The Backyard Economy: New Mexico
A look at this state's economic issues.
— -- Think big government means big trouble? Not so in New Mexico, where more than 20 percent of workers are on the government payroll.
"The New Mexico economy is highly dependent on government employment -- federal, state and local," said Jim Peach, a professor of economics at New Mexico State University.
How Is the Economy Treating You? Tell ABC News Your Story
The state is home to research and technology powerhouses Sandia National Laboratories and the Los Alamos National Laboratory, as well as military installations such as the White Sands Missile Range. The University of New Mexico is the state's top employer, while about 100,000 people work for the state's municipal governments, according to Moody's Economy.com.
New Mexico's unemployment rate was 3.7 percent in March -- a half-percentage point increase from the state's February unemployment rate but still below the national unemployment rate of 5.1 percent.
Peach said that the high rate of government employment adds stability to the state's economy. When the rest of the country enters a downturn, he said, New Mexico usually doesn't.
But that government-borne stability has a downside, too.
"When the rest of the nation booms, we just move right along as usual," Peach said.
Another key player in New Mexico's economy is the energy sector.
The state has large reserves of oil, coal and natural gas -– a particular boon in a time of rising energy prices. Peach said that New Mexico is also poised to take advantage of its uranium reserves.
With uranium-fueled nuclear power plants staging a comeback, several companies have applied for permits to tap New Mexico's reserves and plan to establish "huge, huge mining operations" in the state, Peach said.
Like many other states, New Mexico has been affected by the downturn in the housing market. But any job losses that result from the cooling of the real estate market should be offset, Peach said, by an increase in employment for housing remodeling and repair.
"They can't find enough workers to do those jobs," he said.
A longer-term challenge for the state may be personal income. The state's per-capita income is just 80 percent of that of the rest of the country, according to Moody's Economy.com.
Some relief is in the works: The state instituted an increase in its minimum wage -- from $5.15 per hour to $6.50 -- and another increase, to $7.50, is planned for next year.
