Mexico & Nafta - October 2006 (ISSN 1741-444X)

Immigration to the US has been a crucial escape valve for the Mexican economy. Not only does the US economy provide new jobs for about 500,000 Mexicans every year (more than President Fox has managed in any of his six years in office) but remittances also provide a vital source of funds for some of the most marginalised parts of Mexico. This year remittances are still rising at a spanking rate: 22% in the first seven months. As the US economy is slowing down, the prospects for migrants are deteriorating. What makes this recession unusual is that the official US attitude to migrants has changed. This may mean that migration to the US will fall, or possibly even reverse. 

The US economy is clearly slowing down. In the second quarter growth was revised down to 2.6% on 28 September. In the first quarter growth had been (annualised, as is the US habit) 5.6%. The big fall was in household consumption: this dropped from 4.8% in the first quarter to 2.6%. Household consumption accounts for 70% of GDP. 

If US households are having to cut back, they are likely to start doing more of their own gardening, cooking and childcare. If this happens the US demand for (cheap) Mexican labour will collapse. There will be a foretaste of this when the US construction industry starts to lay people off in large numbers. This must happen soon because fewer new houses are being started in US. The first people to be let go will be the (illegal) Mexican workers. 

In August, housing starts declined by 6% to an annual rate of 1.66m. Compared with August 2005, housing starts are 20% lower. The issuance of building permits also fell to its lowest level for four years. This was the seventh straight month of a decline in the issuance of permits. Such a sustained decline has not occurred for 20 years. This combination of factors meant that builders' confidence indices dropped to a 15-year low. 

What is clear is that life for migrants to the US is becoming harsher. Construction and agriculture are the big employers of migrant labour. Around a quarter of all employed migrants work on the land. About one in five works in construction crews. Agricultural workers, some of whom come to harvest crops for the same farmers each year, say that the combination of low wages and high petrol prices has meant that they have barely broken even this year. A lot of agricultural workers follow the harvest as it moves across the US. They also say that they feel less welcome this year. Some, polled in Illinois, doubt that they will return in 2007. 

The Illinois Migrant Council, which helps migrant workers, said that about 2,000 of the usual 32,000 migrant workers who arrive each summer to help with the harvest did not turn up this year. The change in the US attitude to migrant workers in the past five years is a major deterrent for migrant workers, farmers and migrant workers groups agree. Tom Nassif, president and chief executive of Western Growers, one of the biggest fresh produce firms in the western US, said that many growers were struggling to find enough labourers to harvest this year's crops. What happens to the apple crop in Washington State will be a major pointer to whether farmers are just grumbling or have real problems.

The persistent anti-immigrant drumbeat from rightwing politicians was not present in 2000. As a result, official attitudes to migrants have toughened in petty ways and may, if the US House of Representatives harsh immigration reform bill comes out on top of the more liberal Senate proposal, lead to tougher laws on migrants already settled in the US. This could happen when the new congress convenes in January 2007. 

The current position in the US is, essentially, that the US authorities are trying to prevent more migrants crossing the border into the US. The US authorities are much less interested in expelling illegals who are making it in the US. The House bill would change that attitude, forcing the authorities to treat all illegal migrants as criminals. If this happens, it seems likely that a lot of illegals will return to Mexico. Migrant workers and their support organisations claim that officials are already jumping the gun and becoming more active in trying to catch illegal immigrants.

The reversal of the direction of immigration, should it occur, will have major political and economic effects. Where will the migrants go? Will they go to the more prosperous states in Mexico or will they go home? What will they do wherever they go, given that even a boom the Mexican economy has failed to create the jobs it needs? The fear must be that an exodus from the US will increase social and law and order problems in Mexico. 

It might well be that the recent rise in unemployment rates in Mexico (in July and August) is due to changes in patterns of Mexican migration. The lower death toll on the border suggests that there has been no increase from 2005 in the number of people trying to cross illegally into the US. Migrant groups are not sure that this is the case: they claim that it is simply a milder summer that has lowered the death toll of people trying to cross the Arizona desert illegally. In August 2006 unemployment in Mexico, which defines someone as unemployed if they have failed to work for one hour in the week of the survey, popped over 4%. In August 2005, the rate had been 3.65%. 

Repatriations: Over 12,000 illegal immigrants have so far taken part this year in the Voluntary Repatriation to Mexico 2006 programme. This is a joint initiative between the Mexican and US governments to provide migrants who are detained by the US Border Patrol with a safe way of returning home. The programme was established in 2004, and since then has been implemented in the Arizona-Sonora corridor during the hottest months of the year when the risks are particularly high for Mexican migrants crossing the desert into the US. 

This year's programme began on 7 July and ended on 30 September. According to Russell Ahr of US Immigration and Customs Enforcement in Arizona, an average of 180 migrants per day have volunteered to return to their home towns via Mexico City on flights departing from Tucson in Arizona. This is significantly fewer than last year's figure of over 20,000 repatriated migrants. The US Border Patrol is still arresting almost 1,100 illegal migrants in the Tucson area every day. What is not clear is whether fewer Mexicans are trying to cross the border illegally. What is clear is that the death toll in the Arizona-Sonora corridor is down significantly this year. US Border Patrol agents say that this is simply because this year was not as hot as previous years.