Economic Development and a ‘Skilled Workforce’

Source: Labor Market Review, New Mexico Department of Workforce Solutions, March 31, 2017

Southern New Mexico graduation rates continue to rise, from 49 percent in 2007 to 80 percent last year. However, so do unemployment rates for the area, from 4.5 percent in February 2007 to 7.6 percent in February of this year.

A skilled and robust workforce should lead to lower employment, but why hasn’t that been the case in Doña Ana County?

That’s a very good question, and Jason Gibbs, of the Las Cruces Sun-News, should be commended for asking it.

But the problem runs far deeper than the unemployment situation in Las Cruces. The statewide graduation rate has risen in the last decade, too. And since February 2007, the number of students enrolled in government-run universities has grown, despite insignificant population growth in the Land of Enchantment. If more education makes a state more economically competitive, why does the state suffer from lousy job growth and the worst unemployment rate in the nation?

While the education establishment’s powerful, and well-funded, lobbying machine touts its activities as key to “economic development,” reality is far more complex. Transportation infrastructure, tax rates, the existence of a right-to-work law, energy prices, regulations — a state’s attractiveness to executives, investors, entrepreneurs, and innovators is a function of many factors.

In the Foundation’s ongoing analysis of RTW vs. non-RTW states, we’ve noticed that many places that don’t score particularly well on educational attainment/achievement (e.g., South Carolina, Tennessee, Indiana, Texas) are among the best job-creators. Nevada’s another interesting example. No state was smacked harder by the Great Recession. But while not known for stellar scholastic achievement, the Silver State has vanquished its horrific peak unemployment rate of 13.7 percent, dropping to the national figure today. (And the Tahoe Reno Industrial Center, the largest industrial park in America, continues to lure companies.) A low cost of doing business, no income tax, no corporate tax, and a RTW law have surely played major roles in Nevada’s stunning comeback.

As for states that are hip-deep in all types of degrees, it’s easy to find economic basket cases. Connecticut, Illinois, and New Jersey are desperate to reverse outmigration and job stagnation, despite highly educated populations.

The bottom line? Education alone can’t get it done. (Richard Vedder’s work on the subject is more than convincing.) New Mexico needs to look elsewhere to boost economic development.