By Joe Guzzardi
August 28, 2015
San José Chiapa is a small municipality in southern Mexico, population about 9,000. But it could soon become Mexico’s mini-version of Detroit. Automakers like Ford, General Motors and Nissan are flocking to Mexico.
Audi has just completed construction on a $1.3 billion factory in San José Chiapa, largely because of Mexico’s low-wage scale, now more favorable than China’s, and also because it has advantageous trade agreements with global economic powers. In all, according to The Wall Street Journal, Mexico has more than 10 different free-trade agreement that give exporters duty-free access to markets that generate 60 percent of the world’s economic output.
Virtually every automaker has added investment in Mexico, today home to 18 auto plants with five more on the drawing board. Mexico is now the world’s seventh-largest automobile producer, and the fourth largest exporter behind Germany, Japan and South Korea. Wall Street analysts predict that Mexico’s 3.2 million car and light truck production will increase more than 50 percent to 5 million by 2018. Auto and parts makers have earmarked more than $20 billion for future outlay in Mexico.
Ford, for example, recently announced that it would move its Michigan-based assembly plant by 2018, with Mexico the likely destination. Jobs will be lost, and never recovered. During the 1980s, the Southeastern United States was the premier spot to build auto factories. But more than six years have passed since an automaker infused new money – and created new jobs – into southern states.
The effect of vanishing jobs has already been felt. Since 2008, U.S. auto jobs increased only 15 percent, while Mexico has enjoyed a 40 percent increase in similar jobs during the same period. Before Congress finalized this year’s fast-track trade deal, U.S. Rep. Rosa DeLauro (D-CT) said in an ominous reference to the disastrous North American Free Trade Agreement, “Bitter experience tell us that bad trade deals devastate jobs, devastate wages.”
American workers, the subject of so much attention on the presidential campaign trail, seemingly have nowhere to turn. Domestic jobs continue to be outsourced overseas. Over the last few years, Mexico has become the next China as the prime destination for middle-class jobs. Opportunities that would normally come from U.S. factory construction never evolve because the plants are built offshore.
Consistently high immigration is another variable that hurts American workers. A stunning Bureau of Labor Statistics report showed that in May the number of foreign-born workers in the U.S. economy hit a record 25.1 million, the second highest in history, and increased by 279,000 since April. According to data included in the Census Bureau’s Household Survey, of the 279,000 new May jobs, only 1,000 went to Americans. Digging further into BLS native-born statistics finds that over the last eight years, 75 percent of all jobs have gone to foreign-born residents.
As middle-skill jobs like auto worker disappear, those displaced employees must take lower-wage jobs which sets off another round of displacement and puts more downward pressure on wages. The cycle continues endlessly.
For all the campaign bluster about restoring jobs, and Congress’ insistence that it prioritizes American workers above all else, nothing either candidates or incumbents have done supports their claims. And Americans have little confidence that the 2016 White House, whoever may occupy it, will be different.
Joe Guzzardi is a Senior Writing Fellow with Californians for Population Stabilization. Contact him at [email protected]