Santa Fe, NM Economic Future Looks Bright

By: Mathew Turner 06/12/2014 The economic forecast in many areas around the nation is bleak despite the establishment media’s constant drumbeat focused on spreading recovery propaganda to the masses. Fortunately, the Santa Fe area’s economic prospects are looking bright. According to the Bureau of Labor Statistics (BLS), the April, 2014 unemployment rate in the Santa Fe area was 4.6%; well below the New Mexico statewide unemployment rate which came in at 6.8% and even better than the Albuquerque metro area rate which rolled in only moderately better than the NM statewide rate at 6.1%. The US national average unemployment rate is 6.3% for both April and May of 2014 respectively. We have long understood that an unemployment rate at 5.0% is considered essentially “healthy” and a rate that drops too low (like 2.0%- full employment) creates an environment in which businesses find it too difficult to find employees. At present, minimum wage in Santa Fe for all businesses affected by the living wage ordinance remains at $10.61 per hour. Despite the criticism from the many naysayers before the ordinance went into effect, one business owner seemed to sum up a differing account of the impact of the relatively new law from Sperling’s Best Places Report; “As a business person, my experience has shown that the living wage ordinance actually improves the bottom line, in that employees are more motivated and there’s much less problem with folks not showing up to work (e.g. due to problems making rent, cars breaking down and not being able to afford repairs, etc.) and it has reduced turnover / improved employee retention. Moreover, it’s just a better business climate when employees are happy; they have a better demeanor and attitude and it shows in their relations with customers. From a business perspective, I can say it’s improved things in our city. More cities should consider adopting such ordinances. The Chicken Little ‘sky is falling’ crowd who lobbied so heavily against it and out spent proponents 3 or 4 to 1 (but were still defeated!) can look around and see that the ordinance has, in fact, not “decimated” our economy as they claimed it would; Santa Fe is thriving! It should be noted that Santa Fe’s living wage ordinance only applies to employers with at least 25 employees, so very small businesses have a chance to get off the ground when they are just starting out. I believe that is a good compromise.” In sum, the opportunity costs of imposing the ordinance were greatly outweighed by the economic benefits. At present, new housing developments are under way in Santa Fe off Hwy 599, at Airport Rd and Paseo Del Sol West, off Agua Fria St, Richards Ave,  and other locations around the area. The interesting twist being that it is homes between 200k and 300k that are selling more quickly than anything else on the market. Indications are that the luxury home market is recovering, but at a much slower pace. Homes in the Santa Fe area are projected to rise in value from the 2nd quarter of 2013 through the 2nd quarter of 2016. The upwards trend has been forecast with 83% accuracy. That is, there is an 83% chance the trend will occur as forecasted. The city has made substantial investments in creative methods to grow its own population like making funds available to non-profit organizations like Homewise and the County’s Housing Trust in order to enable Santa Feans with the financial means to own a home within the city or county despite the area’s prohibitively high housing costs- especially for those middle class residents and individuals entering the housing market for the first time. The emphasis of these organizations in creating stability for their clientele (they do not lend adjustable rate mortgages etc.) has made an unprecedented difference for the better in the local economy. According to Homewise, the ability to help 1000 homeowners purchase in Santa Fe adds an additional $64.7 million to the economy annually. The same Homewise report tells us that between 1999 and 2006, Santa Feans’ household income increased by approximately 24% and during the same period, the sales price of single family homes jumped 90%. The role of organizations like Homewise and the County Housing Trust became even more essential in the city’s efforts to keep Santa Feans in Santa Fe and to attract others from other locations to purchase homes in the area- essentially mitigating the effect of inflation in the housing market during the economic glory days prior to 2008 to some extent and continuing to add to the city’s property tax base throughout the recession that ensued after to the present day. And now we are seeing the results. The city and state also offer a wide variety of tax credits and incentives (some of the most competitive in the region) to incentivize individuals to start businesses or organizations to move to Santa Fe. All in all, a low residential property tax environment, an effort by the city, county, and non-profit groups to grow the local population through home ownership, plenty of attractive economic incentives for businesses to locate themselves in the area, and a stellar focus on residents’ quality of life have helped the Santa Fe area through some tough times. Remaining weaknesses include an over reliance on US Government related jobs, a somewhat poor secondary education system, and potential over emphasis on the tourism and hospitality sector. The city could make some tremendous gains by growing private sector employment not affiliated with providing government agencies with goods or services and not connected with hospitality and tourism. To conclude, the economic future of the Santa Fe area looks bright. There is still plenty of ground in which to grow momentum forward, but plenty of fundamentals are already in place due to well thought out policy that will allow the economic development of the area to proceed forward.        

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