New Mexico lost some 2,700 federal jobs last year, according to a jobs report released Wednesday. The workforce reduction is linked to cost-cutting efforts under Donald Trump’s administration that are beginning to ripple through the state’s economy.
The job losses brought the state’s unemployment rate to 4.7 percent in February. It is the highest level since March 2022, when New Mexico was recovering from the COVID-19 pandemic.
Data from the New Mexico Department of Workforce Solutions show marked disparities across counties. Los Alamos County posted a low unemployment rate of 2.3 percent, while Luna County posted 16.5 percent. Bernalillo County registered the same as the statewide rate at 4.7 percent, while Santa Fe County came in close at 4.4 percent.
Economist Kelly O’Donnell said the job losses underscore New Mexico’s dependence on federal employment and spending. This dependence, she said, makes the state particularly vulnerable to policy changes in Washington.
“This is probably a taste of some pretty serious economic headwinds,” O’Donnell said. “New Mexico is very vulnerable to uncertainty and volatility at the federal level.”
Job gains in other sectors helped cushion the impact of the federal layoffs. The state has added 1,900 jobs over the same period, while private employers contributed some 1,600 new positions.
Health care and social assistance topped job growth, adding 2,800 positions. The retail sector followed, which grew by 2,100 jobs.
These gains, however, were partly offset by losses in sectors linked to immigration policy. Construction and manufacturing lost a combined 2,300 jobs last year, reflecting labor shortages and policy impacts, O’Donnell said.
“I don’t think we can underestimate the negative impact that federal immigration policy is having on New Mexico’s economy,” she said. The economist noted that industries such as construction and food processing heavily rely on immigrant labor.
Inflation may add further stress in the months ahead. The consumer price index rose 3.3 percent through March, data from the US Bureau of Labor Statistics showed. The uptick is driven largely by energy costs, including higher gas prices.
“The profound uncertainty that many of us are experiencing has to be having a chilling effect on employment, if nothing else,” O’Donnell said. “I expect that it will be an increasingly prominent factor in March and April.”
Federal agencies are also feeling the strain of reduced staffing. One agency official, Prather, said the cuts have left remaining workers barely keeping up. “We’re absolutely strapped,” he said, adding that staff have taken on “a ton of extra responsibilities.”
That’s the reason why some senior employees are opting to leave under the current administration, Prather said. “It’s a crushing thing that’s happening,” he said. “For those who want to get out, I can’t blame them — but we’re at critical levels here.”