Problems and Prospectsthe ideal employment growth is in high-paying occupations and industries. While New Mexico’s economy was creating jobs at a brisk pace in 2006, they were disproportionately

State of Working New Mexico Problems and Prospects

Fiscal Policy Project of New Mexico Voices for Children2340 Alamo S.E., Suite 120, Albuquerque, NM 87106 505.244.9505 www.nmvoices.org

2

Released January 2008


3

Overview

Problems & ProspectsState of Working New Mexico/2007

T he “State of Working New Mexico 2007” reviews the most current information1 on indicators of economic well-being for New Mexico’s working families.

Among these indicators are income, job quality, labor force participation, poverty and household wealth. This report deals with labor issues because work is generally considered the best path out of poverty, and alleviating poverty would significantly improve the health and well-being of New Mexico’s children. However, work must pay a living wage – that is, enough to support a family – and should include benefits such as health insurance and paid sick leave.

Not enough jobs in New Mexico meet this criteria and our state is home to a great many “working poor.” On average, New Mexicans put in more hours than do workers across the nation. Still, our state’s median income lags behind that of our neighboring states, and we consistently have one of the highest poverty rates in the country.

As this report shows, the reasons New Mexico is no worker’s paradise are numerous and go beyond job quality to include where jobs are (and aren’t) located, work-force education and more. But one statistic shines an interesting light on the picture as a whole: New Mexico’s economy suffers from a fundamental worker equity imbalance. That is, far less of the state’s gross domestic product (GDP) goes to worker paychecks than it does in most other states. In New Mexico, 50 percent of GDP goes to employee compensation. Nationally, that rate is 57 percent.

The reasons for this imbalance are beyond the scope of this report. But one thing is clear: lower wages can allow for higher profits – much of which likely go to out-of-state shareholders. Such income distribution is neither good for New Mexico’s workforce nor the state’s economy as a whole.

If New Mexico’s distribution of income followed the national average, employee compensation would be about 12 percent ($4.3 billion) higher than it was in 2005. Profits would have been about $4 billion lower. This imbalance demonstrates that New Mexico is in need of a substantial redistribution of income.

1 In most cases, the data are from 2006, but in some cases only data from the 2000 Census are available.


4


Overview

Corporate ProfitThe following two graphs show the difference in wages (the light gray bars) and profits (the dark gray bars) as a percentage of both the U.S. (Graph I) and New Mexico (Graph II) economies. If you were to overlay the two charts, you would see significantly lower ratios of wages to profits in New Mexico than nationally in several sectors, most notably in mining, manufacturing, and arts/entertainment/recreation. Only two sectors – construction and the management of companies – show the opposite.

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United States Percent Compensation United States Percent Gross Operating SurplusSource: U.S. Bureau of Economic Analysis, National Income and Product Accounts

Graph IRatio of Wages to Profits in the U.S. (2005)


5


Overview

This imbalance may partly explain why New Mexico has a disproportionate number of low-wage jobs. It does not, however, account for the other factors that are obstacles to prosperity in New Mexico, such as the state’s low employment rates, asset poverty, weak public policies regarding unemployment insurance, the educational levels of its workforce, and the fact that the state’s rural areas have a higher proportion of low-wage jobs than its urban areas.

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New Mexico Percent Compensation New Mexico Percent Gross Operating SurplusSource: U.S. Bureau of Economic Analysis, National Income and Product Accounts

Graph IIRatio of Wages to Profits in New Mexico (2005)


6


Overview

Fortunately, New Mexico is also faced with opportunities for laying the foundation for prosperity. Most recently, the New Mexico Legislature raised the state’s minimum wage and the first increment of that raise went into effect on January 1, 2008. Raising wages is the single most important step that can be taken in the short term to expand prosperity to working families. Higher wages also mean more discretionary income, and the additional spending it generates is good for the local economy.

New Mexico has also experienced growing revenues in the form of taxes on the extraction of natural gas and crude oil. If the state decides to invest this windfall in education and other programs that improve the job opportunities available to New Mexicans it could greatly improve the state of working New Mexico.


7


JobsEmployment growth is the best measure of the health of any economy. Naturally,

the ideal employment growth is in high-paying occupations and industries. While New Mexico’s economy was creating jobs at a brisk pace in 2006, they were disproportionately low-wage jobs. The issue of low-wage jobs is especially a problem in the state’s rural communities.

New Mexico’s job growth in 2006 was 3 percent. Contrast that to between 1.5 and 2 percent during the second half of the 1990s, when New Mexico’s job growth was hobbled by the Asian economic crisis, which put constraints on the state’s electronics exports. Between 2000 and 2003, the years of national recession and slow growth, New Mexico job growth hovered near 1 percent, skirting recessionary levels. The state’s job growth rose to healthy levels of 1.9 percent in 2004, and 2.4 percent in 2005. Job growth slowed appreciably after 2006 and was at 0.9 percent by October 2007, ranking New Mexico 31st in the nation.

