Letter to my next Governor

By Mark Lautman

Published 10/29/10

Dear Governor-elect,

Congratulations. Being elected governor of a state is not easy. It’s a great honor. As the euphoria of election night wears off and you contemplate the realities of governing through the next four years, you are probably thinking condolences are more appropriate.

One of my colleagues told me that there is nothing wrong with New Mexico that 50,000 new jobs – which is how many we’ve lost since mid-2008 – wouldn’t fix. That’s not exactly true, since some of the things wrong with New Mexico won’t automatically go away with full employment. But it is true in the sense that if we don’t fix the economy first, we won’t have the resources to fix any of the other problems. So you might say the success of your first term comes down to one question: Can you create 50,000 new jobs in the next four years?

How does one create 50,000 new jobs? The short answer is, you have to create 20,000 economic-base jobs first. Those are jobs where the products and services produced are sold out of state and bring new money into the economy. The new money will create an additional 30,000 service sector jobs. Service sector jobs are those where the products and services produced are purchased locally.

That’s 5,000 jobs a year, or 400 a month. OK, you shouldn’t really be responsible for generating all 20,000, so cut it in half. You’re on the hook for 10,000 economic-base jobs in four years. That’s only 2,500 a year, or 200 a month. That amounts to 10 announcements of 1,000 new jobs or more, or 20 at 500 jobs, or 50 at 200 jobs, or 200 announcements of 50-job projects.

There are only three ways to create jobs. You can help New Mexico’s existing employers expand, or even start up a few businesses, but you will have to recruit most of those businesses from out of state. When you find one, there are only four things you can do: encourage them, facilitate them, incentivize them or invest in them.

Any way you cut it, 10,000 new economic-base jobs will be a tall order in a slow, jobless recovery, with commercial credit dried up and a widening mismatch between qualified workers and jobs in demand. What’s more, you will have to do it with a shrinking budget, and public resentment of corporate incentives at an all-time high. It is not impossible, but it isn’t going to happen without a Herculean effort.

When it comes to the state’s economic development apparatus, you have three choices: do a major overhaul, privatize it or triple the budget. The job creation game has changed so much in the past three years that many of the things we are doing don’t work any more or don’t work well enough to keep doing.

There are several big strategy initiatives that need to be championed, like the Spaceport, the film program, Tres Amigas and some of the energy initiatives. We’ve had significant success in recent years landing projects of 1,000 jobs or more and in the 50-to-100 range. We’re expecting another surge of big projects starting next year, so keep the New Mexico Partnership going, figure out how to get commercial credit turned back on and keep economic development incentives.

Then take a hard look at the half of the market we’ve been ignoring, the under-10-employee firms and the solitary jobs. Solitary jobs are those where people work on their own, usually at home from a third-bedroom office. They are the fastest growing segment of the economic base, and we have no organized program efforts to recruit or start them up. As long as they bill out-of-state customers, they are economic-base. A well-designed and executed program targeting under-10-employee firms and solitary workers could produce spectacular returns.

I know you will do everything you can. Like your predecessors, you will be criticized, even vilified, for doing too little and too much – often simultaneously. So go for it.

It’s no time for half-measures. Hire the best talent in the country, then execute like New Mexico depends on it. If you succeed, you’ll have a lock on re-election and you’ll be the toast of the National Governors Conference.

If you don’t, we’re all toast.