In 2026, the Granite State labor market began to show signs of recovery from its 2025 slowdown. Preliminary data indicates that nonfarm employment in New Hampshire rose by 1.1% from January through July 2026, but fell short of a full recovery from job losses during 2025.

Looking back and comparing 2024 to 2025 by employment sector, health care and social assistance led job growth in the state in 2025, adding 2,407 jobs even after accounting for job losses in the sector. By firm size, small businesses contributed the most to hiring increases within the Granite State. In 2025, companies with fewer than 20 employees added 3,663 jobs, which accounted for 79% of all net private sector job growth.

Meanwhile, the state’s unemployment rate fell below 3% during the first half of 2026, down from an average of 3.2% in 2025. Yet high inflation, stagnating wages, shifting demographics, and rapidly evolving technologies signal potential challenges for New Hampshire’s workers and labor force both now and into the future.

Wage growth lags behind inflation, squeezing family budgets

In both 2024 and 2025, average private-sector wages in New Hampshire grew more slowly than consumer prices in the Northeast. During the first seven months of 2026, wage growth again lagged behind inflation, reducing estimated purchasing power by 1.6% relative to 2025. When inflation outpaces wage growth, families may find it more difficult to afford the same daily living expenses. Even with pay raises and higher household incomes, the dollars just don’t go as far as they used to.

Nationally, average hourly earnings increased 3.2% between July 2025 and July 2026, while the Consumer Price Index increased 3.4% in June. Also in June, the national personal savings rate fell to 2.7%, suggesting households nationwide compensated for higher costs by saving less. This financial strain can cut even deeper for Granite Staters living paycheck to paycheck. The Urban Institute’s latest available analysis suggests that one in four Granite State households lacked $2,000 in savings in 2022 to cover an unforeseen emergency expense, such as a medical bill or car repair.

Productivity gains outpace compensation growth as workers earn less for their contributions

Granite State workers are producing more, but compensation for their work is not keeping pace. From 2009 through 2013, productivity increased while inflation-adjusted compensation declined. Both productivity and compensation rose in 2020 and 2021, and compensation grew faster than productivity in both 2021 and 2022. During this time, companies were raising wages to remain competitive in a job market with fewer available workers. From 2007 to 2024, labor productivity in New Hampshire increased by 32.8%, while inflation-adjusted hourly compensation increased by only 20.3%, creating a 12.5-percentage-point gap. So, while Granite State workers may be doing more, their pay does not reflect it.

Finding work is becoming more difficult, while technological advancements slash entry-level openings

Although the number of unemployed Granite Staters is lower, the length of time it’s taking for workers to find employment is increasing. While unemployment fell, the number of ongoing unemployment claims in the first seven months of 2026 was 23% higher than in the same period two years ago. These unemployment claims reflect a labor market characterized by low hiring and low turnover. For those seeking work, finding new employment opportunities is becoming more challenging.

Additionally, new technological advances, including artificial intelligence, are introducing other risks by reducing the number of entry-level jobs offered, particularly among large employers. Young workers and their families, who are already facing steep housing and child care costs, may be most destabilized if they lose a critical first rung on the career ladder. These technological changes may also have long-term impacts, as older workers retire without the younger workforce to replace them.

What might lie ahead

While the topline indicators for the labor market have strengthened, other key indicators of economic health have lagged behind. While more workers have jobs, job growth is heavily concentrated in a few sectors, and their wages do not appear to keep up with inflation. At the same time, inflation-adjusted compensation continued to lag behind long-term productivity growth. Although some early indicators suggest positive trends in New Hampshire’s labor market at large, current challenges should not be understated, and the real impacts felt every day by many Granite Staters are key to understanding both the State economy as a whole and the risks that lie ahead.