Massive federal investments from the Bipartisan Infrastructure Law, the Inflation Reduction Act, and the CHIPS and Science Act are reaching communities across the United States. One key to landing these investments in a particular community is an available workforce. While New Mexico’s labor force participation rate has remained below the national average for much of the last decade, sustained policy efforts can transform this disadvantage into an advantage right as we deliver the unprecedented federal investments from the last Congress. These needed policies include: expanding access to health and child care, boosting literacy rates, investing in broadband, and better training people for the jobs of the future. If these policies are executed in a sustained way, they can help transition more New Mexicans into the workforce and attract the federal and private investments spurred by the Inflation Reduction Act, the CHIPS and Science Act, and the Bipartisan Infrastructure Law.
Despite recent gains, there is still room to grow New Mexico’s labor force participation
In general, New Mexico has a lower labor force participation rate than the national average, regardless of age, sex, race and ethnicity, or veteran status. In a November 2022 analysis, the New Mexico Legislative Finance Committee found that nearly one-quarter of New Mexicans are of working age but not employed. New Mexico’s labor force participation rates have hovered below the national average for decades, but that gap has widened in recent years following the 2008 financial crisis. The graph below shows these trends in more detail.
A range of effective policies can help increase labor force participation
Evidence shows that raising literacy and numeracy rates, increasing educational attainment, providing adequate job search and training services, expanding access to broadband internet, and providing access to affordable health and child care can help more people join the labor force. In New Mexico, several related policies have been enacted. For example, New Mexico now offers free tuition to public universities and colleges throughout the state. Child care is also now free for families with low to moderate incomes. However, it will take time and sustained implementation to see the effects of these policy changes on labor force participation rates.
Access to affordable health care raises labor supply and supports workers’ performance
Providing health care coverage for low-income or unemployed individuals and families can lead to higher labor force participation. For example, states that opted to expand Medicaid in 2014 generally saw an increase in labor supply. Health coverage through Medicaid has helped workers across the country to look for employment and do a better job at work. Poor physical and mental health, including chronic disease, are significant factors associated with workers exiting paid employment through disability insurance, unemployment, or early retirement. Employee well-being is associated with better job performance, lower absenteeism, and greater longevity of employment.
Many people in New Mexico face barriers finding and accessing health care providers, including mental health care providers
Accessing health care can be a serious challenge, particularly for Americans living in rural areas. The overall supply of health care providers is strained by limited residency slots and by the difficulty of attracting and retaining physicians in rural areas. New Mexicans, especially those living in rural counties, face barriers to obtaining maternal health care. One-third of New Mexico counties are maternity care deserts, meaning they lack a hospital or birth center offering obstetric care and obstetric providers. Additionally, the Association of American Medical Colleges found that less than one-third of Americans live in a place where there are enough mental health professionals to meet their needs. Slightly more than half (51%) of all counties in the United States lack a practicing psychiatrist. An estimated one in four to five U.S. adults live with a diagnosable mental disorder.
Without support, mental disorders can affect a person’s confidence and identity, capacity to work productively, and ability to gain or retain work. A 2016 study led by the UN health agency estimated that depression and anxiety cost the global economy $1 trillion each year mostly due to reduced productivity. Investments in technology and infrastructure can help Americans access health care professionals by providing telehealth options. Investments in the health care workforce, especially for rural and underserved areas, are critical to meeting the needs of New Mexicans.
Improving educational access and attainment, including in fundamental skills like literacy, creates a larger and more skilled workforce
Those with higher educational attainment typically have greater participation in the labor market and earn higher wages. Higher educational attainment also helps reduce the time a worker is unemployed, and vocational education and training allow job seekers to find employment faster and obtain higher-paying jobs. Literacy is a crucial step toward reaching higher education levels. For adults, literacy is associated with a higher chance of being employed and earning higher wages.
New Mexico has some of the lowest literacy and numeracy rates in the nation. In 2016, only