LFC chief economist: targeted investments, job quality and certification matching can close New Mexico’s $15,000 income gap

Ismael Torres, chief economist for the Legislative Finance Committee, told lawmakers at a CNM-hosted meeting that New Mexico faces a persistent earnings gap — about $61,000 per capita in the state compared with roughly $76,000 nationally — and that closing it requires carefully targeted investments rather than broad subsidies.

"We exist in the problem," Torres said, laying out a framework that links GDP and industry composition to personal income. He urged the committee to prioritize investments in sectors and programs that convert a high share of economic activity into wages — what he called the state’s "wage-intensity" metric — and to focus on levers the state can control: growing participation, expanding labor demand, improving job quality, raising productivity and improving local capture of purchasing.

Torres used modeling results to quantify trade-offs. He said, for example, that bringing 1,000 higher-wage earners to New Mexico could raise per-capita wages by about $400, while bringing 1,000 people into employment from the sidelines could boost average wages by roughly $500 per person. He also warned that attracting new industries with large incentives frequently fails to deliver proportional revenue gains unless a substantial share of the activity is truly additional.

On state finances, Torres said recent oil-price changes have improved revenue tracking: the general fund is tracking roughly $300 million above earlier estimates, while larger windfalls (he cited about $850 million) flow to statutorily dedicated trust funds for early childhood, Medicaid and behavioral health.

Committee members pressed Torres on practical policies. Vice Chair George Muñoz and other lawmakers asked how certification programs and CTE could be better matched to employer demand; Torres pointed to LFC program-evaluation work identifying higher-return certifications and promised to provide those evaluations to the committee. Several members pressed for examinations of permitting and licensure barriers, particularly for construction and manufacturing, and Torres said those are suitable topics for follow-up analysis.

The presentation framed the work of the interim: identify lower-cost, higher-return interventions that create jobs and push more dollars into wages rather than into nonwage activity or leakage outside the state. Torres concluded that a performance-based approach — evaluating programs and incentives on their demonstrated return to personal incomes and regional labor markets — should guide legislative choices this summer.

Looking forward, Torres and staff committed to more granular follow-up on topics raised during Q&A, including program-by-program return-on-investment and evaluations of how universal childcare, job-matching services and other binding-barrier removals affect participation and wages.