Employment can be classified into private and government sectors. About one-quarter of New Mexico’s non-farm employment is in the government sector. While government employment is 26 percent of the total in New Mexico, it is just 17 percent of the total nationally. This leaves private employment at 74 percent of total employment in New Mexico, significantly lower than the national rate of 83 percent. The Los Alamos and Sandia national laboratories, with many high-paying jobs, are often thought of as government employers, but both are classified as private-sector employers because they are managed by private contractors. State and local government jobs do not tend to pay as well as comparable jobs in the private sector (although they generally offer better benefits).

More noteworthy is the comparison between industry employment shares for New Mexico and the country as a whole. Lower-wage industries (like retail trade) represent a higher percentage of total employment in New Mexico, while higher-wage industries (like manufacturing, finance and management) represent a lower share of total employment (See Table I, Employment by Industry, page 10). In the long run, New Mexico must approach a more typical distribution of high- and low-wage industries and a better balance of government to industry jobs, if its economic condition is to improve.

Among the higher-wage private sector employers in New Mexico are mining, construction and health care, all three of which have shown strong growth in recent years. The mining sector has seen rapid growth since 2000, as high oil and natural gas prices have encouraged drilling activities in northwest and southeast New


8


Jobs

Mexico. Most of the employment growth in this sector is in exploration. Rising copper prices brought back workers to the large open-pit copper mines near Silver City in southwestern New Mexico’s Grant County, but those mines are approaching depletion.

Construction employment growth began a remarkable acceleration early in 2003 after modest and halting growth in the second half of the 1990s and the ensuing national recession. Employment growth in this sector reached 7 percent in 2004, and 8 percent in 2005.

Education and health-care employment rose consistently from about 3 percent in the late 1990s to 6 percent from 2001 through 2003. The sharp increase in the health-care service growth rate was largely due to changes in which types of employees were counted. Previously, some in-home Medicaid workers were not counted in the overall employment figures. However, health-care employment has slowed in the past two years as state government placed restrictions on the availability of the Medicaid personal care option.

Job QualityJob quality – meaning the wage scale, work hours and benefits – varies greatly by industry. Mining jobs, for example, tend to pay well, but are fraught with safety and health risks. Still, the substantial job growth in the oil and natural gas industries helped improve job quality in terms of wages dramatically in New Mexico between 2005 and 2006. This improved job quality, combined with accelerated job growth, may explain why New Mexico’s per capita income ranking rose in 2006. The average weekly wage in industries that were shrinking in 2005 and 2006 was $692, while industries that expanded during that timeframe paid an average weekly wage of $768. This turnaround in job quality was good news for New Mexico workers.

The future may not be as bright, however (see Table II, Projected New Jobs Table II, page 11). All but one of the top-ten fastest growing jobs pay low wages. In fact, more than one-third (35 percent) of new jobs predicted in the future are low-wage. The top three fastest growing jobs are in retail sales and food service. Such occupations generally pay an hourly wage and include few, if any, benefits such as health insurance or paid sick leave. Many workers in such jobs are also under-employed – meaning they want to work full-time but are only employed part-time.

Only one of the top-ten fastest growing occupations – registered nurses – is a high-paying occupation, but those wishing to become registered nurses face a shortage of openings for nursing students at state educational institutions. Management, both general and operational, which ranks eleventh and pays just under $90,000 annually, is the highest-wage job on the table.


9


Jobs

Health insurance is another indicator of poor job quality. New Mexico had the lowest rate of employer-provided health insurance in the country in 2006.2

Job DistributionAnother important labor market issue is job distribution – or whether enough jobs are located near the communities in which workers live. Although the state recently experienced its highest job growth in 12 years, the rural workforce was still left behind, as they were in the boon of the early to mid-1990s. This is due in large part to New Mexico’s transition away from a rural-based agricultural economy.

The core urban counties of Los Alamos, Santa Fe, Bernalillo (Albuquerque), and Sandoval (Rio Rancho) are the economic engine of the state and show a strong employment pattern. The two smaller urban counties, San Juan in the north (Farmington) and Doña Ana (Las Cruces) in the south, also perform better than their neighboring rural counties. Aside from fewer employment opportunities, New Mexico’s rural counties also have a disproportionately higher rate of low-paying jobs than do urban counties, lower employment rates and, not surprisingly, higher poverty rates.

The city of Los Alamos is a prime, if extreme, example of this income inequality. Los Alamos National Laboratories is an enclave of high-end scientific jobs that pay well enough to perennially rank the county as one of the nation’s richest. However, the county is surrounded by largely low-income communities. Widening its economic well-being beyond such islands of prosperity is a key challenge for New Mexico’s economy.

