New Mexico's wealth gap springs from failure to develop private sector, residents, leaders say

Industrials Associated Press

Tucked in the mountains of one of the poorest states is one of the nation's wealthiest counties: Los Alamos, which, except for its landscapes, looks decidedly unlike the rest of New Mexico.

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On a recent day in the county, which is dependent on the federal dollars that run Los Alamos National Laboratory, nannies, young mothers and children enjoyed the shade at Ashley Pond Park near a new county building and a renovated community center. A mega-grocery store bore "help wanted" signs. And Melanie Bennett of Bennett's Fine Jewelry and Gifts lamented that it's hard to find good help because "the lab sucks everybody."

Less than 30 miles south is Rio Arriba County, home to drug-and crime-plagued Espanola, whose main drag is a mix of fast-food restaurants, boarded-up businesses, a casino-hotel and a Wal-Mart.

"There's more workers than there are jobs," said Dennis Salazar, who owns a liquor store. Average per-capita income in Rio Arriba: $20,000, well below half Los Alamos County's average of $50,740.

The contrast highlights an unusual wealth gap in New Mexico. Unlike other states, the richest residents of New Mexico work mainly in the public sector, while almost everyone else is employed in the private sector.

That dynamic is both a blessing and a curse. Federal dollars, along with the energy industry in southeastern New Mexico, have fueled the state's economy for decades. Besides Los Alamos, where the atomic bomb was developed, the state is home to Sandia National Laboratories, three Air Force bases, the Army's White Sands Missile Range and several national forests and parks. In all, according to a study by the Pew Charitable Trust's Fiscal Federalism Initiative, about 35 percent of New Mexico's economy comes from the federal government — the highest such figure for any state.

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But critics say an inability to diversify the economy has exacerbated income disparities. They say that at a time of tight federal budgets, the state can no longer afford to stake its economic future on government spending.

Unless New Mexico can attract new industries, workers will have to settle for whatever lower-paying government jobs are available or for low-wage work in the service industry, according to political leaders and experts on the state's economy.

"The rest of the nation is subsidizing New Mexico," said Jake Arnold, a political consultant and longtime New Mexican. "It's like the Third World. ... All these people are fighting over crumbs."

The issue was a key topic in this fall's governor's race, with Republican Gov. Susana Martinez insisting in one debate that "we have to diversify ... and make sure that there are jobs of all kinds." Martinez said she cut business taxes to spark the creation of more private-sector jobs.

But so far, large-scale job-creation efforts have faltered. In September, the state lost out to Nevada for a Tesla battery factory that officials say could have created 22,000 jobs over the next two decades and pump billions into that state's economy.

Then there's Spaceport America in southern Sierra County, the venture of entrepreneur Richard Branson that was supposed to lure both jobs and tourism dollars. Instead, like much of New Mexico, Sierra County is losing rather than gaining private-sector jobs, according to data from the state Labor Department. The futuristic building and runway sit nearly empty, waiting for Virgin Galactic to make good on what have been annual projections since 2010 to launch its $250,000-per-person space tourism flights "by the end of the year."

The breakup Oct. 31 of its experimental rocket-powered spaceship over the California desert has raised new doubts about whether the space-tourism flights will ever happen. Virgin Galactic CEO George Whitesides has said that the company could resume test flights as early as next summer if it can finish building a replacement craft.

"I think we gave up on all that a long time ago," said Stephanie Ontiveros, who works at the Butte General Store and Marine in Sierra County, which raised its taxes to help support Spaceport. It's now among the New Mexico counties with the lowest average wages, and, like Rio Arriba, it is plagued by empty buildings and businesses for sale.

New Mexico ranked last among states for job growth from January 2011 through 2013. It is second, behind Mississippi, in the percentage of its residents living in poverty — a percentage that increased from 20.8 percent in 2012 to 21.9 percent in 2013, Census figures show. It also consistently ranks at or near the bottom of national rankings for education and child welfare.

"What this state really needs to advance economically is workforce training and education that is at least as good as what the surrounding states have," New Mexico State University economist Jeff Peach said.

Economists and activists say New Mexico has trouble attracting new industries for two major reasons: widespread poverty and low education levels. A study released in mid-November by the Annie E. Casey Foundation found that more than half of New Mexico families with children under the age of 8 are low-income, about one-third of the families are headed by a single parent and more than 10 percent of the families include parents who don't have high school diplomas.

Family advocacy groups in New Mexico have long said that breaking the cycle of poverty is nearly impossible when families and children are confronted with economic burdens, barriers to educational success and few prospects for high-paying jobs. While Los Alamos and a few other parts of New Mexico have some of the highest percentages in the nation of doctoral-degree holders in science and engineering, U.S. Census data show the state is below the national average in the percentage of its adult population that holds a bachelor's degree.

The private sector did add about 8,000 jobs in the 12-month period that ended in September, according to state labor reports. More than half the jobs were in education or health services. Government jobs declined by 1,800 over the same period, with 300 of those losses in the federal sector.

Even in Los Alamos, the number of lucrative lab jobs is shrinking along with the federal budget. And yet in a sea of struggling New Mexicans, Los Alamos, with nearly 18,000 residents, remains an island of prosperity. Of those ages 25 and above, 63 percent hold at least a bachelor's degree, compared with 25 percent statewide. More people own homes than the statewide average. And the median home value is far higher: $285,800, compared with $161,500 statewide.

The average salary for jobs at Los Alamos National Laboratory listed on employment-search sites pays about $70,000 a year, but many high-level scientists and program managers earn six-figure salaries. Employees at the Sandia National Laboratories, based in Albuquerque, enjoy similar pay doing security-related research for the federal government. But they are spread throughout the sprawling metropolitan area.

Mike Lippiatt, a Los Alamos native, said that while Los Alamos and places like Rio Arriba County are worlds apart, residents really don't think much about the disparities. Nor do they tend to consider that — thanks to federal largess — they live in one of the country's most affluent communities.

Lippiatt likened Los Alamos to a "fantasy world" where children still walk to school, crime is kept low by a huge police force and there's no such thing as real traffic.

While many residents "live very humbly," Lippiatt said, "I think the people who have all this money are retired from the lab, they invested well, they did things right. ... They have literally millions of dollars in the bank."