The Mexican middle class is struggling
FFIFTEEN A few days ago, Maria, a school secretary, and her husband Samuel, a technician in an electronics company, had just bought a car when they found out she was pregnant. They couldn’t afford the payments with a baby on the way, so they returned it. Today, the couple and their three children live in a three-bedroom house in Tesistán, western Mexico, and have just purchased a second pair of wheels. They eat out once a fortnight and have a subscription to Netflix, a video streaming site. “My children would ask me if we were poor and I would tell them ‘No, we have food, a roof over our heads, clothes and we are moving forward,’” says Maria. “For me and my husband it’s the best time we’ve ever had.”
Enjoy more audio and podcasts on ios or Android.
Over the past few decades, Mexico, like many emerging markets, has seen a growing middle class. Income has gone up – Maria and Samuel bring in around 20,000 pesos ($ 1,000) per month, an increase of over 50% in real terms since they first met 16 years ago. More people like them bought cars, fancy TVs, smartphones and nice clothes. But recently, the middle class, long neglected by politicians, suffered two setbacks, thanks to covid-19 and the policies of President Andrés Manuel López Obrador.
The classroom is nebulous. It can be defined by income, occupation or aspirations. Status markers vary. Middle-class Mexicans are unlike their Spanish peers. They are poorer and more likely to work in the informal sector, rather than being a doctor, teacher or other professional. The World Bank defines the middle class as earning $ 13 to $ 70 per day in 2011 dollars, adjusted for purchasing power parity. the OECD, a club of predominantly wealthy countries, defines it as earning 75 to 200% of the median income of the country where you live. In Mexico, almost half of the population of 126 million people meet this definition of the middle class. (About 36% fall below that, and 19% are officially rich.)
In Mexico, the growth of a large part of those who are neither rich nor poor owes much to NAFTA, a free trade agreement with the United States and Canada. It brought jobs and cheaper goods to the country when it was implemented in 1994. (A renegotiated, more restrictive version went into effect last year.) And restaurants in urban areas. In 2019, Mexico City, the capital, had the highest number of songs streamed on Spotify, an audio streaming service. Mexico is one of the top five markets in the world for Uber, a ridesharing company. In April IKEA, a Swedish furniture giant, has opened its first store in the country.
The middle class is a vital part of any economy. In Mexico, many of its members own the small and medium-sized businesses that provide most of the jobs in the country. “They can start with a puesto [stall] in the street and then invest in starting a permanent restaurant that will also employ other people, ”explains Javier Lazarín de FES Aragon, a university.
Aspiring types tend to pressure governments to provide better services like health care and education because they rely more on them than on the rich, who can buy what they need. Better education can also often lead to better public debate. Middle-class citizens are also seen as good for democratic stability because they care about protecting what they have. Nonetheless, belonging to the middle class in Mexico is much more precarious than in wealthier places. An economic shock, a family illness or a recession can push people back into poverty. Today, several forces strike the average Mexican masses.
The most immediate threat is covid-19. The World Bank estimates that, according to its measurements, last year 4.7 million net Latin Americans fell out of the middle class. In 2020, Mexico experienced its worst recession since the Great Depression, with the economy contracting 8.5%. (It normally increases by around 2-3%.) Mr. López Obrador’s fiscal aggressiveness, which is sensible in good times, appears to have been a handicap. His government has provided very little financial support, compounding the impact of the pandemic. In contrast, handouts in Brazil were so generous that the World Bank claims it has reduced the number of people coming out of the middle class by 12 million.
Miriam Corona works as an accountant in an office furniture store in Mexico City. Her salary of 16,000 pesos a month was cut in half when the pandemic began, she laments from her living room in Pantitlán, an eastern neighborhood of modest homes, restaurants and shops. Ms Corona and her son, a college student, only get by because they live with her brother and mother. “We limited what we spent,” she says. Neither she nor her company received additional handouts last year.
Even before covid-19, government policies hurt people like Ms. Corona. “In a country with so much poverty, the middle class is often not appreciated,” explains Armando Regil, who heads a NGO. The rich are under-taxed in Mexico and the poor have little cash on hand, so middle-class Mexicans pay more than their fair share. They pay for public services and, as these are unequal, for private surrogates as well.
Mexico ranked 56th out of 78 countries in the most recent PISA ranking, a test of the skills of 15-year-old students in science, math and reading. According to a 2017 survey, less than half of Mexicans were satisfied with the state of public health care. Services and their access have improved over the past decade, but not by much. One sixth of Mexicans do not have effective access to health care.
When asked about their spending priorities, middle-class Mexicans are most likely to mention private education and private health care. If she had more money, Maria would send her children to a private school and buy them swimming lessons.
Despite his populist rhetoric, Mr. López Obrador has done little to improve matters. Since taking office in 2018, the president has focused on the poor, distributing funds for social programs to support them. Meanwhile, his nonchalant approach to foreign investment, which fell in 2019, hurt the better-off, says Luis Rubio, analyst and co-author of a book on the Mexican middle class. One of Mr López Obrador’s first acts, for example, was to cancel a major new international airport, which scared investors.
Now the president is verbally berating the middle class. Mr. López Obrador blames them for his party’s losses in Mexico City during the June elections. He called middle-class Mexicans “individualists” and accused them of wanting to “be like those above and climb as high as possible without any qualms.”
The president acknowledged that people should want to “improve themselves”, but clarified that they should “not become selfish and aspire to be snobs”. Such messages turn off many middle class people. “He talks about the richness of culture and family, but not finances, and that matters too,” explains Luis Castellanos, academic.
Viri Rios, analyst, estimates that given limited access to public services, a Mexican needs at least 16,000 pesos per person per month to live comfortably, which Ms Corona earned before the pandemic. A 2019 report from McKinsey, a consulting firm, speaks of two “missing ways” in Mexico: robust midsize businesses and a middle class with more purchasing power.
“If you don’t fight to move forward, you don’t move forward,” says Carla, an independent consultant (and wife of Mr. Castellanos). If public services improved, middle-class Mexicans could spend their money on other things and more people could move up the ranks as well. ■
This article appeared in the Americas section of the print edition under the title “Le milieu pressé”