The largest financial losses came with the abolition of agency fees. New Hampshire state employee unions lost more than $1 million a year in agency fee collections from non-members after the Janus decision. But they managed to hold on to 94 percent of their members, losing only a few thousand dollars in membership dues.

The payroll data suggest that most state employees find value in union membership while a smaller portion either doesn’t want to associate with a union or has concluded that the costs outweigh the benefits.

The state payroll data spreadsheets can be viewed here: Union Dues 2013 Through 2019 Web.

A pdf of this brief can be downloaded here: Janus Effect Union On NH Union Membership.

The top two contributors to the re-election campaign of U.S. Rep. Annie Kuster, D-N.H., in this quarter are public-sector labor unions: the Service Employees International Union (SEIU) and the American Federation of State, County, and Municipal Employees (AFSCME). Each union has given Rep. Kuster $5,000 this quarter (not 5,000 quarters).

And until June 27, each of those unions used agency fee provisions in their collective bargaining contracts to take money without consent from public employees who did not wish to give it.

The State Employees Association of New Hampshire is otherwise known as SEIU Local 1984. As of June 27, when the U.S. Supreme Court ruled in Janus vs. American Federation of State, County, and Municipal Employees, the SEA was collecting agency fees from 2,104 state employees, according to data obtained by the Josiah Bartlett Center for Public Policy through a state right-to-know request.

An agency fee is money a public-sector union could take out of a non-member’s pay, ostensibly to cover the cost of collective bargaining. Officially, unions could not use agency fees for political activities. But the extra revenue made these organizations larger and more politically powerful, even if they never spent it directly on lobbying, campaign donations or political ads.

Mark Janus, the Illinois state employee who sued AFSME and won his Supreme Court case last month, successfully argued that being forced to contribute to the union violated his First Amendment rights not just because the union endorsed candidates and policies with which he disagreed. He disagreed with the union’s collective bargaining activities too, and its goal of pushing government spending ever higher.

The Supreme Court agreed with him that the “extraction of agency fees from nonconsenting public-sector employees violates the First Amendment.”

On the date of the ruling, 2,161 New Hampshire state employees were unconstitutionally being compelled to pay $37,913.60 per pay period to unions they chose not to join, according to state data.

From July 6, 2017 to July 6, 2018, state employees were forced against their will to contribute a total of $1,012,055.83 from their paychecks to just two unions, the State Employees Association and the Teamsters.

The payroll records show that through unconstitutional contracts that allowed the state to collect union fees from non-members, public-sector unions in New Hampshire were able to inflate their budgets by nearly 1/5 and their number of financial contributors by nearly 1/3.

This was a forced transfer of money and power from individual state employees to labor unions. That transfer compelled employees to support political positions they did not consent to support.

The Janus ruling made those agency fee clauses immediately null. As a result, individual state employees will have greater leverage when deciding whether to join a union. From now on, the choice of whether any of their pay goes to support a labor union is theirs and theirs alone.

January 2017

By Michael Sununu

Among the many drivers of unsound public policy in this day and age, perhaps the most odious is the alarmism over changes in climate that are supposedly driven by human activity. Time and again, we have seen costly, unjustified, and economically destructive public policy implemented in the name of climate protection, proclaiming that humanity can and should micromanage the earth’s climate, the largest and most complex system mankind will ever encounter. The justification for these costly actions is based on flimsy evidence, exaggerated claims, and a profound ignorance of the natural evolution and cycles of our climate systems. National, state, and local governments have all acted to impose damaging regulatory regimes, costly mandates, and harsh anti-development initiatives in the name of climate change, and New Hampshire has not been immune to the consequences.

On November 30, 2016, the New Hampshire Coastal Risk and Hazard Commission (“NHCRHC”) released its final report (http://www.nhcrhc.org/wp-content/uploads/2016-CRHC-final-report.pdf). This report is 124 pages of alarmist hand wringing, with a litany of recommendations that would expand government and strangle development in the Seacoast area. The apparent goal of the authors is to prod state legislators, bureaucrats and local officials to institutionalize acceptance of anthropogenic global warming (AGW) in state law and state regulations, based on the premise that sea level rise (SLR) threatens our Seacoast in an unprecedented fashion. The unstated result of these actions would be to cede control from local towns to the state, impose huge barriers to development and undermine the economy in the region.

