Latino Immigrants Pay a Price for Free Trade

Roberto Chavez was 8 years old when he began fantasizing about the inevitable day he would follow his brother to the U.S., then return to his poor Mexican village smelling of money.

What he did not know, in fact never could have imagined, was that the Los Angeles employer that helped him buy a home and raise five children would ship his job to Mexico after 15 years of loyal service.

For Chavez, the circle of betrayal pitting the poor people in his adopted homeland against the poor people he left behind is a rarely acknowledged consequence of the landmark 1994 trade agreement linking the United States, Mexico and Canada.

Two decades ago, Detroit auto workers and Pennsylvania steelworkers feared foreign competition would cost them their jobs. Today, the more likely victims of what Ross Perot called the “great sucking sound” are the Latino workers in textiles, food processing and electronics, many of whom risked their lives to cross the border only to see their new jobs go south as companies sought cheaper labor.

“They get pushed; we get pushed; everybody gets pushed,” said Chavez, a soft-spoken 47-year-old from Chihuahua.

Free trade wasn’t always a villain in the Chavez home, a neat stucco bungalow in Huntington Park, a predominantly Latino city in southeastern Los Angeles County where the average annual household income is less than $30,000. How it became one helps explain the growing uneasiness about globalization and poses a serious challenge to the Bush administration’s ambitious trade agenda.

Seven years ago, Roberto and Concepcion Chavez, like many of their friends in the Latino community, supported passage of the North American Free Trade Agreement, designed to make it easier for everything from fresh tomatoes to electricity to be shipped between the three countries.

The Chavezes said they believed NAFTA would create opportunities for them in the U.S. and for their relatives in the impoverished Mexican villages they left behind.

“I thought it was going to be a good thing,” Roberto said. “Politicians talk so beautiful. When we see the realities, it’s not that way.”

‘No Job Security in Trade Agreements’

What began as hope has turned to a skepticism that has planted its roots deeply in the Chavez household. In April, when President Bush was in Quebec City rallying support for free trade at a summit of leaders from North and South America, Chavez’s daughter Jesenia and a group of Latino friends from UC Santa Barbara caravaned to an anti-trade protest at the California-Mexico border.

“I saw what it did to my community,” said the impassioned 20-year-old. “I saw a number of families left with nothing. There is no job security with these trade agreements.”

Jobs aside, many trade economists would argue that the Chavez family, like other Americans, has benefited tremendously from the integration of the North American economies.

Imports of Mexican-produced televisions and vegetables have helped keep prices lower at the checkout counter here, and Mexican production facilities have helped the U.S. automobile industry regain its global edge. A surge in U.S. exports to Mexico has created jobs here.

Whereas the benefits of trade tend to be broadly dispersed across the United States, the pain is concentrated among those Americans most vulnerable to lower-cost competition, experts say. Data on the effect of trade on workers are spotty, and it is often hard to untangle the factors--poor management, technological change, cheap foreign competition--that might cause a plant to be closed or moved abroad.

A recent report by the liberal Washington-based Economic Policy Institute placed the net NAFTA job losses in the U.S. between 1993 and 2000 at 766,030, with California suffering the biggest hit at 82,354.

In a U.S. economy that creates an estimated 200,000 jobs a month, those losses may not seem large. But Raul Hinojosa-Ojeda of UCLA’s North American Integration and Development Center said Latinos bear a disproportionately heavy share of the pain because they are concentrated in the low-skilled industries and border communities most vulnerable to Mexican competition.

This Latinization of the lower-paid work force can be seen in the latest Department of Labor data. Latinos represent 49.9% of those operating textile pressing machines, 40.6% of those holding textile sewing jobs and 70.9% of the people sorting agricultural products. Of the 116,005 workers who received federal aid in 1999 and 2000 from a program designed to help workers hurt by NAFTA, 37% were Latino.

“The places which are the hardest hit are places like Watsonville, Calif., which is 60% Latino immigrants, or sectors like the garment industry, which is almost 80% Latino,” Hinojosa-Ojeda said. “Ironically, these industries have survived and thrived in [Southern California] precisely because of immigration over the last 20 years.”

Life Far From Perfect

The Chavezes were once the low-cost competition. But instead of the jobs going to them, they came to the jobs. In 1974, Roberto’s elder brother paid a smuggler $200 to take the 20-year-old Roberto across the border.

“I used to see people going to the U.S. to work, and when they came back, they were dressed so nice and had nice things,” said Roberto, who was 3 years old when his father died, leaving a widow with 10 children.

Of course, the young Mexican immigrant didn’t learn until much later the downside of life as an unwelcome trespasser into American society: working long hours at dangerous, low-paid jobs with no benefits or security, living in fear of the traffic stop that could result in his deportation, staying one step ahead of the immigration officers.

In 1979, Roberto married Concepcion, a young widow who lived a few blocks from his brother. She had crossed the border a year earlier seeking a job to support her mother and sisters in a small village in Chihuahua.

After drifting from job to job for years, the Chavezes found employment in the mid-1980s at Los Angeles firms producing door hardware. Roberto worked in the warehouse at Weslock Corp., a subsidiary of Tool Research Engineering that was later acquired by Alcoa. Concepcion worked in assembly at Belwith International, a small family-owned company.

The jobs were steady and provided some benefits. By working overtime and scrimping, the couple were able to save enough money to buy a tiny house. Roberto, whose education stopped after elementary school, enrolled in classes at East Los Angeles College, determined to gain the skills to better himself.