The job distribution dilemma is this: either workers must move to where jobs are, or jobs move to where the workers are. But neither workers nor jobs can relocate unless the educational level of the workforce matches the needs of the industries. In either case, the educational performance of New Mexico’s rural counties needs to improve.

2 Briefing Paper #203, Economic Policy Institute, Washington, DC, November 1, 2007


10


Jobs

Components of Employment United States Share of Total New Mexico Share of Total

Employment by Industry 174249.6 100.00% 1064351 100.00%

Farm Employment 2914 1.67% 24685 2.32%

Nonfarm Employment 171335.6 98.33% 1039666 97.68%

Private Employment 147498.6 84.65% 820099 77.05%

Forestry, Fishing and other 1012.2 0.58% 7224 0.68%

Mining 820 0.47% 21024 1.98%

Utilities 594.1 0.34% 4217 0.40%

Construction 10845.7 6.22% 73165 6.87%

Manufacturing 14860.9 8.53% 41896 3.94%

Durable manufacturing 9334.4 5.36% 29113 2.74%

Nondurable manufacturing 5526.5 3.17% 12783 1.20%

Wholesale Trade 6401.3 3.67% 58566 2.68%

Retail Trade 18941.1 10.87% 117770 11.06%

Transportation/Warehousing 5510.1 3.16% 24901 2.34%

Information 3577.1 2.05% 4050 0.38%

Finance/Insurance 8186.6 4.70% 32101 3.02%

Real Estate/Rental/Leasing 6934.3 3.98% 37892 3.56%

Professional/Technical Services 11488.7 6.59% 68994 6.48%

Management of Companies 1857 1.07% 5921 0.56%

Administrative/Waste Services 10645.1 6.11% 56653 5.32%

Educational Services 3552.9 2.04% 15551 1.46%

Health Care/Social Assistance 17267 9.91% 109575 10.30%

Arts/Entertainment/Recreation 3517.3 2.02% 21962 2.06%

Accomodation/Food Services 11728.3 6.73% 81679 7.67%

Other Services 9758.9 5.60% 53689 5.04%

Government/Gover't Enterprises 23837 13.68% 219567 20.63%

Federal Civilian 2790 1.60% 30099 2.83%

Federal Military 2027 1.16% 16258 1.53%

State and Local 19020 10.92% 173210 16.27%

State 5112 2.93% 69786 6.56%

Local 13908 7.98% 103424 9.72%

Source: U.S. Bureau of Economic Analysis

Table IEmployment by Industry - U.S. and New Mexico (2005)


11


Jobs

Occupational Title Annual Openings Average Wages

1 Retail Salespersons* 1,576 $22,891

2 Waiters & Waitresses* 1,047 $14,092

3 Combined Food Preparation & Serving Workers, including Fast Food* 865 $13,575

4 Janitors & Cleaners, Exc. Maids & Housekeeping Cleaners* 623 $18,931

5 Office Clerks, General* 553 $22,364

6 Registered Nurses 515 $57,419

7 Personal & Home Care Aides* 503 $18,418

8 Security Guards 482 $22,357

9 Maids & Housekeeping Cleaners* 426 $14,709

10 Landscaping & Freight, Stock & Material Movers, Manual 426 $19,821

General & Operations Managers 420 $89,747

Counter Attendants, Cafeteria, Food Concession & Coffee Shop 350 $14,470

Maintenance & Repair Workers, General 348 $28,640

Elementary School Teachers, Exc. Special Education 341 $37,704

Carpenters 341 $28,989

Executive Secretaries & Administrative Assistants 340 $33,059

Truck Drivers, Heavy & Tractor-Trailer 337 $37,028

Licensed Practical & Licensed Vocational Nurses 322 $38,827

Secondary School Teachers, Exc. Special & Vocational Education 296 $44,815

Teacher Assistants 287 $17,041

Receptionists & Information Clerks 282 $21,535

Police & Sheriff's Patrol Officers 281 $37,632

1st-line Supervisors/Mgrs of Food Preparation & Serving Workers 273 $21,567

Sales Representatives, Wholesale & Mfg. Exc. Technical & Scientific 273 $43,211

Cooks, Fast Food 264 $14,858

Food Preparation Workers 252 $16,373

Cooks, Restaurant 250 $17,990

Nursing Aides, Orderlies & Attendants 223 $21,435

Cooks, Insitution & Cafeteria 216 $18,924

1st-line Supervisors/Mgrs of Office & Administrative Support Workers 215 $41,836

Dishwashers 214 $14,472

Middle School Teachers, Exc. Special & Vocational Education 213 $39,546

Home Health Aides 205 $21,624

Automotive Service Technicians & Mechanics 204 $34,306

Accountants & Auditors 199 $53,766

Child Care Workers 189 $15,539

Hotel, Motel & Resort Desk Clerks 165 $17,061

Counter & Rental Clerks 158 $23,284

Truck Drivers, Light or Delivery Services 153 $26,474

Bill & Account Collections 150 $25,930

Helpers--Production Workers 145 $22,648

Dining Room & Cafeteria Attendants & Bartender Helpers 140 $14,081

Hosts & Hostesses, Restaurent, Lounge & Coffee Shop 135 $14,465

Bartenders 134 $14,205

Team Assemblers 127 $24,636

Table IIProjected New Jobs in New Mexico (2004-2014)

