New Mexico’s median household income has increased steadily over the last fourteen years. However, it is still lower than the U.S. average and the lowest in the surrounding states. A high household income is an indicator of a prosperous local economy. It also demonstrates that residents have a higher level of purchasing power. This purchasing ability can attract new businesses to the area, which can lead to better employment opportunities for the workforce.1
While the median income is rising, the percentage of people living in poverty is increasing. Roughly one in five New Mexicans live in poverty, and our national ranking for this measure has fluctuated between 48 and 50 for the past three years. Reducing the percentage of New Mexicans living in poverty would improve the living standards of our residents while contributing to the state's overall economic vitality.3
New Mexico’s unemployment rate increased more sharply than the national average during the 2007-2010 recession. It is decreasing, but more gradually than other Four Corners states. Our decline in unemployment is partly due to people exiting the labor force. There are over 9,500 fewer people in the New Mexico labor force than in 2009. They have presumably either retired, moved to other states, or chosen not to pursue employment.
It is also worth noting that unemployment varies greatly by region in the state. For example, Los Alamos and Eddy Counties have the lowest unemployment rates (five percent or less) while Luna and McKinley have the highest (14 percent and 11 percent).5 Targeted job creation or movement of job seekers between counties are possible strategies for increasing employment.
A diversified economy is one in which employment exists in multiple industries and is not concentrated in just a few types of businesses. Industry diversity contributes to economic stability. A diversified economy is typically less sensitive to volatile business cycles. The Hachman Index measures industry diversity based on private-sector employment data. New Mexico’s ranking is worse than our neighboring states because employment is concentrated in only a few industries as shown in following figures. Generally, the index values remain stable over time because employment concentrations shift gradually.7
|State (#1=most diverse, #50=least)||2008||2011||2014|
The figure below provides additional context for the industry diversification indicator. A majority (57 percent) of New Mexico's jobs are concentrated in the healthcare, retail trade, accommodation, food services, education and public administration industries. The figure also provides context for the status of the state regarding high-wage jobs. The industries that require science, technology, engineering and mathematics (STEM) skills are among the highest paying. The four highest paying industry sectors constitute only 18 percent of the jobs in New Mexico. The NM Department of Workforce Solutions reports that one-third of New Mexico's workers are employed in jobs such as office support, retail and food services, and are traditionally low-wage jobs.9
Entrepreneurship plays a vital role in the growth of the economy. If successful, entrepreneurial innovations improve living standards, create jobs, create wealth from the entrepreneurial venture, and stimulate related businesses.15 The Kauffman Index of Entrepreneurship ranks states by assessing new business start-ups, the percent of new entrepreneurs, and the number of start-up businesses divided by total population. According to this index, New Mexico ranks well in comparison to our neighboring states, steadily increasing since 2011. We rank third in the nation on the percent of the adult population that became entrepreneurs.16
Another tool for assessing entrepreneurship capacity is venture capital funding. Investments in New Mexico have been relatively flat since 2009, with the state falling notably below other Four Corners states.
According to a George Mason University ranking of states by policies that shape economic climate, New Mexico’s national ranking is 27, a +12 improvement since 2009. This analysis looks at both fiscal and regulatory polices, including taxes, fiscal decentralization, government employment and spending, tort law, property rights, labor policies, and broadband.19
|State (#1=best, #50=worst)||2009||2011||2013|
Energy industries occupy a key role in the state's economy. For example, the oil and gas industry comprises roughly a third of New Mexico's general fund; state fiscal planners estimate that each dollar drop in the price of a barrel of oil reduces the state budget by about $6 million. For this reason, oil and gas production—as well as reserves that inform future production—are important economic indicators in New Mexico. (The industry is also susceptible to large market swings, causing volatility for the state economy when oil and gas prices are down.) In addition to conventional energy, the state's natural climate and already constructed facilities offer tremendous capacity for renewable energy production, primarily solar and wind.
Nationally, New Mexico is the fourth largest net-supplier of energy to the country, due primarily to oil and gas.21 The following table illustrates our national rankings for oil, gas and coal production (#1 being the state producing the largest quantity of energy). The table also shows national rankings (again with #1 being the highest) for built capacity to produce solar and wind. New Mexico's overall energy ranking improved since last year.
|Total energy production22||10||28||7||17|
|Natural gas production24||7||30||6||10|
|Wind installed capacity for production26||19||28||10||27|
|Solar installed capacity for production27||11||5||13||22|
|Renewable power generation* 28||29||27||10||44|
*Excluding conventional hydropower
The previous table shows rankings for energy that the Four Corners states are producing today. However, energy is a long-term industry. The table below illustrates rankings for each state's potential, based on what each could produce in the future using existing natural resources or conditions. With the exception of natural gas and coal, New Mexico has more potential for energy production than any other Four Corners states. However, major increases in renewable energy exports would rely on expansion of the national energy transmission grid.
|Proved oil reserves29||5||NA||6||8|
|Proved natural gas reserves30||8||NA||5||11|
|Recoverable coal reserves31||9||*||7||14|
* No data reported. **U.S. Energy Information Administration combines CO, AZ, and UT. All three together do not equal NM’s uranium reserves.