Their fears of deportation ended in 1987 when the U.S. government approved a blanket amnesty program for illegal immigrants who had lived in the U.S. continuously for the previous five years.

But life was far from perfect. Roberto, their eldest son, drifted away from the close-knit family in his teens, dropped out of high school and got involved in drugs and gang activity, according to his parents. While her parents put in long days at work, Erika, their eldest daughter, took responsibility for raising her younger sisters, Jesenia and Lucero. In 1995, a year after the passage of NAFTA, David was born.

With another mouth to feed, the Chavezes grew uneasy about the rumors floating around their heavily Latino workplaces. Fierce competition in the hardware industry and mismanagement dogged Weslock, which has experienced seven owners and two foreclosures in the last 15 years.

Regaining Lost Economic Ground

In 1997, after a series of job cutbacks, both Weslock and Belwith announced they were closing their Los Angeles facilities. The following year, Weslock, the only remaining privately owned U.S. hardware manufacturer, moved its manufacturing to Mexicali, where it pays $10 to $15 a day to its entry-level workers. Belwith, which was purchased by British-owned FKI in 1988, consolidated its U.S. production in Grandville, Mich.

Within a matter of months, Roberto and Concepcion lost the jobs they had held a combined 34 years. Neither got severance.

“Every five or six years, you got a silver pin. It probably cost 89 cents,” Roberto said. “That’s what I was worth.”

The move to Mexico didn’t go smoothly. Weslock’s sales collapsed in 1998 because its Mexican workers were not properly trained and quality suffered, said Clint Brumble, an executive with Tulsa, Okla.-based Vintage Holdings, the present owner. He said Vintage reversed the downward slide by bringing in new management and retraining its Mexican staff.

“You don’t want to lose jobs in America for Americans,” said Brumble, the son of one of Weslock’s owners. “But we have to make our businesses work. If to stay competitive you have to go elsewhere, you’re left with no choice.”

Roberto and Concepcion struggled for months to get back into the work force. Under the federal government’s NAFTA trade adjustment assistance program, Roberto was eligible to enroll in a training program for up to 18 months while collecting a small allowance. But he quickly grew frustrated with the classes, which offered remedial training in computers and mechanics.

The jobs that were available--fast-food cooks, warehouse loading crew, electronic assembly work--paid minimum wage with few, if any, benefits. The Chavezes quickly gave up hope of matching their last jobs, which paid more than $10 an hour plus medical coverage and paid vacation.

Others have also criticized the federal trade adjustment programs as inadequate and ineffective. In a report released last year, the General Accounting Office said the federal programs for dislocated workers are underfunded, are not well-coordinated, have confusing eligibility requirements and do not provide adequate services for workers with limited English or less than a high school education. The federal expenditures for those programs between 1995 and 1999 was just $1.3 billion.

“In any program, there is room for improvement,” acknowledged a Department of Labor official, who asked not to be named.

The Chavezes count themselves among the lucky ones. After working a series of temporary jobs as warehouse security and an airport cargo handler, Roberto went back to East Los Angeles College and completed the two-year degree he had begun a decade earlier. Last year, he was hired on a temporary contract by the state Department of Employment Assistance as an employment counselor in the San Fernando Valley.

Concepcion was hired at the deli counter at Ralph’s grocery store in Long Beach. The first few months, the 41-year-old spent hours each night memorizing product codes and recipes because she couldn’t read or write English. She volunteered to work extra hours and was rewarded with a recent promotion to assistant manager of her department. She hopes to start English classes this summer.

The Chavezes have regained some of their lost economic ground but not their confidence. With two children still at home and one in college, the couple save every extra penny in case their new jobs disappear. Many of their former colleagues still haven’t found work.

Failure to Help Could Fuel Backlash

Obscured by the dramatic economic expansion and tight labor market in the United States in recent years, these displaced workers have largely fallen through the cracks, according to labor economists, trade experts and Latino leaders.

The failure to help them could fuel a backlash against the Bush administration’s hopes to extend NAFTA, warn trade experts in Washington. As an acknowledgment of the rough road ahead, the White House said recently it would support efforts to beef up the federal trade adjustment programs, which are up for renewal this fall.

“The longer they put this off, the more frustrated people will get,” said Howard Rosen, a Capitol Hill trade specialist advising the Senate Finance Committee on ways to strengthen the government safety net for trade-affected workers.

That is particularly true in the hard-hit Latino community, whose leaders largely supported NAFTA and are being counted on to bring those same sentiments to the proposed Free Trade Area of the Americas.

Occasionally, the former members of the close-knit Weslock family of employees get together for a meal. What’s left of their anger is aimed at the company or the government’s trade policies. They don’t blame the Mexicans who hold their former jobs.

When the Chavez family crosses the border into Tijuana, they see workers toiling away at maquiladora (export factories) for a fraction of their salary and going home to tin shacks without electricity or running water.

“Only a few people benefit from trade, the big companies,” Roberto said. “Ninety percent still live in poverty. It’s the same everywhere.”

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Affected by Trade

States with the most jobs lost by because of NAFTA from 1993 to 2000.

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No. of State NAFTA jobs lost* California 82,354 Michigan 46,817 New York 46,210 Texas 41,067 Ohio 37,694

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* Excludes effects on wholesale and retail trade and advertising.

Source: Economic Policy Institute