New Mexico
New Report Shows How To Boost New Mexico’s Economy
Backpacker at the top of Sandia Peak in New Mexico. USA.
New Mexico is not known as an economic powerhouse. Despite being one of the sunniest states in the country, its population has hardly grown over the last decade. Meanwhile, the populations of its biggest neighbors—Arizona, Texas, and Colorado—have grown rapidly. Economic growth in the region follows a similar pattern, with New Mexico’s growth trailing its neighbors. In a new report, author’s Matthew Mitchell and Paul Gessing link New Mexico’s weak economy to its lack of economic freedom.
New Mexico is the fourth sunniest state in the country. It has cooler summers than Phoenix and warmer winters than Denver. Research shows that people are attracted to places with nice weather, yet New Mexico’s population only grew by 1% from 2013 to 2022. Meanwhile, Arizona’s grew by 12%, Colorado’s by 11%, and Texas’s by 14%. Employment growth, real GDP growth, and income growth all follow the same pattern (see figure below), with New Mexico trailing its neighbors over this period.
Income growth in the Southwest
New Mexico’s favorable weather should be a plus, yet there is something holding the state back. In their new report, Mitchell and Gessing make a convincing case that a lack of economic freedom is keeping New Mexico from experiencing the same success as its neighbors.
Economic freedom is the degree to which individuals are allowed to make their own economic choices. Choices about where to work and on what terms, and how to invest their time and money. Places that allow more economic decisions to made by individuals have more economic freedom.
Dozens of studies show that places with more economic freedom, whether it be countries, states, or cities, tend to have better economic outcomes, including more job growth, higher incomes, less poverty, and more business creation. New Hampshire is the freest state according to the latest edition of the Fraser Institute’s Economic Freedom of North America index, while New Mexico ranks 47th, well behind Arizona (32), Colorado (14), and Texas (5).
Even worse, New Mexico is the only state where economic freedom declined over the last 40 years. Yes, you read that right—in every state but New Mexico, economic freedom increased from 1981 to 2022 (the latest available data).
New Mexico’s lack of economic freedom is contributing to its poor economic performance. As the report notes, if New Mexico increased economic freedom by 10% to a level like that of Maine (which is not that free at 38th overall) its per capita GDP could increase by as much as 5%, or about $10,000 for a family of four. This is a non-trivial increase in output that requires relatively modest policy changes.
A state’s overall economic freedom score is composed of scores from three areas—government spending, taxation, and labor market regulation. New Mexico ranks 49th in government spending, 36th in taxation, and 49th in labor market regulation. Each of these scores is the lowest in the Southwest, as shown in the figure below.
Economic Freedom scores in the Southwest
One of the first things New Mexico should do to increase economic freedom is lower its taxes. It has the highest top marginal income tax rate in the region at 5.9%, more than double Arizona’s 2.5% flat rate. Texas has no personal income tax. It also has the region’s highest corporate income tax rate, also at 5.9%. Worse, its corporate income tax is not indexed to inflation. This means more and more companies will pay the higher rate as inflation pushes their income over the minimum threshold, despite their profits not being higher when inflation is accounted for.
New Mexico policymakers should lower their top personal and corporate income tax rates to make them more competitive with their neighbors. A lower, flat rate like Arizona’s 2.5% rate would incentivize work and investment. New Mexico can also afford a lower rate since the state’s oil and gas industry is bringing in billions of dollars in tax revenue each year. The report notes that New Mexico has had a run of $3.5 billion surpluses in recent years.
Policymakers in New Mexico should also make it easier for people to work. Mitchell and Gessing point out that New Mexico has some of the most onerous occupational licensing regulations in the country. The state places a particularly large burden on occupations that often serve as an entry into the labor market. For example, HVAC contractors and sheet metal workers are required to spend four years in training before they can obtain a license. Drywall installers must train for three years before they can get a license. Barriers like these make it difficult for younger and less experienced workers to earn a living and support a family. Reducing these and other unnecessary licensing regulations would improve New Mexico’s economic freedom score and increase opportunity for the state’s residents.
New Mexico’s economy is lagging its neighbors and has for years, but it does not have to be this way. New Mexico policymakers can improve the state’s economy by lowering tax rates and reducing barriers to work. Such changes would increase economic freedom in New Mexico, and increasing economic freedom is a proven path to prosperity.
ALBUQUERQUE, N.M. (KRQE) – The Rail Yards Market celebrated the state’s rich indigenous culture and history over the weekend through artistry, food, and craftsmanship. Some of the many attractions included a variety of southwestern jewelry pieces, handmade leather goods, as well as contemporary beadwork and artwork showcasing centuries-old traditions.
The Ry-Dale Largo Dance Group also performed traditional Navajo dancing styles. “I think it’s really important for everybody to get out and mingle and sit next to each other and create art. It really forms a sense of community, and it’s nice to just sit and create with people next to you that just really enjoy doing art,” said Lisa Richards, beading instructor.
Organizers say the Rail Yards Market sits on Tiwa land, emphasizing their pride in uplifting indigenous voices through their vendors and partners.
VALENCIA COUNTY, N.M. – Valencia County Fire Department responded to a serious UTV crash after two people suffered major injuries in the Rio Puerco area.
The Valencia County Fire Department one patient was flown to the hospital with critical injuries. A second patient went by ambulance with serious injuries.
The fire department said this was the second serious ATV or UTV crash its crews handled that day.
Earlier in the day, units responded to an ATV crash that sent two children to the hospital with multiple traumatic injuries.
The fire department urged riders to wear helmets, stay off roadways and make sure children do not operate ATV or UTV vehicles without supervision.
-
Indianapolis, IN16 seconds agoMan Dies Days After Traffic Stop Tasing in Indianapolis
-
Pittsburg, PA5 minutes agoPittsburgh Bureau of Fire Chief Darryl Jones placed on administrative leave
-
Augusta, GA12 minutes agoAugusta Players, Imperial Theatre announce Shane Peterman as new CEO
-
Washington, D.C15 minutes agoMaryland man sentenced to 25 years for sextorting young girls on social media
-
Cleveland, OH20 minutes agoCavaliers obvious draft day win is the opposite move anyone expects
-
Austin, TX27 minutes agoTexas Pride events 2026: Parades, festivals and more happening this June
-
Alabama30 minutes agoTwo Alabama Players, One Coach Being Considered for 2027 CFB Hall of Fame Class
-
Alaska35 minutes agoAlaska Dividend Payments in June 2026: Dates, amount and eligibility