Unfortunately, there is not enough critical analysis and skepticism of the basis for the fears outlined in the report. The result is a document heavy on fearful scenarios, calls to action and demands for spending.

This paper is an attempt to put much of the science in its proper context, educate the reader with real data, raise the types of questions that should have been raised by the NHCRHC, consider the nature of the actual risks involved, and question whether the recommendations are really what the state, the region, and local communities need at this time.

Download the full report: NHCRHC Assessment

Charlie Arlinghaus

November 11, 2015

As originally published in the New Hampshire Union Leader

When it comes to public integrity, New Hampshire is lackluster among states. According to the state rankings of the Center for Public Integrity, “New Hampshire is firmly in the lower tier,” ranked in a tie for 34th with the nominal grade of D-minus. The Center’s State Integrity Investigation found that, as in so many other areas, we aren’t who we think we are.

We think of ourselves as a small state with minimal corruption. The legend has it that our government is small and close to the people, corruption is almost unheard of because so many people involved in the public sector are friends and neighbors, and that the safeguards necessary in more cynical states are superfluous here because everything and everyone is so accessible.

Like many government myths, this one doesn’t stand up to measurement. That helps, perhaps, explain why we avoid measuring things too often.

The State Integrity Investigation didn’t rely on an activist to write a subjective rant. Rather, they developed a comprehensive set of objective measurements — 245 different questions to be scored — and hired experienced journalists in each state to conduct interviews and answer the questions. The results were then peer reviewed by another experienced journalist.

In New Hampshire, the investigation used veteran reporter Ted Siefer, formerly with the New Hampshire Union Leader and lately working with Reuters and other news outlets. Siefer spent more than two years talking to analysts and workers inside and outside government — including me among dozens of others.

The results suggest opacity rather than transparency and won’t come as a surprise to anyone who has spent any time trying to figure out what’s going on inside our government.

New Hampshire has a long tradition of those in charge thinking too much information is a bad thing and not wanting to look too closely at the details. We do generally pay lip service to the idea of public records and have a moderately strong right-to-know law. The flaw, as Siefer points out, is that there is no mechanism to appeal refusals to comply other than the high hurdle of initiating action in state court.

By tradition, New Hampshire’s political class sees no need to police themselves. The most famous incident in New Hampshire’s political history was 30 years ago when infamous House Majority Leader Vinnie Palumbo torpedoed proposed state ethics laws by insisting “gentlemen keep their own scorecards.”

The police later helped with his scorecard on corruption, and he spent a few years as a guest of the state.

The attitude, however, persists. Our campaign finance laws are routinely snickered at around the country as ridiculously archaic with the substance of Swiss cheese. Candidates for high office can avoid any reports until just a few months before the election. Exactly what has to be reported, how described, and permissible uses are the subject of much speculation and multiple interpretations.

The lack of access to information has been on display for the last year-and-a-half in fights between the legislature and executive branch over access to timely budget information. As brilliantly transparent as our tax information is, the spending side is the opposite. Charges back and forth cannot be adjudicated because not only are updates on spending compared to budget not available to the public, those secrets are closely guarded in the Legislature — for example legislative budget writers might normally be expected to have access to agency budget updates.

The new budget transparency law pushed by Sen. Jeb Bradley last session should help but only if appropriately implemented.

A dozen years ago, then-Gov. Craig Benson pushed for but did not receive a significant increase in the funds allocated to the Legislative Budget Assistant’s Audit Division. This little known corner of state government is a staff of 24 that conducts financial and performance audits of state agencies and programs.

Their recommendations often save the state millions of dollars — for example when they recommended competitive bidding of the myriad insurance policies the state buys on itself. They are the group currently charged with figuring out how exactly the state accidentally didn’t spend $20 million appropriated to eliminate the developmental disability waiting list.

Here’s an idea: The current governor might look into Gov. Benson’s old files and dust off his plan on audits. While you’re waiting for that unlikely event to occur, you would do well to read Ted Siefer’s report on state integrity. Be forewarned: It’s a little depressing.