Source: New Mexico Department of Labor, Bureau of Economic Research and Analysis, New Mexico Employment Projections 2004-2014, http://www.dol.state.nm.us/pdf/nmprojocc.pdf *Considered low-wage based on FPL.


12


Work HoursT oo many of New Mexico’s families are working hard at jobs that do not pay

enough to support a family. As a result, many work more than 40 hours a week, sometimes at multiple jobs, and have less time to spend with their children or to pursue educational advancement.

Full-time work is defined as 2,080 hours annually. As Graph III indicates, almost three-quarters of families in New Mexico earning less than 200 percent of the federal poverty level (FPL)3 put in more than 40 hours a week. Single fathers earning more than 200 percent of the FPL work, on average, 2,461 hours a year, while single mothers must work 2,711 hours to reach that still-low standard of living.

3 The FPL varies by family size. The poverty level for a family of three, for example, is $16,600. However, it’s generally agreed that the FPL is set too low because the calculation method is outdated. A family is now consid-ered low income that lives at twice the FPL (or 200 percent of FPL).

Graph IIINumber Hours Worked by Percent of Families Earning <200% FPL (2000)

Source: U.S. Census Bureau, Current Population Survey

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Graph IVMean Number of Hours Worked in New Mexico (by Poverty Level) (2000)

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Graph VMean Number of Hours Worked in United States (by Poverty Level) (2000)




14

Employment


T he employment rate is the percentage of the population over 16 years of age that is employed. This differs from “labor force participation,” which is the

proportion of the population over the age of 16 either working or looking for work. Labor force participation is addressed in the next section.

The employment rate is one of the single most important predictors of the health of a state’s economy. It’s also a good predictor of the state’s poverty rate. New Mexico’s employment rate was low at 60.4 percent in 2006, ranking the state 43rd lowest in the nation (see Map I, Employment-to-Population Rates by State, page 15). Arizona, Colorado, Texas, and Utah all perform better than New Mexico by this measure – and all enjoy a higher standard of living. While New Mexico’s low employment rate contributes greatly to our high poverty rate, it is further aggravated by our high concentration of low-wage jobs. Poverty is discussed more extensively in that section of this report.

Employment rates are higher in New Mexico’s urban counties than in its rural counties. The highest employment rates were in Los Alamos, Santa Fe, and Bernalillo respectively (see Map II, New Mexico Employment Rates by County, page 16).

Not surprisingly, the counties with the lowest employment rates are those with the lowest per capita incomes and the highest poverty rates. A comparison of the three state maps showing employment rates (Map II, page 16), income rates (Map VII, page 26) and poverty rates (Map VIII, page 30) by county bears this out.

UnemploymentUnemployment rates vary considerably among families at different income levels. The unemployment rate for families earning more than 200 percent of the FPL is only about 3 percent; while it is 10 percent for families earning below 200 percent of the FPL. The unemployment rate is also much higher for Hispanics, Native Americans, and African Americans than for non-Hispanic whites.


15


Employment

Source: U.S. Bureau of Labor Statistics

Washington64.0%

Oregon62.0%

Montana64.8%

Wyoming68.6%

Idaho66.4%

North Dakota70.7%

South Dakota70.3%

Nebraska70.2%

Colorado69.6%

Utah70.3%

Nevada65.6%

California62.0%

Arizona62.0% New Mexico

60.4%

Kansas67.3%

Oklahoma60.9%

Texas63.6%

Minnesota69.9%

Iowa70.1%

Missouri64.5%

Arkansas60.1%

Louisiana59.0%

Wisconsin67.3%

Michigan60.6%

Indiana64.3%

Ohio63.6%

Pennsylvania61.4%

New York60.3%

Vermont69.4%

New Hampshire68.6%

Maine63.7%

Massachusetts63.6%

Rhode Island65.1%

New Jersey63.4%

Connecticut65.0%

Delaware64.7%

Maryland66.8%

District of Columbia63.2%

West Virginia53.0%

Virgina66.3%Kentucky

59.3%Tennessee

61.05

North Carolina

62.3%South

Carolina60.1

Georgia64.8%

Alabama59.6%

Mississippi55.8%

Florida61.5%

Hawaii64.8%Alaska

67.0%

Illinois64.4%

Map I Employment-to-Population Rates by State (2006)

Unemployment insurance benefits in New Mexico are low, at about two-thirds of the national average. Legislation passed in 2003 and 2007 increased unemployment insurance payments, added extra money for dependants, and made benefits available to more New Mexicans. But only 35 percent of eligible workers are receiving benefits, in part because the application process is difficult to navigate. Another problem is that those recipients who are certified must wait a week before receiving their first check.


