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NM workforce drop may not be what it appears

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laborCopyright © 2013 Albuquerque Journal

Analysts are wondering what a significant drop in New Mexico’s labor force might say about the state’s economy, assuming the drop is really as bad as the numbers show.

The state Workforce Solutions Department reported last week that New Mexico’s civilian labor force, which had been growing steadily since January 2012, fell from 944,371 people in April to 920,734 people in October, a loss of 23,637 workers.

The Albuquerque metropolitan statistical area workforce declined by 9,789 people from October 2012 to October 2013. The department reported only year-over-year numbers for MSAs in its latest statistical release.

Some workers leave the labor force when they give up trying to find work in a weak economy. A labor force also can contract when workers leave the state for better prospects elsewhere, they decide to improve their prospects by returning to school or they retire.

Joy Forehand of the department’s Economic Research and Analysis Bureau said Tuesday that analysts aren’t sure which of these factors, if any, are behind the labor force decline.

“It is a significant drop,” she said. “More than likely it is overstating the weakness.”

The numbers probably aren’t entirely accurate, said University of New Mexico Bureau of Business and Economic Research Director Lee Reynis.

Government researchers develop workforce and employment estimates from surveys of households and businesses, and some of those surveys “have been problematic in recent months,” Reynis said.

There are indications households are not responding to surveys as much as they once did, and the survey sample is “very tiny,” she said.

Surveys allow researchers to give policymakers a monthly estimate of how the economy is doing. More reliable data, like income tax reporting, are not available every month.

When better numbers are available, economists revise the previous year’s employment and labor force numbers in January and February, and try to improve their statistical tools for the new year.

“Adjustments are rarely very large, but there will be adjustments,” Forehand said.

Retiring baby boomers may be behind some of the labor force decline. Workforce Solutions found that workers “aged 55 to 64 saw the largest percentage increase in unemployment for any demographic group” beginning in 2008. Four years later, workers older than 65 accounted for the largest decline in workforce participation, suggesting they may have retired.

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