Month after dreary month, New Mexico’s employment numbers barely budge.
Between October 2011 and October 2012 employment grew 0.92 percent if you believe the Current Population Survey or declined 0.75 percent if you believe the Current Employment Survey.
CPS is a survey of 60,000 households in the United States. CES is a survey of 141,000 businesses and government agencies.
Nationally, in the same period, employment grew 1.7 percent.
Business people are frightened and economists are baffled.
Long after the Great Recession ended in June 2009, New Mexico is still struggling and no one has a good explanation.
There are, however, some theories.
It’s the data: The federal Labor Department in 2008 mandated changes in data treatment designed to improve economists’ understanding of the jobs picture nationally, but they resulted in less accurate small-state numbers.
Sometimes the numbers simply make no sense. Surveys showed that New Mexico added 2,900 state government jobs between October 2009 and October 2010 when the state’s own payroll numbers showed employment declined in the period.
It is possible that employment isn’t that bad in New Mexico but the data are.
It’s the government: Economists are especially troubled by a big decline in professional and business services employment – 3,400 jobs between October 2011 and October 2012.
This category includes engineers and scientists who support researchers at the national laboratories, accountants, architects, lawyers and other professionals.
These are usually good jobs that require advanced training or degrees. Spending by people who have these jobs supports many other people in other categories, like retail and tourism.
Professional job losses suggest something really bad could be going on in the economy: that the national laboratories, facing budget cuts, have already canceled contracts and projects that require outside labor. Professionals could be canaries signaling a potentially fatal toxicity in the mine.
Maybe not. My colleague John Fleck has found that the value of contracts Sandia National Laboratories has placed locally this year is about the same as last year and the year before.
Those professional job loss numbers might reflect the deep construction recession afflicting the state, which has hit architects, designers and some engineers and lawyers hard.
Government employment is definitely down, though. Local, state and federal governments have cut 4,500 jobs over the 12-month period.
It’s the builders: New Mexico has lost tens of thousands of construction jobs since 2009. Construction has been an important industry in New Mexico. Its spending and payroll resonate through the economy. Removing thousands of jobs from that sector can’t help but damage the larger economy.
It’s the labor pool: New Mexico faces labor shortages in a number of job categories that require advanced training, among them airline pilot, biochemist and biophysicist, nurse practitioner, personal financial adviser and pharmacist.
We also have a serious high school- and college-dropout problem. The national unemployment rate for high school dropouts is 11.8 percent; it’s 7.7 percent for high school graduates, and 3.7 percent for people with bachelor’s degrees or higher. A better-educated workforce would presumably be a better-employed workforce.
It’s Lehman Bros.: New Mexico hasn’t endured a real recession since the 1930s. Our large government sector has always acted as a cushion that prevented significant job losses.
This recession was very different. It was accompanied by a financial and banking crisis of global proportions, triggered in September 2008 by the collapse of Lehman Bros.
That kind of a recession is always deeper, always longer and always leads to a slower recovery. The last time the country experienced such a thing was, you guessed it, in the 1930s.
It’s the uncertainty: Businesses have no idea what the next year holds. They can’t guess what tax rates will be, whether their federal contracts will be funded, what will happen in the eurozone or what Obamacare might cost them. Uncertain businesses try not to hire.
It’s the bankers: New Mexico lost two very important institutions during the recession and the financial panic: Charter Bank and First Community Bank. Both were taken over by the Federal Deposit Insurance Corp. and are now controlled by out-of-state banking companies. There are a few dozen truly local banks left in New Mexico, and few if any of them have nearly as much capital to deploy as those failed banks could.
Out-of-state banks are fine, but they just don’t look at local deals the way Charter and First Community did. Businesses can’t hire if they can’t get the capital they need to grow.
We need a tractor: The economy is like a car stuck in a ditch. It’s still idling, but we need a tractor to come by that can pull the car out of the ditch. In years past, that tractor has been construction or government spending. Neither of those sectors is helping this time. So we wait.
Suggestions? The Journal’s business desk wants your suggestions for improving job growth in New Mexico. We’ll publish the best of them in a future edition. Send your ideas to firstname.lastname@example.org.
UpFront is a daily front-page news and opinion column.
— This article appeared on page A1 of the Albuquerque Journal