State ranks low in income growth
No matter how you slice it, New Mexico ranks low in real personal income growth.
During 2017, the state fell in with the nation’s lowest group of states with a 0.6 percent income growth rate. This, while all the other mountain states were at the top of the class in the 3.3 percent to 3.7 percent range, according to personal income statistics released Thursday by the U.S. Bureau of Economic Analysis.
The national average in 2017 was 2.6 percent.
The bureau defines real personal income as personal income adjusted by a state’s regional price parity and a national personal consumption expenditures price index.
Price parity is measuring local prices against overall national prices.
Prices in New Mexico were 93.3 percent of the national average, or the 28th highest. Income growth in 2017 was No. 47, according to the bureau.
Personal income the following year in 2018, not adjusted for price parity, increased
4.5 percent nationwide and
3.9 percent in New Mexico. The state again lagged behind mountain states that were above 5.5 percent.
“[High increases in earnings] was the leading contributor to growth in the five fastest growing states — Washington, Utah, Nevada, Colorado and Arizona,” the bureau said in its report.
Those states also have its largest groups of newcomers moving from California — unlike New Mexico, where Texas and Arizona are the top source of new residents, according to the U.S. Census Bureau.
Jeffrey Mitchell, director of the University of New Mexico Bureau of Business and Economic Research, said he believes two primary factors are behind New Mexico’s slow recovery from the 2008 recession: A high dependence on government jobs and the national economy shifting to professional business services such as technology and finance. New Mexico has the third-most government jobs per capita, according to U.S. Bureau of Labor Statistics data.
“Since the recession, the growth of government jobs has slowed at all levels [in New Mexico] — state, federal and local government,” Mitchell said. “Professional services jobs are very dependent on a well-educated workforce.”
Mitchell said New Mexico’s personal income statistics also suffer because roughly half of all income is “other” income, such as investments and transfer payments, including Social Security, food stamps, unemployment and Medicaid.
“What do you do to get the income level up?” Mitchell asked. “Take a 20-year look rather than a one-year look. You have to invest in education as opposed to throwing subsidies [at companies]. What we have is politicians who work in four-year cycles. A one-to-four-year strategy is not going to change the game.”