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Is NM’s unemployment rate reason to hope?

New Mexico moves at a leisurely pace in a lot of areas, including entering and exiting economic downturns.

Stephen Hamway

As the logic goes, New Mexico, with its high number of stable government jobs, tends to be slower than most states to enter economic downturns, and rarely sees the sky-high unemployment rates of its Southwestern neighbors.

On the other hand, New Mexico tends to take a longer time to recover from those downturns than states with a higher percentage of private sector workers.

“We don’t get hit as hard as other states, and we don’t recover as fast,” said Jim Peach, economics professor at New Mexico State University.

So far, that’s held true during the COVID-19 pandemic. In May, the most recent month with available data, New Mexico’s unemployment rate stood at 9.2%, according to numbers from the New Mexico Department of Workforce Solutions. The figure is, of course, much higher than it was a few months prior. But it’s still significantly lower than the national rate, which in May stood at 13.3%, as well as rates in states in the region including Texas, California and Colorado.

But has New Mexico been spared from the worst of the downturn, or is this another instance of delayed economic pain and a long road toward recovery?

“New Mexico stands to lose what is currently our benefit,” said Jeffrey Mitchell, director of University of New Mexico’s Bureau of Business & Economic Research.

artwork by Donna Grethen

Relative to the rest of the United States, New Mexico took a long time to enter the Great Recession. The state didn’t reach its unemployment peak until 2010, about a year after the nation did, and that peak was lower than the national numbers.

However, Mitchell said the recession’s effects lingered longer in New Mexico than nearly everywhere else. New Mexico didn’t reach its pre-recession job total until 2018, making it the second-to-last state to do so.

On the surface, Mitchell said it seems like this downturn – which has hammered leisure and hospitality and contributed to a sharp decline in oil and gas prices – would have a particularly adverse impact on New Mexico. A higher percentage of New Mexico’s workforce works in leisure and hospitality than the national average, and more workers tend to work at smaller companies that lack the deep pockets of larger competitors, he said.

“All of this would lead us to think we would be double-hit,” Mitchell said.

So far, at least, that hasn’t been the case, at least relative to other states in the region. Mitchell and Peach attributed that to a couple of factors.

One, of course, is New Mexico’s famously high volume of government jobs. Mitchell said the Land of Enchantment has the third-highest percentage of workforce with jobs in state, local or federal government. Mitchell said these jobs, which are often affected by budgets set well in advance, are less likely to be cut during the early part of a downturn than private sector positions.

“Governments have been, thus far, significantly more resilient,” he said.

Additionally, Mitchell said the direct cash benefits from federal stimulus packages, including the $1,200 mailed to most Americans and the $600 in unemployment assistance, have made more of an impact in New Mexico, with its relatively low cost of living, than some of its western peers.

However, there’s reason to believe that New Mexico’s luck – if you can call it that – may run out soon. Without additional federal intervention, Mitchell said local governments may have to make hard choices about retaining employees.

Additionally, Mitchell said that once the federal Pandemic Unemployment Compensation program runs out later this month, there’s no evidence that the federal government will replace it with anything as generous.

“What may have been a cushion for (New Mexico) relative to other states may be removed,” he said.

On the oil and gas side, Peach said New Mexico has dropped from 117 oil rigs prior to the crisis to around 50 now. While even these cuts aren’t as severe as those in other states, Peach said the decreased production may hurt New Mexico down the road.

Moreover, as the industry gets more efficient, producers won’t be in a hurry to replace the approximately 4,400 jobs lost since last May.

“We’re not going to see the previous peak in employment for a long time,” Peach said.

However, both Peach and Mitchell said the first step is getting the virus under control, something that New Mexico may be better positioned to do than neighboring states that have seen an exponential rise in cases recently. Fewer cases mean that consumers feel more comfortable shopping and dining out, and large employers can reopen more completely.

“New Mexico has been very aggressive and reasonably effective in managing the virus,” Mitchell added. “And that bodes well.”

Stephen Hamway covers the economy, health care and tourism for the Journal. He can be reached at


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