Las Cruces, El Paso dive in economic rankings

Las Cruces
Las Cruces

EL PASO, Texas (AP) – The economies of Las Cruces and El Paso are performing poorly compared to many other cities across the country, according to the latest Milken Institute Best-Performing Cities rankings.

Las Cruces’ economy ranked No. 120 among 201 small metro areas, compared to No. 55 last year – one of the biggest drops on the small metros’ ranking. El Paso ranked No. 121 on the list of 200 large metro areas, compared to No. 53 last year – one of the biggest drops in that category, according to the 2015 rankings.

The California economic research organization does the rankings annually. It measures each metro area’s economic performance by long- and short-term growth in jobs, wages, and high-tech industry output.

Jim Peach, an economist with New Mexico State University, said the numbers should be viewed with a degree of skepticism as the indices have a lot of variability from year to year.

“I wouldn’t put too much value in it for any given year,” Peach said.

In this region, El Paso ranked better than Albuquerque at No. 180 (No. 179 last year), and Tucson at No. 175 (No. 166 last year) on the big cities’ list; Phoenix ranked No. 62, compared to No. 65 last year. Santa Fe was No. 177 on the small cities’ list, compared to No. 153 last year.

“In many key industries, El Paso has seen a relatively flat performance (recently) while its peers are growing and overtaking El Paso,” said Minoli Ratnatunga, a Milken economist and co-author of the Best-Performing Cities report.

“Las Cruces has the most diverse set of high-tech industries on the small cities list,” Ratnatunga said. However, Las Cruces did poorly on short-term job growth measures, indicating its high-tech industries are not growing as fast as in other places.

Las Cruces ranked first among the small metro areas for its concentration of high-tech industries with significant output. One of the driving forces behind the transition from technology to marketplace in Las Cruces is the Arrowhead Center on the New Mexico State University campus. El Paso ranked 114th for the size of its high-tech industry among the large metro areas.

Still, NMSU’s Peach points out, while there are high-tech jobs, they are not growing and, since the industry is still in development in many ways and a small change in statistics from year to year could have a greater impact due to the smaller workforce in that industry.

“These are almost like beauty contests. But they do have one thing right, Las Cruces and Doña Ana County have not been doing well,” Peach said. “We’ve been flat on employment for a long, long time. We now have just about the same number of nonfarm payroll employees as when the recession started nationally. We are not doing well. Neither is the state as a whole.”

Peach noted that much of the local economy is heavily dependent on government spending – military, contractors, public schools and the university system.

Peach said one bright spot in the local economy is development in and around Santa Teresa with the Union Pacific intermodal center and the development in manufacturing that it spurred along the border.

El Paso’s decline in one-year wage growth and high-tech production growth contributed significantly to its drop in the rankings, Ratnatunga said

El Paso ranked much higher on five-year job growth and wage growth because its economy performed better during the recession than in many other cities, she said.

El Paso was No. 2 in the 2011 Milken Institute big metros’ ranking when Fort Bliss expansion boosted the local economy and other cities were struggling to emerge from the recession.

Carlos Aguilar, an economics instructor at El Paso Community College, said El Paso has under-performed economically for years. The years during the recession that El Paso looked good compared to other areas were an aberration, he said.

“The lack of a strong private sector is holding us back. And we’ve had a significant drop in the labor force,” Aguilar said.

The economic performance of many Texas metro areas has been hurt by the oil industry’s decline, the Milken Institute report showed.

Texas had five of the top 10 large cities on the Milken ranking last year, but this year only Austin (No.4) and Dallas (No. 5) made the top 10. San Antonio dropped from No. 10 to No. 12; Houston dropped from No. 7 to No. 26; and Fort Worth dropped from No. 8 to No. 31.

Oil-rich Fargo and Bismark, North Dakota, ranked first and second on the small cities list despite the decline. Those cities have sustained growth through industry diversification in recent years, Milken economists noted in their report.

“In the United States overall, business and consumer spending on technology products and services is a powerful force in economic growth,” the Milken report noted. “Metros involved in designing and creating these products and services are growing most rapidly.”

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