New Mexico has been named the second-worst state in the country in terms of unemployment, at 6.7 percent. This is considerably higher than the national rate, which, in August 2015 was 5.1 percent, and now as of August of 2016 is 4.9, according to data released by the Bureau of Labor statistics.
Shawn Berman, an associate professor in the Anderson School of Management, said one factor which may be affecting many states’ unemployment rates is the trend of many job positions disappearing — jobs that were once available to those without higher education that lead to employment within the middle class.
“It’s a fact, and I think it’s a problem for any state that has that kind of workforce. It’s going to show up in all the statistics revolving around average wage, and unemployment,” he said. “I think this is unfortunately part of a bigger trend that is not just New Mexico.”
Harry Van Buren III, a professor of business environment and ethics at Anderson, said that since oil and natural gas prices have fallen dramatically over the last 18 months, it is “not surprising” that New Mexico's unemployment rate is so high, relative to the rest of the country.
“Our entire state's population is smaller than that of Brooklyn, so when there is an economic shock that happens in one part of the state, we all feel the effects of it,” he said.
Van Buren said the national unemployment rate has been steady over the last year, hovering between 4.7 and five percent since last October.
He said other states in the Four Corners region have lower unemployment rates than New Mexico, with Colorado and Utah below four percent.
“Our current unemployment rate is due to labor force growth and over-reliance on vulnerable economic sectors,” Van Buren said.
A strong focus on small businesses may also help improve the economy, Berman said, which would in turn help improve the unemployment rate.
“I am no expert on labor statistics, but a lot of the job growth is going to be powered by small businesses. With small business owners I talk to, there is still a lot of uncertainty about the economy and so they are not hiring — and that leads to higher unemployment,” he said.
A factor that may be keeping small business from growing is the opportunity cost that is lost by giving tax cuts to larger corporations to do business in the state, money the government may miss out on that could have been used to invest in small businesses.
“I think the cities in New Mexico are trapped in a race to the bottom where they have to give away the farm to attract a few jobs. Tesla we lost to Nevada, and even then there were some huge tax breaks offered,” he said.
Berman said New Mexico has a lot to offer, without having to offer major tax incentives for large business, such as a great workforce and a large graduate-educated population from local colleges.
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Studying the unemployment rate may lead to finding solutions in other avenues for New Mexico, he said.
Berman said that, within the unemployment rate, if you are not looking for work you are not considered unemployed anymore.
“The unemployment rate can go down if you stop looking for work or conversely it can go up if people that were not looking for work began looking for work,” he said.
Van Buren said he believes the current unemployment rate is due to labor force growth and over-reliance on vulnerable economic sectors.
“New Mexico is dependent to an unhealthy (degree) on government spending and natural resources for employment,” he said.
Van Buren said that New Mexico’s private sector is small relative to other states, and doesn't have a single Fortune 1000 company headquartered in the state.
“I suspect that the state's high crime rate and low education rankings make it difficult to get companies to relocate here,” he said.
Van Buren said a focus on diversifying New Mexico’s economy, improving human capital and infrastructure, as well as thinking about the overall business climate would help New Mexico’s ranking in the long term.
He believes investments in education and infrastructure are important for maintaining New Mexico’s economic competitiveness, he said.
Kalenah Moore, a senior biology major, said she was shocked about New Mexico’s ranking.
“That's crazy we’re that low. It's really stressful for students to get (a) job in the first place with little experience,” Moore said.
For students who remain in New Mexico post-graduation, she said, “it's really rough that, if you have a degree, it doesn’t guarantee you a job.”
Ian Hedges, UNM graduate, said he wasn’t shocked by the ranking, considering that Intel, one of the larger business in New Mexico, has experienced large layoffs.
Hedges also questioned what went into calculating the unemployment rate and whether this included unemployed students.
As a graduate, Hedges said, as long as students pay attention to the doors that are open to them after college and not stay restricted by their degree major, they can find employment after graduating.
Hedges found work within the federal government in finances despite his degree not being within the field.
“When people come out of college, employers ask questions like, did they work, did they intern? Sometimes you just have to put in your time to strengthen your chances in the workforce,” he said.
Van Buren said that his advice to students is to present themselves and their skills in the best possible light to potential employers.
“Think about what kind of career you want, what skills and experiences you need, and how your first job fits into your overall plans,” he said. “Being flexible early in your career is also essential, as is building the kinds of skills needed to maintain your employability.”
Nichole Harwood is a news reporter at the Daily Lobo. She can be reached at news@dailylobo.com or on Twitter @Nolidoli1.
