September 20th 2016 - Written by: Jeff Mitchell

Income Gains in New Mexico Lag the Nation

On September 16, the Census Bureau released results of its most recent Current Population Survey (CPS) Annual Social and Economic Supplement (ASEC). The report received a great deal of attention[1] as it included evidence that real median household incomes increased 5.2% between 2014 and 2015. This was the first annual increase since 2007 and clearest evidence that the economic recovery has begun to benefit more than those at that the top of the income pyramid.

How did New Mexico do?

In New Mexico, median household income grew by 1.2%, from $44,837 to $45,382. Although an improvement in its own right, the state’s position relative to the rest of the country slipped. In 2014, median household income in the state was 83.5% of the national median, ranking 43rd of the 50 states. In 2015, incomes were 81.4% of the national median, 45th among all states.

Poverty data followed a similar pattern. In New Mexico, the percentage of persons living in poverty fell from 20.0% to 19.6%, while the national poverty rate fell 14.8% to 13.5%. The very small improvement compared to other states meant that New Mexico fell from the 6th highest rate of poverty in 2014 to the highest rate in 2015.[2]

As gloomy as the high rate of poverty is, the data further shows that a large and growing share of the households in New Mexico live precariously close to the poverty line. In 2015, 25.5% of all households had incomes between $25,000 and $49,999 – the fourth highest percentage among the 50 states. The number of such households grew by 3.0% between 2014 and 2015. Over the same period, the number of households earning less than $24,999 increased very slightly, while the number earning between $50,000 and $74,999 fell by 2.5%. Thus, on a net basis nearly 50 thousand households, or 3%, saw their income slip closer to the poverty line.

To the other extreme, New Mexico is home to relatively few higher income families. In 2015, 21.3% of all households earned more than $100,000, compared to 32.4% for the US as a whole. This placed New Mexico 50th among the 50 states. Nationally, the number of households earning more than $100,000 grew more than any other group. In New Mexico, the number of such households was nearly unchanged.

States by Median Household Income, Poverty Rate, and Inequality (GINI Index), 2015

states-by-median-household-income-poverty-rate-and-inequality-gini-index-2015

Source: US Census, Current Population Survey (CPS) 2016 Annual Social and Economic Supplement (ASEC).

Note: Size of the bubble indicates GINI Index. Larger size indicate higher level of income inequality.

The extent of income inequality is summarized by the GINI index.[3] In New Mexico, the GINI index was 0.480, 11th highest (most unequal) of the fifty states. Interestingly, most of the states with higher GINI indices are larger urban states, such as New York (1st), California (4th), New Jersey (7th), Illinois (8th) and Texas (9th).

These data are consistent with other data collected and analyzed by BBER. To some extent, median household incomes grew relatively slowly 2015 in oil dependent states; though apart from New Mexico, Oklahoma (41st) was the only oil state to be among the 10 weakest performers. More generally, these income data seem to reflect the pace and composition of employment growth in New Mexico since the Great Recession. Job growth in New Mexico has lagged well below other states, and is yet to recover to pre-recession levels. Further, job growth has been weakest in the relatively well-paying sectors, such as manufacturing, construction and professional services. Rather, until recently and with the exception of the oil & gas sector, the fastest growing sectors of the New Mexico economy have been low wage sectors such as hospitality.

[1] http://www.santafenewmexican.com/news/local_news/n-m-poverty-rate-down-but-is-still-among-worst/article_5da80fa0-d4cd-5fe7-b0c8-3e05f44a7daf.html

http://www.nytimes.com/2016/09/14/business/economy/us-census-household-income-poverty-wealth-2015.html?rref=collection%2Ftimestopic%2FCensus%20Bureau&action=click&contentCollection=timestopics&region=stream&module=stream_unit&version=latest&contentPlacement=8&pgtype=collection

http://blogs.wsj.com/washwire/2016/09/14/takeaways-from-the-5-2-gain-in-u-s-median-household-income/

[2] Poverty is defined as $12,331 for an adult living alone; and $24,036 for a household that includes two adults and two children.

[3] A GINI coefficient ranges from 0 to 1.0. A value of 0 would indicate absolute equality – all households receive exactly the same income. A value of 1.0 would indicate absolute inequality – all income goes to a single household and while others have no income.


The Bureau of Business & Economic Research employs a diverse staff with a wide range of specializations and interests. The views and opinions expressed on this blog belong to the individual authors alone, and do not necessarily reflect the opinions of BBER or UNM.

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