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Wages in NH expected to increase in 2016

New Hampshire Union Leader

January 02. 2016 8:07PM

Wal-Mart, the state's largest retail employer, plans to raise wages for its 7,785 New Hampshire employees in 2016, in one of several signs that the year ahead could finally see meaningful improvement in earnings for hourly workers after years of wage stagnation.

As of Feb. 1, the average rate for full-time Wal-Mart workers in New Hampshire will be $14.29 an hour, with an average part-time wage of $10.95, according to Wal-Mart spokesman Kory Lundberg, who said similar increases are being introduced across the country in an effort to reduce turnover as good employees are being lured elsewhere by better wages in an improving job market.

Prior to 2014, the company had been paying as low as $7.25 an hour, the state minimum wage, for part-time workers at its 31 Granite State locations, Lundberg said.

Retail tops job market

Retail trade is now the largest single category of employment in New Hampshire, accounting for approximately 95,000 of the state's 650,000 workers, according to New Hampshire Employment Security.

It has eclipsed health care (86,000 workers) and manufacturing (66,000 workers). So when the state's biggest retail employer announces a plan to increase wages, it's bound to have a ripple effect.

“We have reached a very low level of unemployment, so the conditions are definitely ripe for wage increases,” said Annette Nielsen, an economist with Employment Security. “For the past five or six years, it's been an employer's market, but it's slowly shifting to more of an employee's market because we are getting close to what you could call a labor shortage.”

At the national level, the Federal Reserve regards 4.7 percent as full employment, with any lower number suggesting a labor shortage. The national unemployment rate was 5 percent in December, when the New Hampshire rate was reported at 3.2 percent.

A broader measure of unemployment and underemployment, which includes part-time workers who want full-time jobs, is much higher at 9.9 percent nationally.

“But if the economy continues to generate an average of 200,000 jobs or more a month next year, as it has for the last three years, both this broader rate and the official jobless figure are likely to hit optimal levels sometime in 2016,” according to a Tribune Media forecast.

Pressure from neighbors

New Hampshire employers will also face pressure from increasing minimum wages in neighboring Vermont and Massachusetts. The Vermont minimum wage increased from $9.15 to $9.60 on Jan. 1, and will continue to rise each year until it hits $10.50 in 2018. The Massachusetts minimum went up to $10 an hour on Jan. 1.

“New Hampshire retailers in most instances are paying well above (New Hampshire's) minimum wage,” said Nancy Kyle, president of the New Hampshire Retail Association. “They have to, to be able to get employees.”

Employers will find it harder to take the “my way or the highway” approach when it comes to benefits and scheduling. Wal-Mart, which has been criticized in the past for its employment practices, is introducing something almost unheard of in the retail industry — fixed schedules.

“We'll have options for people to get fixed schedules — the same hours on the same days every week for up to a year — and flexible options where associates can build their schedules every week from a menu of shifts and hours that are available,” said Lundberg.

The state's shrinking labor force is also putting upward pressure on wages, according to economist Brian Gottlob, with Policon Research in Dover, as employers find a shrinking pool of workers to draw from.

“Wages in New Hampshire will have to rise to attract enough workers, and even then there is not likely to be enough workers,” he said. “In addition, New Hampshire has become a relatively high cost of living state, and that means it is harder for us to offer lower wages than places like Massachusetts.”

Immigration is key

Aging baby boomers are retiring, and there just aren't enough working-age adults in New Hampshire today to replace them in the workforce. Migration of workers into the state from other states or other countries would have to increase to change that.

“It is possible that if labor shortages are severe enough in the Northeast, we would see increased net migration into the region, and once again into New Hampshire,” wrote Gottlob in a recent analysis. “But the potential pool of labor which New Hampshire can attract will be growing more slowly.”

Population and demographic projections show that both nationally and in New Hampshire, the working age population (ages 18-64) will grow slowly if at all over the next 25 years.

None of these trends will necessarily bring about the return of high-paying manufacturing jobs with benefits for low-skilled workers, who now find themselves concentrated in fields like retail or hospitality.

But at least those employers will have to start paying more.

“We're at a turning point, said Mark Zandi, chief economist at research firm Moody's Analytics. “I think it'll be a breakout year in 2016 for wage growth.”

Material from Tribune Media was used in this report.

Labor Economy