At about the same time the U.S. Supreme Court was hearing arguments in the Justice Department’s challenge to the Arizona immigration law last month, there were a couple of developments which paint a much different vision of the future than might be guessed by Americans on either side of the immigration issue.
A few days before the much-publicized hearing, Audi announced it has selected Mexico as the site for its new SUV manufacturing plant, spurning several U.S. suitors, including Georgia, Tennessee and Alabama. This follows recent decisions by Honda, Mazda and Nissan to build or expand on plants in Mexico, which is projected to increase its auto manufacturing by over 40% by 2015.
This news adds context to the second development, a report by the Pew Hispanic Center that net migration from Mexico to the United States, legal and illegal, has slowed to a halt and may even be moving slightly in the other direction.
This trend began before the passage of the laws clamping down on illegal immigration in Arizona, Georgia and other states. It coincides, logically enough, with the collapse of the housing industry and the recession, which begs the question of whether an upturn in the economy could cause the stream of illegal immigration to swell again.
Over the short term that might well happen, but powerful forces are in play which make it unlikely the historic levels of Mexican immigration we’ve seen over the past four decades can be sustained. The most basic of these is demographic.
In 1960, Mexico’s fertility rate was 7.3 children per woman, compared to 3.6 per woman in the U.S. The fertility rate in Mexico has fallen since then much more dramatically than in the U.S.: 2.4 per woman in 2009, compared to 2.0 per woman in the U.S.
This huge demographic bulge of young, low-wage labor over the past half-century has been both a major factor in the tide of illegal immigration, as well as the essential ingredient in the development of agribusiness and the poultry-processing and carpet industries in the U.S. The competition for Mexican and Guatemalan labor has been growing keener in these sectors for a few years now, and the birth rate statistics indicate it will only grow more so.
With a reduction in excess labor comes a change in economic fortunes. When NAFTA made it possible for large U.S. meatpackers to sell sausage in Mexico cheaper than local, traditional butchers, the U.S. industries recruiting cheap labor were the beneficiaries. But as the Mexican economy has become more industrialized, the U.S. has lost some of its competitive advantages to its southern neighbor. Even with the sharp drop in fertility, one of those advantages, for some time to come, will be a younger home-grown Mexican work force.
“We’re basically just on the front end of this production migration from Asia to Mexico,” Dave Starling, CEO of Kansas City Southern, a rail company which does a lot of trans-border business and follows developments in Mexico, said in a recent earnings call with investors.
“The perfect wave of competitive wage rates, favorable currency environment and significantly lower transportation rates to U.S. markets are all in play and we’ll see it rippling through our various business units,” Starling said.
One reason most U.S. analysts have been slow to pick up on these major economic developments is the attention focused on the gruesome gang wars, fueled by the flow of drugs from Mexico to the U.S. and guns from the U.S. to Mexico, which have killed more than 30,000 and at times threatened to destabilize the government. But we should remember that the Chicago stock yards ran just fine while Al Capone and his rivals were gunning it out with each other.
These demographic and economic forces foretell a change in immigration patterns, but that doesn’t necessarily mean that the social tensions which have inflamed the debate over illegal immigration will subside at the same pace.
Births supplanted immigration as the biggest factor in the growth of the U.S. Hispanic population several years ago. That’s a clear indication that Hispanic-Americans will remain a substantial component of the U.S. population, no matter what immigration laws the states pass or how the Supreme Court rules on them. This is rather obvious, but the fact has been obscured in the current debate.
A half-century ago, when China was in the throes of Mao’s Cultural Revolution, it would have been hard to foresee a time when the U.S. would be dependent on Chinese credit. It could be just as hard to envision a time when the economic fulcrum which has spurred the tide of Hispanic immigration is rebalanced. But we could be closer to that time than we think.