16

Source: U.S. Department of Housing and Urban Development

Map II New Mexico Employment Rates by County (2000)

Doña Ana


Employment


17


Labor Force Participation

L abor force participation is the proportion of the population over the age of 16 either working or looking for work. New Mexico’s labor force participation

rate of 63 percent is lower than surrounding states (see Map III, Labor Force Participation Rates by State, page 18). This low labor force participation rate is due in part to the fact that more than 17 percent of all New Mexican adults over the age of 25 lacks a high school diploma and most jobs require at least a high school education. Nationally, fewer than 15 percent of adults are without a high school education.

Of the adults in New Mexico without a high school diploma, only 40 percent have jobs, while 78 percent of those with some college or advanced degrees are working. High school dropouts who are employed tend to earn significantly less than their counterparts who finished high school. A high school dropout typically earns less than $16,000 annually in New Mexico.4 Typically, the more education a person receives, the higher their earnings. However, without a strong demand for labor, educated New Mexico workers will simply leave the state.

Poor educational preparation is a particularly severe problem in New Mexico’s rural counties. New Mexico’s heavily Hispanic northeastern counties, the agricultural counties on the Texas-New Mexico state line, the U.S.-Mexico border counties, and the Navajo Reservation in the northwest all share the problem of low labor force participation. This is exacerbated by job scarcity in most of these areas.

4 2006 American Community Survey


18




Washington67.4%

Oregon65.6%

Montana67.2%

Wyoming71.0%

Idaho68.9%

North Dakota73.2%

South Dakota72.5%

Nebraska72.5%

Colorado72.7%

Utah72.3%

Nevada68.3%

California65.1%


63.1%

Kansas70.4%

Oklahoma63.4%

Texas66.8%

Minnesota72.9%

Iowa72.7%

Missouri67.8%

Arkansas63.5%

Louisiana61.8%

Wisconsin70.7%

Michigan65.1%

Indiana67.4%

Ohio67.2%

Pennsylvania64.4%

New York63.2%

Vermont72.1%

New Hampshire71.0%

Maine66.7%

Massachusetts67.0%

Rhode Island68.6%

New Jersey66.6%

Connecticut67.9%

Delaware67.1%

Maryland69.5%


West Virginia53.0%

Virgina68.4%Kentucky

62.8%Tennessee

64.4%

North Carolina

66.1%South

Carolina64.2%

Georgia67.9%

Alabama62.1%

Mississippi59.6%

Florida63.5%

Hawaii66.5%Alaska

71.9%

Illinois67.4%

Map IIILabor Force Participation Rates by State (2006)


19



Map IVNew Mexico Civilian Labor Force Participation Rates by County (2000)

Source: U.S. Census Bureau, 2000 Decennial Census


20



Total Population Below 50% FPL 50%-100% FPLTotal 1,867,305 133,033 204,903

Not in the Labor Force 954,083 98,712 142,456

Employed 865,521 29,011 53,341Unemployed (rate) 47,601 (5%) 5,310 (16%) 9,106 (15%)

Table IIINew Mexico Labor Force Participation by FPL

Source: U.S. Census Bureau

<100% FPL 101-200% FPL 201-500% FPL

All 15% 8% 5%White 16% 7% 4%Hispanic 19% 11% 4%Black n/a 18% 0%Native American n/a n/a n/a

Table IVUnemployment Rates by Race/Ethnicity and Poverty Level



21

Workforce Investment


T he greatest investment a state can make in its workforce is to provide its residents with a good education. Numerous studies show that a child’s academic

success – from kindergarten through high school – is closely linked to their access to early education (pre-kindergarten) and/or quality childcare. This is because the vast majority of brain development occurs in the first three years of life. Without this critical early learning, children are less prepared to enter school, less engaged, and less likely to complete a 12-year education. Pre-K programs offer a big economic pay off down the line in the form of higher personal earnings (which helps the economy and creates a higher tax base) and lower costs to the criminal justice system.5

In addition to a greater investment in early childhood education, New Mexico needs to invest in its teachers at all grade levels. Like many other employment sectors, educational occupations pay less in New Mexico than in neighboring states. Adequate salaries are needed to attract and retain well-qualified and experienced teachers, as well as enough educational assistants to provide the support and attention students need for academic success. The best-prepared teachers must be given additional incentives to teach in the schools that need them the most. Rural schools are especially in need of the best-qualified and most talented teachers.