Charlie Arlinghaus

November 4, 2015

As originally published in the New Hampshire Union Leader

The Attorney General’s refusal to defend state law, if allowed to stand, would rewrite state law and create an untenable secondary veto power in an appointed office. The “duty to defend” should itself be defended. The issues involved have little to do with one additional education funding lawsuit and everything to do with the balance of powers in state government.

Two weeks ago, the Attorney General Joe Foster’s office announced that it would refuse to defend the state law on education in the face of a challenge by the city of Dover. Dover is challenging the limits on the rate of increase in a town’s aid — limits that have existed since the law, co-sponsored by then- Sen. Joe Foster, was passed in 2008.

Foster told the press last week that his office “could not find a defense we felt was meritorious.” That this sentiment is the complete opposite of the opinion he had as a state senator is curious, but not the point of the current column.

The biggest problem for state government is not whether the defense of the law is good or mediocre. It matters not whether you supported extending the law or repealing it.  This is about the structure of state government and whether we want to grant the Attorney General a passive veto over laws.

Legal scholars refer to a state official’s obligation to defend state statute as the “duty to defend.” Some states vest a duty to defend, some imply, and others limit it. New Hampshire’s law is fairly clear.

The section of state law that describes the Attorney General’s “Powers and Duties as State’s Attorney” requires “The attorney general shall act as attorney for the state in all criminal and civil cases in the supreme court in which the state is interested.” The use of the word shall creates a duty.

On the supposition that everyone is entitled to a lawyer, the AG is designated as the State’s attorney. Just as criminals are entitled to a defense even if guilty, the duly passed laws of the state are entitled to a defense even if the lawyer so charged is not enamored of the law.

Attorneys general have very rarely refused to defend state law across the country even if states where the office is specifically empowered to do so. Because our law is so clear, a Yale Law Journal compilation of all such refusals finds no precedent whatsoever for this in New Hampshire.

It seems clear at this point that the Attorney General is acting beyond his brief, apparently in violation of state law. But what of it? Why should we be concerned?

First and foremost, the law must be defended. The State as an organization or institution is and must be subject to lawsuits. But it is entitled to a lawyer acting as the State’s attorney. Our rules and regulation — state statutes — create and fund an office that is assigned that task.

If the state official assigned that task refuses to undertake it — and that is precisely what has happened in this case — another lawyer should be found to take the job. For the time being, leave aside the question of whether or not an official should be allowed to refuse a job duty defined by law and still keep his or her job.

If the State’s attorney declines to represent the state — as required by statute — and no alternate provision is made, the state and its law is then denied a defense.

If the state’s attorney were allowed to refuse his duty to defend and no alternate provided, it would allow that official the opportunity to effectively negate state laws. His refusal, his judgment would be the equivalent of a veto of legislation without any ability to override that veto.

If he only refuses to do his duty in cases where he has constitutional concerns then we are allowing him to perform the function normally assigned to the Supreme Court despite being in the executive branch.

It has become commonplace for state attorneys general to seek to enlarge their power and set themselves apart from the rest of the executive branch but this trend should be resisted.

The current kerfuffle is not about one city’s quarrel with education funding. The question at stake is whether the Attorney General may nullify our “duty to defend” law and create for the office a shadow veto to make him half-governor and a shadow judicial review to make himself half-Supreme court.

Charlie Arlinghaus

October 21, 2015

As originally published in the New Hampshire Union Leader

Newly elected Canadian prime minister Justin Trudeau and the late, great Margaret Thatcher can teach timid modern politicians that polling, especially the way it’s reported, doesn’t matter and in fact only drives the skittish toward inaction. Polls are snapshots that can fall to a winning argument. Making and winning an argument matters and the good salesman triumphs over the illusory truth of an ephemeral poll.

Monday night, Justin Trudeau and the Liberal Party of Canada destroyed the election narrative written by pollsters months before and rode from third place into a supposedly-impossible majority government. His victory owes much to the admonitions of Margaret Thatcher and stands in stark contrast to the pathetic pseudo-wisdom peddled by American politicians and their media analysts.

