By Granite State Report
New Hampshire’s jobless rate is still low, but the ground beneath the economy is shifting—employers are hiring more cautiously, state revenues are wobbling, and policymakers are colliding over whether the next move should be more tax cuts or stronger public-service funding.
A “Good” Jobs Market That Suddenly Feels… Less Good
Walk through almost any commercial strip in New Hampshire and you’ll still see the ghosts of the post-pandemic labor scramble: hiring banners, “we’re short-staffed” signs, and job postings that never seem to come down. The headline numbers support that story. New Hampshire’s unemployment rate sat around 3.0% in late summer/early fall 2025, with a labor force around 775,000 and payroll employment a little over 700,000. On paper, that’s a tight labor market—still.
But talk to employers (or read what they’re telling the Federal Reserve’s business contacts) and you get a different mood: cautious, cost-sensitive, and increasingly uncertain. Hiring hasn’t collapsed. It’s hesitating. And in an economy like New Hampshire—where workforce constraints, housing costs, and state revenue structure all tangle together—hesitation can be the opening act before something more serious.
The investigative question is simple: Why are employers slowing hiring even as unemployment remains low—and what happens to New Hampshire’s public services if tax-cut politics collide with a cooling economy?
The Numbers: Low Unemployment, Cooling Momentum
New Hampshire’s labor-market story in 2025 is best described as stable-but-slowing.
On the stable side:
- Unemployment remained near 3.0% in late summer/early fall 2025.
- Layoffs, while not exploding, have become a more common topic in regional business commentary.
On the slowing side:
- New Hampshire’s year-over-year nonfarm payroll growth was modest in 2025 (hovering around fractions of a percent in the later months shown in BLS “Economy at a Glance”).
- Regionally, the Federal Reserve Bank of Boston reported that payroll employment growth in New England slowed significantly in 2025, and connected that softness to reduced hiring activity and fewer job openings relative to prior periods.
That combination—low unemployment, but reduced hiring—creates a weird “silent squeeze.” People who already have jobs keep them. People who don’t have jobs (or want better ones) find fewer good openings. Employers feel the economy cooling and stop expanding headcount, even if they’re not actively cutting staff.
Image (chart): BLS New Hampshire “Economy at a Glance” labor-force and unemployment table
What Businesses Say When They Think Nobody’s Campaigning in the Room
The Federal Reserve’s Beige Book is useful because it’s not trying to win elections—it’s trying to understand conditions. In the Boston District (which covers New England), recent Beige Book commentary has emphasized:
- Employment roughly unchanged overall,
- Layoffs becoming more common,
- Wage increases described as modest,
- Consumers increasingly price sensitive,
- And persistent uncertainty linked to policy and trade conditions.
That is exactly the kind of environment where businesses postpone hiring even if demand hasn’t fallen off a cliff. They shift from “growth mode” to “defend margins” mode: limit new hires, stretch existing staff, delay expansions, and renegotiate vendor costs.
This isn’t hypothetical. It shows up in the Boston Fed’s regional analysis too: slower job growth, softer labor demand, and reduced hiring activity that makes it harder for unemployed workers to get traction.
The Cost-of-Living Monster: Housing Turns Hiring Into a Math Problem
In New Hampshire, hiring isn’t just about wages. It’s about whether someone can live here.
Housing has become a central constraint on workforce growth. New Hampshire Housing’s research notes that home prices surged far faster than incomes over recent years—creating a situation where even solid jobs don’t automatically translate into stable living arrangements. The New Hampshire Association of REALTORS has repeatedly pointed to low supply (measured in “months of inventory”) as a primary driver of price pressure.
In one recent statewide market update, NHAR described New Hampshire as having around 1–2 months of housing supply—far below the 5–7 months often cited as “balanced.” That is the housing equivalent of a permanent shortage economy.
For employers, this becomes operational:
- Skilled recruits from out of state run the numbers and decline offers.
- Young workers double-up with roommates or live with parents longer—reducing geographic mobility.
- “Reasonable” wage demands rise, because the rent or mortgage math is brutal.
When businesses say they can’t find workers, sometimes they mean “We can’t find workers at wages that make sense given our prices.” And when workers say wages aren’t enough, they often mean “I’m not paying $2,300 a month to work full-time.”
Image (housing research): New Hampshire Housing 2025 homebuying survey/report (PDF)
YouTube (human angle):
The Workforce Trap Door: Aging + Child Care + Limited Housing = Slower Growth
New Hampshire has a structural challenge: even when the economy wants to grow, the workforce pipeline doesn’t automatically expand.
A Business NH Magazine analysis of labor-force data has warned that even when labor force participation improves in a given year, long-term trends (aging demographics, housing limits) can make that growth hard to sustain. That matters because a tight workforce is a double-edged sword: it supports low unemployment, but it also caps expansion.
Then there’s child care, which is not a culture-war talking point so much as an economic input—like electricity or trucking. NHFPI’s research has documented how child care shortages reduce labor supply and impose real costs on employers through absenteeism, turnover, and lost productivity. Reporting summarizing that research has cited tens of millions in annual potential business costs tied to child care gaps.