|2014||The trade office in Mexico City , established by the state and University of New Mexico, reinforced commerce and academic ties with Mexico.|
|2013||The first commercial geothermal electricity facility opened near Lordsburg, adding four megawatts of baseload geothermal capacity to the state’s renewable electricity mix, with another six megawatts planned.|
|2012||The State Trade Export Promotion program, through the New Mexico Economic Development Department, began benefiting businesses through trade missions to different countries, workshops on exporting, and individual consulting.|
|2011||The New Mexico Broadband Map, created by the New Mexico Department of Information Technology, enabled essential data on broadband availability, types of technologies, and telecommunication provider data. The Office of Business Advocacy was created to help businesses navigate the state regulatory and permitting process. The Union Pacific “Hub” Initiative, a $400 million project, expanded operations in the Southwest.|
|2010||URENCO USA, near Eunice, began operation of gas-centrifuge uranium enrichment for power production. URENCO was the first U.S. nuclear project licensed in 30 years and is the only uranium-enrichment plant operating in the U.S.|
|2008||The state phased down the “top” personal income tax rate, from 8 percent to 4.9 percent, making New Mexico’s maximum marginal income tax rate the seventh lowest in the country.|
|2006||Spaceport, the world’s first purpose-built commercial spaceport, was located 55 miles north of Las Cruces.|
|2005||The Small Business Regulatory Advisory Commission was established, serving as an advocate for fair regulation of small business and reviewing the impact of regulations on small business in its annual report to the governor and legislature.|
|2004||New Mexico Economic Development Department's Office of International Trade was created, assisting New Mexico companies in the global marketplace.|
|2000-2008||Transportation infrastructure was expanded, resulting in the Big “I” freeway construction and renovation (2000-2002), RailRunner (2006-2008), Park and Ride bus systems (started in 2003) and highway expansions.|
|1999||Waste Isolation Pilot Plant (WIPP) opened, disposing of the country’s defense-related transuranic radioactive waste.|
|1992||Santa Teresa Port-of-Entry was expanded, providing access between Mexico and New Mexico and boosting manufacturing.|
|1991||New Mexico Small Business Development Centers, with locations in 20 communities, began providing business planning, marketing, financing, start-up and entrepreneurial training.|
|1979-2007||A number of tax credits intended to spur economic development and job creation have been implemented over the years: Electronic Card Reading Equipment (2007); Solar Market Development Tax Credit (2006); Small Business Research and Development Tax Credit (2005); Affordable Housing Tax Credit (2005); High Wage Jobs Tax Credit (2004); Job Mentorship Tax Credit (2003); Land Conservation Incentives (2003); Renewable Energy Production Tax Credits (2002); Film Production Tax Credits (2002); Technology Jobs Tax Credit (2000); National Laboratory Small Business Partnership (2000); Rural Jobs Tax Credit (1999); Welfare to Work Tax Credit (1998); Cultural Property Preservation Tax Credit (1984); Investment Tax Credit Act (1979).|
|Ongoing||Several micro-lending projects support small businesses through the efforts of organizations such as WESST CORP, Accion New Mexico and the Community Development Fund. The New Mexico Finance Authority enables funding for a wide array of projects generally considered to be economic development in nature. The Job Training Industry Partnership, an economic development tool, subsidizes classroom and on-the-job workforce training.|
1NM Department of Workforce Solutions. (2015). New Mexico 2015 State of the Workforce Report: A Report Highlighting New Mexico’s Current and Future Workforce, pg. 4 & 15.
2U.S. Census. (2015). Current Population Survey Annual Social and Economic Supplement. Albuquerque Journal. (2014). NM Uninsured Rate Drops, But Still High.
3NM Department of Workforce Solutions. (2015). New Mexico 2015 State of the Workforce Report: A Report Highlighting New Mexico’s Current and Future Workforce, pg. 4 &16.
4U.S. Census Bureau. (n.d).
5NM Department of Workforce Solutions. (2015). Local Area Unemployment Statistics Program.
10NM Department of Workforce Solutions. (2015). Quarterly Census of Employment & Wages: NM Industry Distribution.
11Robinson-Avila, K. (2015). New Mexico is No. 1 in export-related job growth. Albuquerque Journal. U.S. Department of Commerce. (2015). United States of Trade: 50 stories in 50 states that show the impact of trade across the nation.
13U.S. Department of Commerce. (2015). New Mexico: Expanding Exports and Supporting Jobs through Trade Agreements.
17Kauffman Foundation. (2015). 2015 Rank for the Kauffman Index: Startup Activity by State.
21U.S. Energy Information Administration. (2014.) NM State Profile.
28Energy Information Administration. (2013). Net generation from renewable sources excluding hydroelectric by state by sector.
29U.S. Energy Information Administration. (2013). U.S. Crude oil and lease condensate proved reserves, reserves changes, and production.
30U.S. Energy Information Administration. (2013). U.S. Crude oil and lease condensate proved reserves, reserves changes, and production.
31U.S. Energy Information Administration. (2013) U.S. Recoverable Coal Reserves at producing mines, estimated recoverable reserves, and Demonstrated Reserve Base by mining method.
32U.S. Energy Information Administration. (2010). Forward-Cost Uranium Reserves by State, Year-End 2008.
33National Renewable Energy Laboratory. (2012). United States Renewable Energy Technical Potential.
34National Renewable Energy Laboratory. (2012) United States Renewable Energy Technical Potential.
35National Renewable Energy Laboratory. (2012) United States Renewable Energy Technical Potential.