NASHUA – Nashua is often thought of as being different from most of New Hampshire, and on Thursday the Chamber of Commerce heard one reason why: manufacturing.
Nashua’s economy depends far more on manufacturing that any other large New Hampshire community, economist Steve Norton said during a Chamber-sponsored breakfast event. Almost 30 percent of wages paid in the city are in the manufacturing sector, twice the state average.
This has advantages, bringing good-paying jobsand creating a diverse economy, but also has its drawbacks.
“You are much more reliant on an industry that is fleeing New Hampshire, fleeing the country,” he cautioned.
Norton’s comments came during the first of three monthly breakfast Chamber meetings featuring researchers from the New England Public Policy Center, the policy branch of theFederal Reserve Bank in Boston.
Thursday’s talk by center researcher Jennifer Weiner was titled “How Does New Hampshire Do It?” She talked about 2011 research into how New Hampshire has managed to avoid having a state income tax and state sales tax.
Weiner say part of the answer is that the state’s demographics – our low poverty rate and relatively small number of school-aged children – lowered the need for spending, giving us “less challenging circumstances that other New England states.”
But Weiner said policy decisions, including smaller payments for higher education, public employee pensions and public hospitals than many states, are an even bigger reason for the state’s lower spending levels.
Just as important in the avoidance of broad-based state taxes, she said, has been New Hampshire’s ability to shift some costs off state taxpayers. That includes a history of bringing in a high percentage of federal money, much of it through the now-ended and controversial Medicaid reimbursement program that was referred to several times as “Medi-scam.”
“There is no single silver bullet for policymakers in other states who want to follow New Hampshire’s path,” Weiner said.
The talk was followed by a panel discussion featuring Nashua Mayor Donnalee Lozeau, Sen. Chuck Morse, R-Concord, and Norton, director of the New Hampshire Center for Public Policy, a Concord think tank.
Norton cautioned that many of the factors which have contributed to the state’s long period of economic growth are ending. Most importantly, he said, we are seeing an end to decades of well-educated people – the sort who use relatively few government services and help create jobs – moving here from other states.
“The last five years, New Hampshire has had a net out-migration, for the first time in 60 years,” he said.
This is partly because the recession has made it harder for people to move, but also because New Hampshire’s migration growth was fueled by baby boomers, who are entering retirement age and no longer moving around.
“Is the next generation going to move here, too?” he asked rhetorically. He argued that the state, which has launched a Stay-Work-Play initiative to keep college graduates in New Hampshire, should try to develop something to lure older adults. “Maybe we need a 30-40 initiative,” he said.
As for Nashua’s manufacturing prowess, Norton said it came partly from geography – it’s the first city with an established industrial base reached by Massachusetts business people seeking New Hampshire’s tax climate – and partly by history.
“A lot of it was Sanders,” he said.
The creation of Sanders Associates as a defense-electronics firm in 1951 signaled Nashua’s shift from a former mill town to a place where modern products are developed and made. Its success attracted more of the same as decades went by. (Sanders is now BAE Systems.)
Lozeau took the opportunity to urge spending on infrastructure, including passenger rail, and noted that cities such as Nashua are being hit hard by cutbacks in government spending.
“We’re taking on more responsibility for spending that isn’t happening by state and federal governments,” Lozeau said. She said the city has lost $16 million in state and federal revenue in recent years.
The Business Insiders Series is sponsored by Citizens Bank, which has hosted the chamber’s breakfast events for five years. The Telegraph is the series’ media sponsor.
Follow-up talks are set for April 19, “Ensuring a Supply of Mid-Skilled Labor in Northern New England,” and May 24, “Lessons for Nashua’s Future from Resurgent Cities across America.”
David Brooks can be reached at 594-6531 or dbrooks@nashuatelegraph.com.
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