So even if employers want to hire, the state’s capacity to supply reliable workers is constrained by:
- Housing availability,
- Child care availability and affordability,
- And demographic reality.
Image suggestion: NHFPI child care economic-impact resource page
The Interest-Rate “Hangover”: Why Borrowing Costs Still Shape Hiring
Even as the Federal Reserve began cutting rates again in 2025, borrowing costs remained a major factor in business decisions—especially for construction, manufacturing, and small firms dependent on credit lines.
The federal funds target range has moved down from its peak, but the broader point is that businesses spent multiple years adapting to a higher-rate environment. That adaptation often looks like:
- Delayed capital projects,
- Slower expansions,
- More conservative hiring plans,
- And greater emphasis on cash flow.
When rates are high (or recently high), the “cost of mistakes” rises. Hiring is a kind of investment. In uncertain conditions, businesses increasingly treat headcount like a commitment they don’t want to reverse.
Image (rate chart): FRED federal funds target range upper limit
New Hampshire’s Fiscal Plot Twist: Revenues Slip, Uncertainty Rises
Here’s where the economic story becomes a state-policy story.
New Hampshire’s revenues surged after the pandemic, buoyed by unusually strong corporate profits and housing-related activity. But NHFPI’s long-term revenue analysis shows that key sources have declined since their inflation-adjusted high point, and that the state remains heavily reliant on revenue streams that can swing sharply with economic conditions.
In NHFPI’s 2025 revenue-trends brief, major findings included:
- Inflation-adjusted revenues to the General Fund and Education Trust Fund declining from SFY 2024 to SFY 2025,
- Combined business taxes making up a large share of those funds in recent years—but declining in importance from their recent peak,
- And big-picture questions about whether business taxes and real estate transfer tax revenues will stabilize or continue sliding.
NHFPI’s monthly/seasonal revenue commentary in 2025 also highlighted how the repeal of the Interest and Dividends Tax created forecast turbulence—especially through refund dynamics—and contributed to revenue coming in below target at points in the fiscal year.
This is where “economic uncertainty” stops being abstract. When revenues soften, lawmakers face choices: pause tax cuts, cut spending, shift costs to municipalities, or find new revenue sources (often politically radioactive in New Hampshire).
Image (revenue chart): NHFPI “Shifting Sources” issue brief PDF
Image (context): NHFPI October 2025 revenue analysis
The Tax-Cut vs. Services Debate: It’s Back (Because It Never Left)
New Hampshire’s identity includes a real pride in low broad-based taxes. The political default, especially in good years, is to cut.
But the 2025–2026 moment is tricky: revenues are showing softness, and the state has already implemented major tax changes—including the Interest and Dividends Tax repeal effective January 1, 2025 (per legal and business reporting summaries), and earlier years’ business-tax rate reductions. NHFPI has estimated that a decade-long series of business tax cuts resulted in a large cumulative amount of forgone revenue—an analysis that has become a central talking point for opponents of further reductions.
Now comes HB 155, a proposal to further reduce the Business Enterprise Tax (BET) rate from 0.55% to 0.50% beginning in a future tax year (with details and effective timing laid out in legislative text trackers). Business organizations like NFIB have supported the move, framing it as relief that improves competitiveness and reduces a payroll-like tax burden. Critics argue that cutting again amid sagging receipts risks weakening support for schools and other services—especially if revenue targets are missed.
This debate matters because it’s not only about “business climate.” It’s about who pays when the state doesn’t.
New Hampshire can keep taxes low partly because it leans heavily on property taxes at the local level and on select state revenue streams (meals and rooms, business taxes, gambling/lottery, insurance premium tax). When state support is thin—or becomes more volatile—municipal budgets and property taxpayers often feel it.
HB 155 legislative text (LegiScan)
What Services Are Actually at Stake?
This is where the conversation gets real—and less ideological.
In NHFPI’s detailed analysis of the FY 2026–2027 state budget, the organization described a budget that largely maintains many services but includes meaningful policy shifts, non-repeated one-time investments (including housing-related items), and areas of reduction or constrained growth. The report also flags uncertainty risks, including the state’s reliance on federal funds and the presence of unspecified reductions that agencies may be required to achieve through underspending.
Translation: even without a dramatic “cut this program” headline, the budget environment can still tighten in ways people feel: longer waitlists, reduced capacity, or pressure pushed onto municipalities, nonprofits, and families.
If New Hampshire hits a sustained slower-growth period—where hiring is cautious and corporate profits cool—then business tax receipts can soften further, and budget stress increases. That’s not a moral argument; it’s a mechanics argument.
The Core Problem: New Hampshire Is Built to Feel Great… Until It Doesn’t
New Hampshire’s economic model has strengths: high labor force attachment, a generally favorable business environment, and a reputation (fair or not) for fiscal restraint. But it also has a vulnerability: the system leans heavily on revenue sources tied to corporate profits and housing activity—both of which can turn quickly when the economy cools.