While early childhood education is the best investment for the state’s future workers, adult basic education and incumbent worker training are needed so that the current generation of workers can improve their skills, employability and, eventually, their salaries and standards of living.

5 “Enriching Children, Enriching the Nation,” Robert G. Lynch, Economic Policy Institute, Washington, DC, 2007.


22

Wages &Income


As the ‘Work Hours’ section shows us, working more than 40 hours a week does not guarantee a decent standard of living. Poor wages and wage inequality are

severe problems in the state.

New Mexico had lower per capita earnings ($18,643) than the U.S. average ($22,9560) in 2005. While per capita earnings reflect the wages earned by New Mexicans, a more complete picture of the well-being of New Mexicans is per capita income6, which includes factors beyond wages and salaries. “Transfer receipts” are one such factor. This is money paid to New Mexicans from assistance programs like Medicare, Medicaid, Social Security, food stamps, and the like. Although our poverty rate is high, New Mexico receives less per capita in transfer receipts ($5,037) than does the U.S. as a whole ($5,149).

Another factor is unearned income – or income derived from rent, interest and dividends. One must have assets (either real estate or investments) in order to receive unearned income, and having assets is generally a sign of personal wealth. New Mexico’s per capita unearned income ($4,209), not surprisingly, is lower than the national average ($5,366).

When wages, transfer payments and unearned income are taken together, New Mexico’s per capita personal income ($29,673) was 20 percent lower than the national average ($36,276) in 2006 (see Map V, Per Capita Personal Income by State, page 23).

Among the other indicators of poor wages or wage inequality:

New Mexico’s median household income lagged behind that of the •surrounding states of Arizona, Colorado, Texas and Utah in 2005 (see Graph VI, Median Household Income; New Mexico and Surrounding States, page 24).

New Mexico’s median hourly wages were on par with Texas and Utah in •2006, but lagged considerably behind Arizona and Colorado (see Map VI, Median Hourly Wages, page 25).

6 State per capita income is the total state personal income divided by the state population.


23


Wages & Income

The per-hour wage gap between the bottom 10 percent of workers and those at •the highest end of the wage scale widened from $18.98 in 1979 to $23.22 in 2005.

Median family income is generally higher in urban counties than in counties that •are rural (see Map VII, Median Family Income in New Mexico, page 26).


Washington$34,701

Oregon$33,666

Montana$30,688

Wyoming$40,676

Idaho$29,952

North Dakota$32,552

South Dakota$33,929

Nebraska$34,397

Colorado$39,186

Utah$29,108

Nevada$37,089

California$38,299

Arizona$31,458 New Mexico

$29,673

Kansas$34,743

Oklahoma$32,210

Texas$34,257

Minnesota$38,712

Iowa$33,236

Missouri$32,705

Arkansas$37,935

Louisiana$30,952

Wisconsin$34,701

Michigan$33,847

Indiana$32,528

Ohio$33,338

Pennsylvania$36,680

New York$42,392

Vermont$34,264

New Hampshire$39,311

Maine$32,348

Massachusetts$45,877

Rhode Island$37,388

New Jersey$46,344

Connecticut$49,852

Delaware$39,022

Maryland$44,077

District of Columbia$55,755

West Virginia$27,897 Virgina

$39,173Kentucky$39,352

Tennessee$32,304

North Carolina

$32,234South

Carolina$29,515

Georgia$31,891

Alabama$31,295

Mississippi$26,535

Florida$35,798

Hawaii$36,299Alaska

$37,271

Illinois$38,215

Map VPer Capita Personal Income by State (2006)


24


Wages & Income

Graph VIMedian Household Income

New Mexico and Surrounding States(1995-2005)

0

10,000

20,000

30,000

40,000

50,000

60,000

1995 2005Arizona Colorado New Mexico Utah Texas

$40,546

$53,478

$34,145

$47,925

$42,091

$46,728

$52,103

$40,224

$56,610

$42,780



25


Wages & Income


Washington$16.73

Oregon$14.72

Montana$12.44

Wyoming$14.32

Idaho$13.20

North Dakota$12.78

South Dakota$12.68

Nebraska$13.09

Colorado$15.72

Utah$13.27

Nevada$14.28

California$15.59

Arizona$14.44 New Mexico

$13.32

Kansas$13.61

Oklahoma$13.13

Texas$13.00

Minnesota$15.94

Iowa$13.77

Missouri$14.05

Arkansas$12.96

Louisiana$13.42

Wisconsin$14.69

Michigan$15.27

Indiana$14.20

Ohio$14.76

Pennsylvania$14.83

New York$15.78

Vermont$14.95

New Hampshire$16.61

Maine$13.94

Massachusetts$17.24

Rhode Island$15.29

New Jersey$17.99

Connecticut$17.75

Delaware$15.40

Maryland$17.31

District of Columbia$19.10

West Virginia$13.59 Virgina

$15.46Kentucky$13.25

Tennessee$12.94

North Carolina

$13.49South

Carolina$13.51

Georgia$14.45

Alabama$13.44

Mississippi$12.47

Florida$14.31

Hawaii$14.84Alaska

$17.00

Illinois$15.14

Map VIMedian Hourly Wages by State (2006)


