Blowin’ in the Wind is a new column by Michael Kitch. He has been writing in New Hampshire since 1982, sandwiching stints with either NH Times, NH Business Review and Laconia Daily Sun around spells within corporate communications and on the staff of the state Senate.
By MICHAEL KITCH, InDepthNH.org
As a candidate Gov. Kelly Ayotte campaigned on the theme “Don’t Mass Up New Hampshire.” In her inaugural address Ayotte called New Hampshire “a model for the rest of the country,” a stature achieved with “no income tax and no sales tax, with our New Hampshire Advantage” while disdaining Massachusetts as “a cautionary tale.”
“The New Hampshire Advantage” was originally coined by Stephen Merrill and his campaign team as the tag line of his bid for Governor that carried him through the Republican primary then to the Corner Office in 1992. Ever since the phrase has served as a mantra signaling that New Hampshire owes its growth and prosperity to its unique political and fiscal structure, which has not changed in its essential respects for two hundred years.
It didn’t make much sense then when the state was littered with foreclosed real estate and failing banks. And it makes less sense now when a state with the ninth highest personal income per capita in the country can’t balance its budget without cutting $50 million from its University System, capping school budgets and trimming social services while giving a green light to gambling interests.
But while New Hampshire has never had a sales or income tax its economic performance has trailed the pace set by the nation for most of its history. In 1950 the US Department of Commerce counted 33 states where annual personal income per capita was greater than the $1,373 earned in New Hampshire. In fact, according to Federal Reserve data annual personal income per capita in New Hampshire lagged the national average for half-a-century from 1930 until 1981.
Yet by 2024 the US Department of Commerce reported that personal income per capita in New Hampshire had reached $82,878, ninth highest among the 50 states. New Hampshire’s metamorphosis from a caterpillar to a butterfly did not burst from the cocoon of its archaic tax structure and scrimpy public investment.
Instead, New Hampshire has grown and prospered from its proximity to Greater Boston, which has become the hub of one of the ten most dynamic and affluent metropolitan areas in the United States.
New Hampshire’s economic fortunes have been tied to Massachusetts since the early 1800s. The Amoskeag Manufacturing Company, incorporated by Boston investors in 1825, became the largest cotton mill in the world while making a range of products from steam locomotives to Springfield rifles.
The Lake Company, a cabal of Massachusetts mill owners, controlled the watershed of lakes Winnipesaukee, Winnisquam, Squam, and Newfound and managed the flow of the Merrimack River to power the mills of Lowell and Lawrence. By 1905 virtually all rail traffic ran on the tracks of the Boston and Maine Railroad. The company put Manchester on the map.
Stuart Wallace, the state’s foremost historian, has written that during the 19th century “New Hampshire was heavily under the influence of foreign capital,” much of it held in Boston, which controlled not only the railroads but also textile mills, logging operations, pulp plants and grand hotels. Manufacturing consisted largely of small textile mills, shoemakers and machine shops.
Boston, a gritty, compact city with aging factories. struggled economically for much of the 20th century. Stung by the Great Recession and consumed by World War II, the city found itself with an eroding industrial base and a shrinking population. Businesses were saddled with high taxes and stiff regulations. Traditional manufacturing industries either ceased their operations or moved them to regions where labor was plentiful, and costs were lower.
By the 1950s the fortunes of Boston began to turn with construction of a highway network that triggered suburban sprawl that would ultimately leave the city with a population of 675,647 at the center of a metropolis of 4.9 million people spread over 3,486 square miles including southern New Hampshire.
Boston constructed a circumferential highway system. Route 128, the inner loop opened in 1951 and I-495, the outer loop was built between 1964 and 1969. This interconnected road network spurred the growth of Boston’s suburbs while linking to I-93 and I-95 to lend ready access to both the Merrimack Valley and Seacoast of southern New Hampshire. Meanwhile, in 1955 New Hampshire opened the Everett Turnpike from Nashua to Manchester, which was extended to Concord and incorporated into I-93 in 1958.
Since the 1960s New Hampshire has been drawn, like a fly into a spider’s web, into a sprawling metropolis the federal government calls the Boston-Cambridge-Newton MA-NH Metropolitan Statistical Area (MSA). MSAs are defined as regions with a high population at its center and close economic ties among its constituent communities.
Within the reach of Boston’s ring roads there are 44 colleges and universities, including eight renowned research institutions, led by the “brainpower triangle” of Harvard, M.I.T. and Tufts. Boston was well equipped to spawn the well-educated, highly skilled workforce to drive its transition from a crippled manufacturing city to a robust information economy.
Before there was Silicon Valley, Route 128 became America’s first “high tech” highway pioneered by the likes of Digital Equipment Corporation and Wang Laboratories and the city remains home to a high-tech sector. Meanwhile, Boston nurtured a financial center that by 2018 became second only to New York with major firms dealing in venture capital, asset management, and insurance services. With 15 acute care hospitals, four university medical schools and ten biotech companies, the city is a mecca for healthcare services and medical research. Each of these sectors lean on a variety of ancillary professions, legal, accounting and consulting among them.
The economic renaissance of Greater Boston transformed New Hampshire forever and for the better. Between 1960 and 2000 the population of New Hampshire more than doubled from 606,921 to 1,235,786, with migration from other states contributing a significant share of the increase. The Great Migrations Project at the University of Washington calculated that by 2000, 539,247 or 43 percent of New Hampshire residents were born in another state, 297,347 of them, almost a quarter of the population, in Massachusetts.
In 2022 the Boston-Cambridge-Newton MA-NH Metropolitan Statistical Area (MSA) posted the 4th highest personal income per capita and 6th highest gross domestic product among all the MSAs in the country. The MSA includes two of New Hampshire’s of southernmost counties — Rockingham and Strafford.
The wider “combined statistical area,” (CSA) stretching west to Worcester and south to Providence also includes Hillsborough, Merrimack and Belknap counties. Between 1960 and 2020 the population of these five counties more than doubled, increasing from 433,666 to 1,085,515.
Today these five counties are home to three-quarters of the population as well as the largest share of commercial enterprises of the state, including satellite offices and operations of firms headquartered in Massachusetts. And all five are among the seven most affluent of the state’s ten counties in the state.
Fortunately Gov. Ayotte’s warning “Don’t Mass It Up” was sounded far too late.