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NM sees biggest drop in prime working age employment rate

Copyright © 2017 Albuquerque Journal

The employment rate for New Mexicans of prime working age has had the biggest drop in the nation since 2007, according to a new study.

The Pew Charitable Trust study, released this month, looks at the change in employment among 25- to 54-year-olds from 2007 to 2016.

unemplymntIt shows that the decline in New Mexico amounted to more than 7 percentage points: from 79.1 percent employed in that age group in 2007 to 72 percent in 2016.

That means that for every 100 New Mexicans in the age group, about seven fewer held jobs by the end of 2016.

More recent data based on U.S. Census Bureau information show that figure dropped slightly more as of last month – to 71.7 percent.

The average for the U.S. as a whole was 79.9 percent in 2007 and 77.9 percent last year – a decline of 2 percentage points. That’s despite a national unemployment rate that has been steadily falling.

The top three states for prime-age employment were Michigan, with a positive 0.8 percentage point change in the employment rate, followed by Wisconsin and Indiana. After New Mexico, Nevada had the biggest drop in employment, followed by South Dakota.

While employment and unemployment rates are related, they measure somewhat different groups. The main reason prime-age employment nationwide was lower in 2016 than in 2007 was an increase in the share of people neither working nor looking for work – a group that is not counted in the unemployment rate.

New Mexico’s ranking is not a surprise, considering the state still has not recovered from the recession, said Jim Peach, a New Mexico State University economist.

“It’s a general lack of economic progress for a decade,” Peach said.

Pollster Brian Sanderoff said the state’s employment rate for all ages lags behind, “so it doesn’t surprise me that in that age group we’ve had a significant decline.”

A drop in employment is among the economic conditions that are “major drivers of state finances,” the Pew study said.

“Changes in employment rates among adults in their prime working years can affect both sides of a state’s budget ledger,” the study said.

On the revenue side, employee paychecks generate individual income tax dollars and fuel consumer spending. That, in turn, produces tax revenue from sales and business income for state coffers.

On the state spending side, people without jobs often need more public services, such as Medicaid and other safety-net programs that increase costs borne by the state, the study said.

University of New Mexico economist Jeff Mitchell said that likely related to the loss of jobs and employment in the state is the net loss of 9,500 prime working-age adults from 2010 to 2015 who have left the state.

Because adults ages 25 to 54 are most likely to have families, New Mexico has had a 3 percent net loss of children ages 5 to 17 to other states, he said.

That loss is “raising questions for the future of the labor force,” Mitchell said.

The national decline in prime working-age adults is hard to explain, although economists generally agree that it’s partly due to structural changes brought on by the recession. For example, hundreds of thousands of jobs in manufacturing have been lost while technology has replaced jobs in a variety of sectors.

Hard-hit by the changes have been low-income men without college degrees. The number of prime-age men who are neither working nor looking for work has doubled since the 1970s, according to Atlantic magazine.

Peach said other reasons could be that those thrown out of work during the recession, which started in December 2007, might find it hard to get back into the labor force.

“The longer the unemployment, the harder it is to find a new job,” he said.

But, he added, “It’s something of a mystery at the national level.”

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