26


Wages & Income

Map VIIMedian Family Income in New Mexico (2006)

Source: U.S. Department of Housing and Urban Development


27


HouseholdWealthH ousehold wealth, as well as income, should be considered an indicator of the well-being

of a state’s working population. Wealth is really a measure of a household’s net worth – such as savings and other financial assets including life insurance policies. The higher a family’s net worth, the greater its ability to weather a spell of unemployment without economic catastrophe. Unfortunately, New Mexico’s household net worth was $15,755 in 2006, ranking us 50th among the states and the District of Columbia.7 Just under 50 percent of New Mexico households have savings accounts, ranking the state 41st in the nation. Part of this problem is that New Mexico lacks sufficient facilities to make banking accessible to low-income residents.

Asset poverty – owing more in debts than one owns in assets – is another critical measure of wealth. With 36 percent of its households affected by asset poverty, New Mexico ranked 50th among the states by this measure. Another 28 percent of New Mexico’s households had zero net worth, again ranking the state last in the nation. Although bankruptcies were fairly low at 6 percent of households, or 22nd among the states, sub-prime loans were high at 12 percent of all loans and rank the state 37th.

7 Data in this section are from the CFED 2007-2008 Assets and Opportunity Scorecard (www.cfed.org).


28


PovertyW hile poverty is a complex issue with many interconnected causes, work and education

are generally thought to be the best bridges out of it. There is a strong correlation between earning potential and educational attainment. In 2006, the poverty rate for a high school dropout in New Mexico was twice the poverty rate for that of a high school graduate. Likewise, far fewer college graduates lived in poverty than did high school graduates.

New Mexico had the fourth highest poverty rate in the nation in 2006 (see Map IX, Poverty Rates by State, page 31), with more than a third (37.5 percent) of the state’s population living at or below 200 percent of the FPL. The good news is that this was actually a decrease of five percentage points from 2003. The falling poverty rate was a reflection of the low unemployment and strong job growth of the last few years. The bad news is that nearly 40 percent of the state is still struggling with poverty and the economy is slowing.

It is important to break down that 40 percent by federal poverty level in order to get a more accurate picture of poverty in New Mexico. Nearly 17 percent of all New Mexicans in 2006 lived in deep poverty – that is, at or below 100 percent of the FPL. Families in deep poverty live with the constant threat of eviction, loss of utilities, and food insecurity. Another 21 percent lived between 100 and 200 percent of the FPL, which is a more accurate threshold for determining poverty.

The percentage of poverty varies greatly with race and ethnicity. As the bar graph on the following page shows, Native Americans experience the highest poverty rates in New Mexico, followed by Hispanics, African Americans, then non-Hispanic whites.

20

30

40

50

1980 1990 2000 2001 2002 2003 2004 2005 2006

New Mexico Arizona Colorado Utah

4644.9

41.2 40.6 40.7

43.5

38.2

41.4

37.536.7

34.8 34.833

36.7

34.8

37.536.4

28.4

32.2

37.3

25.9

28.5 28.4 28.6 28.2 28.3

30.7

33.534.8

25.1 25.6 25.9 26.2 25.827.0

25.7

Graph VIIPercent of People at or

Below 200% FPL(1980-2006)


Perc

ent o

f Peo

ple

in P

over

ty


29


Poverty

5

10

15

20

25

1980 1990 2000 2001 2002 2003 2004 2005 2006

New Mexico Arizona Colorado Utah

20.6 20.9

17.5 18 17.9

18.1

16.517.9

16.9

12.813.7 14.6

13.5 13.514.4

15.214.4

8.6 8.2

109.8

10.59.9 9.7 10

11.49.7

11.713.7

7.68.7

9.8 9.19.9

9.2 9.3

Graph VIIIPercent of People at or Below 100% FPL

(1980-2006)


Perc

ent o

f Peo

ple

in P

over

ty

0

10

20

30

40

50

60

70

80

<100% FPL 100-200% FPL <200% FPL

TotalWhiteHispanicBlackNative American

18.116.3

22.5 22.7

29.025.4 24.3

30.8

36.0

29.8

43.540.6

53.3 52.5

65.0

Graph IXPercent of People Living in New Mexico by FPL & Race



30


Poverty

Map VIIINew Mexico Poverty Rates by County (2000)



