The Sixty-Four Dollar Question

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.

One comment

  1. One also has to look at demographics. In the 1950s and 60s. El Paso was a military boom town. Lots of white collar workers from Biggs, Ft. Bliss and White Sands. There used to be buses that parked at Northgate Shopping Center that were used just to shuttle the engineers and rocket scientists back and forth between the missile range and Northeast El Paso where most of them lived. Now, Ftl Bliss is full of low level soldiers. Remember when we had NUKES sitting out in the Northeast El Paso desert? Those B52s required a lot of support. When that all left, so did the reason for most white collar jobs, and they associated income that comes with it, to stay.

    You have had white flight, brain drain, and I remember a time when Juarez was a playground for the rich. Remember when the celebrities would come over and get their quickie divorces after spending a day at the Juarez Racetrack? The rich played in Juarez and stayed in El Paso. Now no one wants to go to Juarez.

    The white flight comment is more about white collar flight than a race comment by the way. There is no compelling reason for a student graduating from UTEP to stay here. Most of the whittle collar jobs are not here, and the ones that are are few and far between.

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