This week’s Question and Answer session in the El Paso Inc. is an interview with Patrick Schaefer, Executive Director of Hunt Institute for Global Competitiveness. According to the lead-in to the interview, the Institute was founded
“to answer some of the region’s most intractable social and economic questions. Why is it that El Paso’s median income was on par with the nation in the 1950s but is now at least 30-percent lower, and what might turn that around?”
Well, I’ve got the answer to the first question: leakages.
The bracero program, and later porous borders that let day workers come over from Juarez and then take their paychecks home with them, reduced the amount of money circulating through the El Paso economy. The wage and cost-of-living differentials incentivized the exodus of money from El Paso to Juarez. Juarez became more attractive to other citizens of Mexico, and they moved to the Mexoplex. It was like trickle-down economics, except it skipped about seventy percent of El Pasoans.
Wealthier Mexicans brought their buying power to El Paso, but not in sufficient volume to compensate for all the money flowing south. And a few El Pasoans capitalized on the lower wages to make money in labor intensive industries, like clothing manufacturing, but their increased salaries didn’t make up for the money flowing south either.
Some companies skipped El Paso all together to manufacture their goods in twin plants. Their managers may live in El Paso, but corporate profits flow to corporate headquarters in Minnesota, or Washington State, or Chicago.
So El Paso gets service industry jobs, and increased wealth and income inequality.
And once a trend like that starts, it’s hard to stop. You can stick your thumb in a dyke, but once the sea wall crumbles, you’re wet.
Nothing in our current economic policies addresses the issue of leakages. We recruit out-of-town firms and twin plants. Our landlord class siphons off the rents and spends their money from their second homes in La Jolla. Blue collar wages are beaten down by competition from people who cross the border daily, and spend their paychecks where their dollar goes farthest.
I’m not being judgmental, or advocating closed borders. I’m simply explaining why El Paso’s median income was on par with the nation in the 1950’s, and is now at least 30 percent lower. A similar study of Juarez’ income might reveal a similar trend, but reversed. I’d wager that over that same period, Juarez’ median income rose, though probably not as much relative to Mexico’s, as Juarez’ population swelled with internal migration.
Hope I didn’t put those guys at the think tank out of work. El Paso needs their incomes.