Trudeau is no Thatcherite. It’s fair to say that almost anything Margaret wanted, Justin wants the opposite. He is from the left side of the centrist Liberal Party and the ideological heir to his father Pierre who presided over a massive expansion of the state as prime minister for almost sixteen years.

But his path to power followed Thatcher’s advice that “first you win the argument then you win the vote.” Polls can be changed by winning the argument, selling your position to the electorate.

The Liberal Party long governed by being both a little bit left and little right. It occupied a wide, amorphous swath between the Conservative Party and the left-leaning New Democratic Party. In the last election they fell to third place and were thought to be squeezed out on both sides

Trudeau began the election campaign in third and two months ago was still 12 points behind the leading New Democrats, unlikely to be more than a spoiler.  But the other parties campaigned like Americans — believing the media spin that polls are all that matter and just trying to ride out the lead.

Trudeau campaigned. His message was upbeat and optimistic –“sunny days, my friends, sunny days.” He campaigned on ideas — not ideas I agree with, but ideas — while his opponents trimmed their sails.

The Conservatives in particular were stuck. Having run deficits for the last five years they had lost credibility on fiscal sanity. After a decade in power they were reduced to mocking Trudeau for his youth and his parentage — hardly a sign of strength in the battle of ideas.

Mocking your opponents and generally being grumpy old men wasn’t exactly Margaret Thatcher’s vision of  “winning the argument.”

Trudeau actually made the argument which made it easier to win it. On election night he declared “This is what a positive, hopeful vision and a platform and a team can make happen.” A vision and a platform, for my jaded fellow sufferers of modern politics, means talking about ideas and proposals rather than simply poking fun at the other guy.

What’s more, in Canada the Liberal Party is unquestionably the adult in the room on fiscal responsibility in a way that no American congressman seems capable of understanding.

When the Liberals were last in control, they were concerned about 40 years of deficits that had led to debt at a then-scary 67% of the economy — the current American public debt is 75% of GDP but we don’t seem to care.

The Liberals cut spending by an actual 10% with cuts coming in every budget area and balanced the budget in four years.

In our Congress, the deficit isn’t as bad as theirs had been but our nervous politicians maintain that balancing it in even ten years is nigh impossible.

Canadian debt declined from 67% of GDP to 37% today and allowed them to reduce the highest corporate tax rate from 29% down to 15% — ours is 40%.

I hope that Trudeau will spend a bit less than he promises and will balance the budget again in four years after the Conservatives let it go. Whatever happens, Americans can learn a lesson.

Trudeau was 12 points down two months out. A vision and platform — in contrast to opponents insisting he was too young at 43 — brought him twenty points higher than the favored New Democrats and ten points above the Conservatives.

Poll numbers are just random answers given on the day I made the mistake of answering my phone. Ideas have consequences. You can’t win the battle of ideas if you avoid the fight.

October 2015

Joshua Elliott-Traficante

Summary[i]: Despite historically leading the region out of recessions, the New Hampshire has become a laggard in comparison to Massachusetts. While Massachusetts recovered from the recession in terms of both employment and job numbers more than two years ago, only as of June 2015 has New Hampshire done the same. If New Hampshire had matched Massachusetts’s recovery speed, there would be 27,000 additional jobs in the state today. This piece looks at three work force metrics: the number of jobs in the state, the number employed residents, and the size of the labor force.


Proportionally, both New Hampshire and Massachusetts lost roughly the same amount of jobs in the last recession. Massachusetts hit bottom first in October 2009, with the total number of jobs in the state falling by just over 4 percent. New Hampshire reached its lowest point a few months later in January 2010 and lost just over 4.6% of its jobs. There the similarities end.



After hitting bottom, Massachusetts experienced a job creation growth rate averaging 1.6% per year, over the last five and a half years, far outpacing New Hampshire’s .9% per year average. While a .7 percentage point difference in growth does not sound like much, compounded over five and half years yields the yawning gap seen in the chart above. With that higher growth rate, Massachusetts was able regain all of the jobs lost in the recession by September 2012. New Hampshire on the other hand needed an additional two and a half years to recover all of the jobs lost. The state did crest prerecession levels in both December 2014 and March 2015, only for it to fall back below in the following month. Only as of June 2015 have job numbers stated above prerecession levels for more than a single month. If New Hampshire experienced the same growth rate in job creation Massachusetts did, there would be an additional 27,000 jobs in the state today.



