NAFTA and Mexican Immigration

(Note: I received some reports yesterday that some readers were being redirected to a porn site. The blog was hacked. I have removed the malicious code and I believe the site is now working as it should. Should you experience any issues, please let me know.) The debate over the benefits of NAFTA versus the cost to jobs in North America ignores a fundamental metric. It is the metric of undocumented migration from México to the United States. Immigration is a complex issue involving many dynamics at play at the same time. These range from the politics of hate, to border security on towards the economic costs, both positive and negative. Almost all immigration debates fail to tie in the population trends of Mexicans migrating towards the United States.

Mexicans generally immigrate to the United States for economic reasons. Eliminating the politics, the cause is simple, Mexicans need jobs and thus go look for them where they can be found. The U.S. offers jobs. In April 2016, Pew Research published a graph detailing the apprehensions of Mexicans caught crossing the border as undocumented immigrants. The graph tracked the apprehensions from 1960 through 2015.

According to the Pew graph, less than 300 thousand Mexican immigrants were apprehended in 1960. The trend doubled to about 600 thousand at about 1971. (Note: Pew writes that the numbers represent events and not individuals but for arguments sake we assume they represent individuals. Events can represent numerous individuals in an encounter.) The Mexican apprehension undocumented immigrants peaked twice, first at 1,636,000 in about 1983 (hard to tell exact years from the graph) and again in about 2000 at 1,637,000. From that point on it has significantly dropped each year to 188 thousand in 2015.

In 1994, NAFTA entered into force. At that point, México’s economy started to transition away from its dependency on exporting oil towards exporting manufactured goods. As oil exports decreased, manufacturing increased in México. This has created greater job opportunities and wealth in México although much of this is contradicted by various reports.

For example, a Carnegie report from 2004 suggests that NAFTA produced “a disappointing small net gain” in Mexican jobs and pointed out that “about 30 percent of the jobs that were created in the assembly plants in the 1990s have since disappeared.” Those are clearly dire consequences when taken outside the context of what México would be like today without NAFTA. Additionally, the evidence suggests that NAFTA has made México stronger.

To demonstrate reality of what México would be without NAFTA, one only needs to look at Venezuela today.

Unlike México, Venezuela continues to rely on oil exports as its primary national income, instead of modernizing its exports, like México did with NAFTA. Today, Venezuela is on the precipitates of a failed state while México is globally recognized as a “developing country.” México, today is a member of the G20, or the Group of Twenty, which is made up of the top 20 major economies of the world.

It is true that the agricultural industry in México was decimated by NAFTA. México imports corn from the U.S. instead of exporting it. It is the unfortunate but necessary cost of industrializing a nation. The Industrial Revolution fundamentally changed the business of agriculture, basically diminishing the need for labor. NAFTA, has trended México’s industry away from oil and agriculture towards the manufacturing of consumer goods.

Although much debate centers on agricultural jobs lost in México and lost U.S. entry-level jobs, the possibility of a failed states on the United States’ southern border largely remains undiscussed. This is also true for discussions within México on the dependency of antiquated agricultural techniques and oil for the country’s economy.

The discussion on stagnant wages ignores the rising middle class in México that today accounts for over 40% of México’s population. But how does that account for the income disparity in México and the pockets of poverty across the country?

Income disparity is a problem as is poverty. But to understand these issues it is important to understand Mexican culture and realities. México’s wealth is concentrated in the metropolitan areas, while the rural areas remain mired in poverty. There are many cultural and political reasons behind this phenomenon but its reality does not negate the fact that México’s middle class is rising and that Mexicans searching for U.S. jobs has declined significantly since 2000.

Mexicans have traditionally filled low-wage and labor-intensive jobs in the United States because they require little skills and education. But as México’s economy has shifted so have the job requirements shifted as well. Higher skills and education are now required in the modernized Mexican economy. This has translated into better job opportunities in México resulting in the declining number of undocumented Mexican immigrants being apprehended at the U.S. border, as Mexican workers find jobs in México.

Mexicans are now finding job opportunities in México that gives them better living conditions. The middle class is rising and wages are giving Mexicans better opportunities. Declining immigration numbers and a rising middle class in México proves this point.

Clearly and as painful as NAFTA has been for modernizing the Mexican economy – it has benefited the United States and México as well as workers in both countries, notwithstanding the various reports on both sides of the border that suggests NAFTA was a failure for México. Look to Venezuela to see a glimpse of what México could be today absent NAFTA.