July 17th 2020 - Written by: RaeAnn McKernan

Labor Markets in New Mexico and Other States

by Jeff Mitchell

The US Bureau of Labor Statistics has released state-level unemployment data (Local Area Unemployment Statistics, or LAUS) for the second quarter of 2020. The data, based on a survey of households, tallies 1) the number of persons employed, whether full or part-time; 2) the number of persons unemployed who would like to work; 3) the number of persons in the labor force, which includes both employed and unemployed persons but does not include persons not seeking employment; and 4) the unemployment rate, which is the percentage of the total labor force that is unemployed. In this survey, persons temporarily laid-off because of Covid-19 are considered employed, even if they are receiving a paycheck or unemployment insurance. 

The following chart summarizes the data for each state and for the US. The bars show the number of persons who continued to be unemployed over the past year, the number of newly unemployed, and the number of persons who left the labor market over the past year.

The chart shows that, although sobering, New Mexico’s labor market thus far has been less severely impacted than in most other states and is in better shape than in the US as a whole.

Over the 12 months ending June 2020, 79,700 (or 8.8%) New Mexicans lost their jobs. Yet, as terrible as it is, job losses in other states were far greater. Nationally, 19.3 million persons or 12.3% of recently employed workers lost their jobs. Interestingly, over the same period the number of New Mexicans who reported being unemployed increased by 43,685 – barely more than half the number no longer employed. In fact, in no other state (except DC) did the number of persons reporting themselves as recently unemployed increase by less.

What gives?

The reason that the number of unemployed increased by so much less than the number who recently lost their jobs is that many dropped out of the labor force. This points to something further. It is very likely that many or most of these newly-unemployed persons simply left the state. The data shows that New Mexico’s labor force (employed plus unemployed but looking for work) fell by 37,000 persons (3.9%).

The decline makes sense. Over the past few years job growth in New Mexico has been strongest in the Oil Patch, including Eddy and Lea Counties. Many of those employed in the boom and bust oil & gas industry are itinerant workers who come to the state to fill difficult but short-lived jobs in the oil fields, living in motels and ‘man camps’ while in the state. When the oil market collapsed (the number of drill rigs in Eddy and Lea Counties has fallen from 115 to 48 since mid-March 2020), these workers head home.

This pattern unmasks patterns behind what may seem to the relatively good (or maybe less-bad) news that New Mexico’s unemployment rate during the coronavirus crisis is lower than in most other states. During the three months (April-June) the unemployment rate in New Mexico averaged 9.8%, 16th lowest among the 50 states and DC, and well below the national rate of 13%. However if the recently-unemployed didn’t leave the labor force (and the state) as quickly, but instead followed the national pattern, New Mexico’s unemployment rate during the second quarter would have been 11.3%, 2.5% higher than reported – below the national average but closer to the middle of the pack compared to other states.

Changes in State Labor Markets, 2nd Quarter 2020 vs. 2nd Quarter 2019

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