Economist: Key to growth is existing businesses - Albuquerque Journal

Economist: Key to growth is existing businesses

In recent years, the economic development conversation in New Mexico has focused on attracting new business to the state and creating a vibrant startup community here.

But one of the top economists in the state says officials often overlook a crucial key to New Mexico’s recovery.

“Where we really lag behind neighboring states is expanding our existing businesses to where they employ 250 to 500 people,” said Jeffrey Mitchell, director of the Bureau of Business & Economic Research (BBER) at the

MITCHELL: Generally more optimism now

University of New Mexico. “We’re actually doing a pretty good job of creating new jobs by new businesses, which is where most of our attention is.”

Mitchell made the remarks at a economic data conference hosted by BBER. He said understanding this trend has significant implications for the way New Mexico handles economic development.

Businesses here, said Mitchell, open at a rate commensurate with Colorado, Arizona, California and Texas. The state begins to diverge from its neighbors, however, once a business starts to grow.

“We create businesses, they get to five employees or so, they need second or third round capital, so what do they do?” said Mitchell. “They move to San Diego or Boston.”

The state’s net migration— a measure of the people who leave the state in comparison with the people who move here— has changed dramatically in recent years. BBER data shows that from 2005 to 2010, the state’s population gain was a net positive of 39,500 people moving into New Mexico. From 2011 to 2015, the net migration was a net negative of 42,000 individuals leaving the state.

Mitchell said that much of the change in the migration pattern can be attributed to two things. First, fewer people are moving to New Mexico from Midwestern and Southern states. Secondly, the people leaving New Mexico are primarily young families.

“Losing young families is a double hit for the economy, because you are losing both productive young people and families that buy a lot of things,” said Mitchell.

Mitchell said that despite those circumstances, there does seem to be at least some good news in the state’s forecast: its economy is stabilizing somewhat. The oil market, on which New Mexico’s economy is heavily reliant, appears to be recovering, and the state has absorbed the healthcare-related economic gains created by the Affordable Care Act.

“Perhaps we’re in a situation now where we can’t look outside ourselves for an excuse or a savior,” said Mitchell.

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