In terms of employment, which measures the number of state residents that have jobs (regardless of where the job is located), New Hampshire made out slightly better than Massachusetts did in the recession, experiencing less severe losses on a percentage basis.


Despite losing more proportionally, Massachusetts recovered faster, averaging growth of 1.4% per year, and returned to its pre-recession employment level in June 2013. New Hampshire however, only averaged .66% growth per year. That lower growth rate meant New Hampshire only returned to its pre-recession level of employment in February 2015, nearly two years after Massachusetts. The fact that the number of employed returned to prerecession levels before the number of jobs after Massachusetts did, indicates more people are commuting to other states for work than they did before the recession.

Labor Force:

With the mediocrity of the recovery, many analysts have used changes in the size of the labor force as a better measure of the general labor situation because the traditional unemployment rate fails to account for those who have given up looking for work. Although mild by national standards, both New Hampshire and Massachusetts saw declines in their respective labor forces as first the recession and then the mediocre recovery wore on. After hitting their lowest points in Spring 2011, both states saw minor albeit steady improvements.


Massachusetts returned to its prerecession high in March 2012 and saw accelerating growth beginning in late 2013 that continues to the present. New Hampshire’s Labor Force largely held steady and only recovered fully in May 2015. In recent months however, New Hampshire has experienced sustained growth, though not nearly as dramatic as south of the border. Some of this slow recovery in Labor Force growth is connecting to the ageing of the state, but the recent growth spurt in the last few months shows that this is not the dominant factor.

More Commuters?

With those upticks in Labor Force and Employment growth rates, it would seem as though New Hampshire is finally experiencing real economic growth. Unfortunately that does not seem to be the case. That growth in the Labor Force over the last 11 months represents more than 7,000 additional New Hampshire residents actively searching for work, with the number Employed growing by roughly 10,500. That means both those new entrants into the Labor Force and people who are currently unemployed are finding work. However, there is only a muted corresponding increase in the Jobs numbers, which only increased by 3,600 over the same eleven months. What accounts for these ‘missing jobs?’ Even when taking into account the self-employed and agricultural workers[iii] the difference between Job creation and Employment growth means upwards of half of the newly employed are finding work in another state, likely Massachusetts.


While it is tempting to judge a state’s economic health based on the unemployment rate alone, doing so can be misleading. New Hampshire has an incredibly low unemployment rate, but it only just recovered all of the jobs lost in the recession.  In contrast, Massachusetts has seen strong job growth, propelling it back to precession levels two and a half years before New Hampshire. Had New Hampshire simply replicated this growth rate, there would be more than 27,000 additional jobs in the state. Despite the recent improvements over the last nine months in both Labor Force and Employment numbers, the lack of a corresponding increase in Job numbers indicates more people are commuting out of state for work. Given Massachusetts’s growth it is likely that most of those new commuters found work there.

If Massachusetts, a state that lost a congressional seat in 2010 because its population was not growing fast enough, and that has notoriously difficult regulations and high taxes can both increase their labor force and add jobs, New Hampshire can certainly do better.

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[i] All data used in this piece was taken from the Bureau of Labor Statistics Establishment Survey (Jobs) and Household Survey (Employment and Labor Force) for New Hampshire and Massachusetts.

[ii] Jobs vs Employment: ‘Jobs’ counts the number of paid positions based on where they are located. Employment’ counts the number of people employed based on where they live. The employment figure for New Hampshire counts every state resident that has a job, regardless of where the job is located, while the jobs figure for New Hampshire counts the number of jobs based here, regardless of who fills it. For example, someone who lives in New Hampshire, but works in Massachusetts, would show up in the New Hampshire employment number, but their job would be counted in the Massachusetts job number. The Labor Force measures all of the people either employed or looking for work.

[iii] Both the self-employed and those who work on farms are not counted in the Jobs survey, but are counted in the Employment survey. It is possible that all of those ‘missing’ jobs in the last eleven months are people who started their own businesses or found agricultural work in the state. However, there is no evidence of a very quiet boom in either farming or self-employment, so this does not seem to be the case.