New Mexico’s workforce participation rate continues to drop (but it IS making news)

The Rio Grande Foundation has long considered New Mexico’s lagging workforce participation rate as among New Mexico’s most serious issues. According to the Federal Reserve Bank which tracks this data, “A state’s labor-force participation rate is the number of all employed and unemployed workers divided against the state’s civilian population.”

Here is a recent article from SourceNM on the issue. They reference a report from the Legislative Finance Committee as well. The biggest discrepancy comes from SourceNM which claims that our rate has “fully recovered to pre-pandemic levels,” but that isn’t exactly right. New Mexico HAD hit pre-pandemic levels, but as the chart below shows, since November 2025 (when MLG created her “free, universal childcare” program, the State’s workforce participation rate has dropped by a full percentage point. That is well below NM’s pre-pandemic rate of 57.9 which indeed was tied in January of 2025.

The following slide from page 7 of the LFC report highlights some of the reasons given for people not working. No jobs nearby being the top one overall with low wages and lack of skills being some of the others.  We recommend of course bold policy change like eliminating the personal income tax, reforming the gross receipts tax, and a combination of accountability and choice in the K-12 education system. New Mexico also needs to reduce the generosity of government benefit programs to encourage work.

Clearly, as the chart above highlights, new government programs (like free childcare) that might theoretically help improve workforce participation, are not necessarily effective.