LFC report notes workforce participation challenge, lacking in recommendations

10.05.2023

Fresh off publication of an excellent report trashing New Mexico’s film subsidies the Legislative Finance Committee has produced a new report looking at the issue of New Mexico’s low workforce participation rate.

Here is one of many choice quotes analyzing the problem (which reflects RGF’s work on the issue):

While unemployment rates have recovered to pre-pandemic levels, the share of the state’s working age population participating in the labor force is persistently low. Social services, economic development, tax rates, pension systems, the service industry, and virtually every other area of the economy is impacted when there are fewer people working to support those who do not work.

While the report further (correctly) notes that “misalignment between the state’s workforce skills and industry is a challenge for New Mexico’s
economic future,” the report focuses most of its attention on job training programs and other economic development incentives.

Sadly, some of the fundamental issues facing New Mexico’s workforce are not contemplated in the report. These include:

  1. Our failing education and the need for dramatic reforms that might include everything from Arizona-style education savings accounts to improved charter school laws to simply embracing Mississippi’s approach to reading. Having students prepared to enter the workforce is vastly better than having an unprepared workforce or having to “backfill” through programs like JTIP.
  2. New Mexico should generally move away from targeted economic development programs from LEDA and JTIP and focus on basic reforms like GRT reform/reduction, income tax reduction, and regulatory reform.
  3. Notably, the State’s massive investment in “free” college does NOT appear to be a central focus of the report in terms of improving the match between workers and the workforce.
  4. Also left out of the report is the generosity of New Mexico’s welfare programs. Providing money to people in lieu of work is a great way to keep people out of the workforce. We. recommend the LFC take a closer look at ways the State can reform its approach to welfare programs in an effort to boost workforce participation.