31


Poverty

Map IXPoverty Rates by State (2006)


Washington8.0%

Oregon11.8%

Montana13.5%

Wyoming10.0%

Idaho9.5%

North Dakota11.4%

South Dakota10.7%

Nebraska10.2%

Colorado9.7%

Utah9.3%

Nevada9.5%

California12.1%


16.9%

Kansas12.8%

Oklahoma15.2%

Texas16.4%

Minnesota8.2%

Iowa10.3%

Missouri11.4%

Arkansas17.7%

Louisiana17.0%

Wisconsin10.1%

Michigan13.3%

Indiana10.6%

Ohio12.1%

Pennsylvania11.3%

New York14.0%

Vermont7.8%

New Hampshire5.4%

Maine10.2%

Massachusetts12.0%

Rhode Island10.5%

New Jersey8.8%

Connecticut8.0%

Delaware9.3%

Maryland8.4%


West Virginia15.3%Virgina

8.6%Kentucky16.8%

Tennessee14.9%

North Carolina

13.8%South

Carolina11.2%

Georgia12.6%

Alabama14.3%

Mississippi20.6%

Florida16.8%

Hawaii9.2%Alaska

8.9%

Illinois10.6%


32

W hile New Mexico cannot directly steer economic growth, there is much the state can do to foster it, while – just as importantly – making sure its residents

benefit from such growth.

JobsWhile it’s clear that New Mexico needs to attract better-paying jobs, particularly in its rural areas, there are other things the state can do now to improve job quality.

Universal health care is essential to alleviating poverty and not enough •New Mexicans receive employer-provided insurance. Any proposal for universal coverage must address this issue.

Any kind of economic development incentives – such as the job training •incentive program (JTIP) or tax increment financing (TIF) – must be transparent and accountable, and tied to the creation of high-paying jobs.

Employment and Labor Force ParticipationIn order to produce a better-educated workforce, New Mexico needs to •make a greater investment in early childhood education. Although the vast majority of brain development occurs in the fist three years of life, most public expenditures begin when a child reaches the age of six.

The one-week waiting period for receiving unemployment insurance •benefits needs to be eliminated and the application process needs to be improved.

Wages and IncomeWhile the state minimum wage will be $7.50 an hour on Jan. 1, 2009, it is •likely to stagnate after that unless it is indexed to rise with inflation. Local governments should also be allowed to set the minimum wage within their municipality higher than it is at the state level.

Policy Recommendations



33


Policy Recommendations

The funding for assistance programs that comes from the federal •government injects millions into the state’s economy. Unfortunately, programs like food stamps are underutilized in New Mexico. The state needs to study and address the barriers that people face in applying for these types of programs.

New Mexico enacted a state-level earned income tax credit (EITC)• 8, called the Working Families Tax credit, in 2007. The credit is worth 8 percent of the federal EITC, but should be raised to 10 percent.

The lower income threshold for the personal income tax is now •approximately $19,000. This threshold should be raised to 200 percent of the FPL for each household. This could be done by expanding the current exemptions in the personal income tax statutes.

Household WealthBanking in New Mexico needs to be more accessible to low-income •residents. Credit unions could provide a good alternative to sub-prime lending. New Mexico also lacks a structure of lending norms and short-term loan protections.

New Mexico needs to strengthen existing policies that foster asset •building among low-income households, and enact measures to curb abuses, such as predatory lending practices. While legislation to regulate predatory lending practices was passed in 2007, it did not go far enough toward protecting the consumer.

An asset building savings program called Family Opportunity Accounts •(more commonly known as Individual Development Accounts or IDAs) was put into place during the 2006 legislative session. This program should be better publicized so that those eligible can take full advantage of it.

There is room for improvement in the state’s Temporary Assistance for •Need Families (TANF) policy. Asset limits for eligibility for TANF and other means-tested9 programs result in a strong disincentive to save. Two states – Ohio and Maryland – have completely eliminated asset limits for means-tested programs. New Mexico should follow suit for TANF recipients.

8 The EITC is a refundable tax credit, meaning it is available to people who earned too little to have any tax li-ability.9 Means-testing is a way of determining eligibility for some government programs, and can include counting income such as child support or assets like a savings account.


34


The State of Working New Mexico is published in conjunction with the nationwide Economic Analysis and Research Network (EARN) with support from the Economic Policy Institute (EPI) in Washington, D.C.


35

The Fiscal Policy Project is a program of

New Mexico Voices for Children2340 Alamo S.E., Suite 120

Albuquerque, New Mexico 87106(505) 244-9505

www.nmvoices.orgwww.nmfiscalpolicyproject.org

Documents

Problems and Prospectsthe ideal employment growth is in high-paying occupations and industries. While New Mexico’s economy was creating jobs at a brisk pace in 2006, they were disproportionately