The Fall of El Paso?
Study: City faces future of 'growth without prosperity'

By Lynwood Abram
The Houston Chronicle, November 28, 1993

EL PASO — A new study of this border city's economy says it is experiencing "growth without prosperity'' and seems destined to deteriorate to Third World standards of living.

There is a Spanish word for such a decline: "Tercermundizacion,'' according to the author of the study, David Simcox, a former official of the U.S. State Department and founder of the Center for Immigration Studies in Washington, D.C.

"In the absence of a major demographic turnaround, El Paso's economy faces a dismal future. The outlook is for further "tercermundizacion." Nor can El Paso expect much of a boost from the North American Free Trade Agreement, which will make the city more like Ciudad Juarez, its sister city in Mexico, the report says.

With slower growth of government employment and free trade threatening "intense Mexican competition'' in several sectors, El Paso can expect "creeping double-digit unemployment and (a) decline to Third World standards as permanent features,'' the study says.

The October unemployment rate, the lastest figure available, was 10.4 percent, but the average in recent years has been above 10 percent.

Kathleen Staudt, chairman of the political science department at the University of Texas at El Paso, says the "whole tone of the study was anti-immigrant. ''

"The idea of talking about the Third World is kind of a polemical scare tactic. I would call it immigrant-bashing. ''

Jack Martin, research director for the privately funded Center for Immigration Studies, acknowledged that the center, which Simcox founded in 1985 with two former associates from the U.S. State Department, takes the position that immigration laws should be tightened.

 Simcox denies any bias against immigrants. "That is like saying if you support flood control you are therefore anti-water,'' says Simcox, who lived in El Paso during the 1950s.

"Urban growth machines tend to be defensive,'' he says.

Combining to hobble El Paso's economy are a tide of legal and illegal immigrants, a high birth rate and proliferation of low-paying, no-future jobs, Simcox's study says.

Even so, he says, El Paso's record of economic progress is good compared with that of most cities on the Texas border. "El Paso is more of a crossroads than the other towns. It is a bigger city and has better transportation links between eastern and western markets. ''

Bob Cook, a spokesman for the Greater El Paso Chamber of Commerce, attacks Simcox's prophecy of Third World status for the city as "ludicrous. El Paso is outperforming Texas in creating new jobs. ''

Cook acknowledges that wages are low in El Paso, but he says the city is making strides in attracting businesses and industries that pay better.

Simcox agreed with Cook that for more than 20 years El Paso, the largest Texas border city -- with an estimated 606,000 metro area inhabitants -- has experienced unusually rapid growth in population, labor force and jobs.

"Yet El Paso's Metropolitan Statistical Area, already one of the poorest among the major cities, has gotten poorer relative to the rest of the country, with chronically higher unemployment and lower earnings. Poverty in the city is now more than twice the national average, and average earnings a third below it,'' the study says.

Simcox's study depicts El Paso as mired in "a cycle of poor wages and poor jobs'' with a labor force, foreign and domestic, that is youthful, increasingly female, poorly educated and unorganized.

For example, the average worker in El Paso's manufacturing sector earns about $ 10,000 a year less than the national average for manufacturing laborers, according to the U.S. Bureau of the Census.

In large part, the growth of manufacturing in El Paso is in industries that are declining elsewhere, Simcox says, such as clothing, leather and food products.

"Much of El Paso's growth has come from the decentralization of industries in the U.S. heartland to peripheral areas in search of cheaper and more abundant labor and an absence of labor unions,'' according to Simcox, who says that low wages remain the city's chief advantage in today's economy.

He primarily attributes the boom in retail employment to the great surge in the number of shoppers from Mexico. Juarez now has a population estimated at 1.2 million, twice that of El Paso's.

Totally free trade with U.S. consumer products (as ultimately provided by NAFTA) probably will hurt rather than help El Paso wholesalers and retailers, Simcox says.

"It will enable Mexican merchants to offer a full range of inexpensive U.S. goods at home and spare their customers a trip north of the border,'' he says.

"You can envisage in Juarez huge shopping emporia offering American goods at prices that undersell El Paso stores. '' He noted that there is no sales tax in Mexico, compared with El Paso's tax of 8.25 percent.

Even so, Simcox says, it is better for the country that Congress approved NAFTA because, if "an isolated Mexico, spurned by the U.S., returns to its old economic system, it would cause a deep social malaise that would cause disruption and would be harmful to the United States.''

Simcox foresees no slackening in the growth of El Paso's labor force nor in the factors that depress wages. High fertility among Hispanics insures a heavy flow of new job seekers in the next two decades, he says.

He believes that improving education and job training would be "the most rewarding step El Paso could take to end the cycle of poor wages and poor jobs.''

As education and training improve, economic development officials should concentrate on attracting firms that require higher skills, he says. Current efforts at equalizing access to resources for all school districts, rich and poor, may ultimately benefit tax-poor school systems such as those in El Paso, he says.

"Immigration and rapid population growth themselves impede the schools' march toward higher quality,'' he says.

***