Fiscal Cliff Threatens Jobs

This week, SFR published a handy explainer on the impending "fiscal cliff" of federal budget cuts and tax increases. But with the cliff less than two weeks away, we figured we'd dig down a bit more into the jobs numbers.---

Some say sequestration—the set of massive, across-the-board budget cuts that may hit starting Jan. 1—could reduce our state workforce by 2-3 percent. The University of New Mexico's Bureau of Business and Economic Research estimated last year a loss of 20,700 jobs. A George Mason University study in July projected 28,400 jobs.

BBER estimates job losses of 5,400 at the national laboratories, 4,300 in health care, and 1,800 in government and military. George Mason projects federal sequestration cuts to the Department of Defense budget would directly cost the state 4,900 jobs.

Not everyone in New Mexico agrees LANL, Sandia, and WIPP would face job cuts this large. Earlier this month, Sen. John Arthur Smith, D-Deming, told Capitol Report New Mexico that he expected greater defense cuts at the state's air bases.

Last month, according to the U.S. Bureau of Labor Statistics, 31,000 federal civilian employees worked in New Mexico. The BBER and George Mason estimates suggested sequestration could eliminate almost a quarter of these positions from the state workforce.

According to BBER, four other sectors in the state economy could each see over a thousand jobs cut from their field: leisure and hospitality, retail trade, construction, and financial activities.  A quarter million New Mexicans work in these four sectors.

The National Education Association estimated in September that New Mexico would lose over 700 jobs tied to federal education programs.  Job losses would amount to 460 in Head Start, 300 in Title I programs, and 235 in special education programs.

In October, New Mexico Voices for Children issued a report that predicted fewer jobs lost in education. However, their report also found sequestration would cancel job training for 10,100 jobseekers in New Mexico and skills training for 1,900 students.

Recently the Public Education Department downplayed the effects of sequestration on local school districts.  PED stated some districts have millions saved and the loss of federal dollars would take away relatively few jobs from classroom teachers.

Gallup-McKinley County Public Schools and other New Mexico school districts that depend significantly on impact aid—federal dollars that compensate for tax-exempt federal property or children tied to federal programs, like Native Americans—could lose a third of their budget.

A UNM report issued last month calls for replacing 40,000 to 50,000 jobs lost during the recession and the creation of an "additional 50,000 jobs to replace those lost from sequestration and the taking of New Mexico's federal jobs."

This UNM report foresees a higher number of job losses, caused by sequestration, than projected in the BBER and George Mason reports, because it considers the "worst case scenario" and estimates greater job losses in the state's service sector.

Over the next decade, this report from the UNM Economic Development Summit projects, New Mexico will have to create 100,000 new jobs to get back to the employment levels of 2007.

The state lost jobs in several sectors over the last half decade, such as 16,800 in construction; 12,000 in professional and business services; 10,800 in trade, transportation, and utilities; 7,900 in manufacturing; and 4,200 in state government.

Reaching a deal to avoid the fiscal cliff, according to the report, will slow, but not reverse, the contraction of New Mexico's economy.  To achieve economic growth, the report outlines proposals and policies for creating more jobs in New Mexico.

An alternative proposal, put forward last month by the state's Economic Development Secretary Jon Barela, and known as the "New Century Economy Jobs Agenda," estimates it can create seven to eight thousand new jobs in New Mexico by 2016.

With Washington struggling to reach a deal for the fiscal cliff, and hundreds of millions of dollars of new funds available for the state budget, the state legislature will likely hear competing proposals about private-sector versus government job creation.

Santa Fe Reporter