Glimmer of Hope for the New Mexico Economy

Official employment numbers for the New Mexico economy are bleak, but the reality, while far from good, may not be quite so bad, according to the Journal’s twice-yearly Economy Watch review of economic conditions.
“We’re not growing rapidly,” said Lee Reynis, director of the University of New Mexico Bureau of Business and Economic Research, which conducts the review. “I’m not even sure we’re growing at 1 percent. But in my opinion, based on everything I look at, we are definitely on the positive side.”
The state Department of Workforce Solutions reported earlier in April that New Mexico lost 1,000 jobs between March 2013 and March 2014, and the March unemployment rate increased to 7 percent from 6.7 percent a month earlier. The Albuquerque metropolitan statistical area added almost 1,400 jobs in the 12-month period, but the unemployment rate was 7.6 percent, according to DWS.
Reynis thinks recently completed, routine statistical adjustments to the nation’s jobs numbers, known as benchmarking, are probably overstating job losses in New Mexico.
“A variety of things is happening that says we have positive but slow growth,” she said.
For example, household surveys show employment grew 0.7 percent in both January and February compared with the same months a year earlier. Trends in the data over the past several months show the gap in job growth between New Mexico and the rest of the country has narrowed, Reynis added.
A sign of strength?

A line of job seekers waits to get into the recent Choice Career Fairs’ Albuquerque Career Fair at Hotel Cascada. Albuquerque and New Mexico employment numbers, while still bleak, are believed to be on the “positive side,” according to UNM economist Lee Reynis. (Albuquerque Journal File)
Rising unemployment rates even can be a sign of strength in the economy, Reynis said. Since only people who say they are looking for work are counted as unemployed, an increase in the unemployment rate absent evidence of economic decline can show that jobless workers have become more confident they can find a job and have begun looking for work again.
The household surveys that generate the unemployment numbers also reveal some disturbing things, Reynis said.
The unemployment rate in New Mexico for 2013 was 7.2 percent. However, if people who want to work but have given up trying to find work – known as marginally attached workers – are counted, the 2013 unemployment rate goes to 8.3 percent.
Add workers who want full-time jobs but can only find part-time jobs and the rate reaches 13.7 percent.
“Those numbers kind of help put things into perspective,” Reynis said. “We have a much larger problem with unemployment than we see in the (usual) numbers. That’s true at the national level. It’s true everywhere.”
Government reliance

Iron workers install rebar on March 24 for the supports of the Paseo del Norte overpass at Jefferson NE, part of the reconstruction of the I-25 and Paseo interchange. (Albuquerque Journal File)
New Mexico’s reliance on government employment goes a long way toward explaining the problem, Reynis said. Counting both workers who receive a government paycheck and those who work for firms that contract with government agencies, 32 percent of the state’s workforce relies on government spending.
“That makes us very vulnerable,” she said.
New Mexico lost 2,800 government jobs between March 2013 and March 2014, but that doesn’t count nongovernment workers whose employers rely on government spending.
“Government wage and salary disbursements growth is close to zero or negative because of what has happened to the federal government” through budget cuts, Reynis said.
The doldrums afflicting New Mexico’s economy show up in two major ways: construction and population growth.
“Our economic booms are coincident with housing booms,” she said. “Housing and construction in general should be a reflection of what’s happening in your economy. When businesses expand they require people, and people require housing.” The housing booms have stopped, Reynis said.
Population growth in 2013 “was very close to zero,” she said, largely because more people are moving out of the state than are moving in. “If you have population growth, you’re going to stimulate demand for housing and all sorts of things.”
Slowing population growth is “one of the things that will hold us down” economically, she said.
Losing educated people

Home construction in the Albuquerque metro is still struggling to recover. (Albuquerque Journal File)
Population data for 2013 are not available yet, but census data show New Mexico is losing people it can’t afford to lose. It appears a disproportionate number of educated people are leaving the state because job prospects are better elsewhere.
Of the total workforce that left New Mexico in 2013, 19 percent were employed in the professional and business services category and 18 percent were employed in the education and health services sector. Construction workers accounted for 4 percent of the workers who left New Mexico.
By: Winthrop Quigley (Albuquerque Journal)
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