When times are good, tax cuts feel easy. When times are uncertain, tax cuts become bets.
Meanwhile, businesses aren’t waiting for Concord to resolve the debate. They’re responding right now to:
- Housing-driven wage pressure,
- Child care constraints,
- Price-sensitive consumers,
- Policy uncertainty (trade, federal funding issues),
- And a labor market where the “easy hires” are gone.
That’s how you get slower hiring even with low unemployment: employers aren’t panicking—they’re bracing.
What Comes Next: Three Plausible Paths
New Hampshire’s near-term trajectory looks like one of three broad paths:
- Soft landing, cautious growth: hiring stays slow, unemployment stays relatively low, revenues stabilize enough to avoid major service disruptions.
- Revenue squeeze without layoffs: employment remains stable, but state revenues underperform, forcing fights over municipal aid, school funding, DHHS capacity, and higher-ed support.
- Broader cooling: if demand weakens more sharply, cautious hiring turns into layoffs and unemployment rises, just as revenues soften—creating the worst of both worlds.
The uncomfortable truth is that state policy can’t fully control which path happens. But it can decide whether the fiscal system is resilient or brittle when uncertainty hits.
Conclusion: The State’s Biggest Economic Risk May Be Its Own Success
New Hampshire’s low unemployment rate can lull us into thinking the fundamentals are fine. But employers don’t hire based on vibes; they hire based on confidence, costs, and forecasts. In 2025, those signals got noisier: housing costs remained punishing, the labor pipeline stayed constrained, borrowing costs still shaped investment decisions, and state revenue performance became less predictable—especially with tax-policy changes rippling through collections.
The next round of tax-cut vs. service-funding battles won’t just be ideological theater. It will determine whether New Hampshire can keep bragging about being a great place to do business and a functional place to live.
Because the real competitiveness question isn’t “How low can taxes go?”
It’s “How stable—and livable—can the state remain when uncertainty arrives?”
References
- Federal Reserve Bank of Boston. (2025, October 10). New England Economic Conditions through October 7, 2025. https://www.bostonfed.org/publications/new-england-economic-conditions/2025/october
- Federal Reserve Board. (2025). Beige Book – Boston District (selected 2025 releases). https://www.federalreserve.gov/monetarypolicy/publications/beige-book-default.htm
- Federal Reserve Bank of St. Louis (FRED). (2025). Federal Funds Target Range – Upper Limit (DFEDTARU). https://fred.stlouisfed.org/series/DFEDTARU
- New Hampshire Fiscal Policy Institute. (2025, September 8). Shifting Sources: A Brief Look at Long-Term State Revenue Trends in New Hampshire. https://nhfpi.org/assets/2025/09/NHFPI-Issue-Brief_A-Brief-Look-at-Long-Term-Revenue-Trends-in-New-Hampshire-9.8.25.pdf
- New Hampshire Fiscal Policy Institute. (2025, November 6). October Revenues Set Back by Interest and Dividends Tax Repeal. https://nhfpi.org/blog/october-revenues-set-back-by-interest-and-dividends-tax-repeal/
- New Hampshire Fiscal Policy Institute. (2025, July 28). The State Budget for Fiscal Years 2026 and 2027. https://nhfpi.org/resource/the-state-budget-for-fiscal-years-2026-and-2027/
- New Hampshire Association of REALTORS. (2025). Market Data. https://nhar.org/resource/market-data
- New Hampshire Association of REALTORS. (2025, April). April Market 2025: Run-up continues. https://nhar.org/news/article/april-market-2025
- New Hampshire Housing. (2025). NH Homebuying Survey 2025 Research Report. https://www.nhhfa.org/wp-content/uploads/2025/04/NH-Homebuying-Survey-2025-Research-Report_4_29.pdf
- LegiScan. (2025). NH HB155: Reducing the rate of the business enterprise tax (bill text). https://legiscan.com/NH/text/HB155/id/3040005
- NFIB. (2025, October 16). NH House Advances Business Enterprise Tax Cut. https://www.nfib.com/news/news/nh-house-advances-business-enterprise-tax-cut/
Verification notes
Key data points above are supported by the following sources:
- NH unemployment, labor force, and payroll employment figures: (Bureau of Labor Statistics)
- New England slowdown / reduced hiring activity and regional labor-market context: (Federal Reserve Bank of Boston)
- Boston District business sentiment (employment steady, layoffs more common, price sensitivity): (Federal Reserve)
- State revenue declines and reliance on volatile sources; business tax share and decline since peak:
- October revenue shortfall and Interest & Dividends Tax repeal effects via refunds: (New Hampshire Fiscal Policy Institute)
- FY 2026–2027 budget changes and risk factors: (New Hampshire Fiscal Policy Institute)
- HB 155 mechanics and BET cut framing: (LegiScan)
- Federal funds target range time series: (fred.stlouisfed.org)
