Chronically among the poorest states, New Mexico received the dubious distinction in 2015 of being ranked 51st by the Measure of America, behind Nevada and Mississippi, which is based on 16 indicators related to the economy, education and community. New Mexico’s drop to last place is a signal that the next governor must redouble efforts to increase the prospects for New Mexicans.
New Mexico Development Accounts represent an innovative model for accelerating the upward mobility of New Mexicans. Integrating behavioral economics, asset building and impact investing, NMDAs represent a new social contract between citizens and government.
• The default for an NMDA would have workers save 5 percent of wages, increased to 10 percent at worker discretion, automatically diverted to an incentivized plan, unless they opt out.
• The choice architecture matches worker savings for dedicated purposes: finishing vocational school or college, starting a business or purchasing a first-time home. NMDAs would be progressive, with savings matched according to worker attributes, so that earnings at half the federal poverty level would be matched 3 to 1, for the poor 2 to 1, and for other workers 1 to 1. NMDAs would be universal, tax exempt, portable and heritable.