Sunday, July 14, 2013

Over 60% of Jaliscans earn less than subsistence income

"They can't eat," reports university study

Thursday morning's front page carried the disturbing news in several metro area newspapers

*Updated Dec. 15, 2014 (below)*
Guadalajara -
A study reported last week by academic investigators at the University of Guadalajara found that 61% of Jalisco state residents don't earn enough to purchase basic foodstuffs and household necessities.

The researchers attributed the problem to chronically poor wages, inflation and the falling value of the peso against the U.S. dollar.

The current minimum wage in Mexico is about 64.50 pesos per day. At at exchange rate of 13 to 1, that's the equivalent of just under $5.00 USD. The university study found that a worker needs to earn 3.6 times that amount to have sufficient purchasing power to meet basic needs. But most do not.

Both the government and research institutions commonly refer to la canasta básica in evaluating consumers' purchasing power. The term is best translated as the "shopping cart," and includes not only foodstuffs and household products, but fuel, transportation costs, basic services and children's educational needs.

UGL researchers concluded in their latest report that the shopping cart has a current acquisition cost of at least 6,900 pesos ($550) per month, over three and one half times the minimum monthly income of 1,935 pesos. Even skilled or better educated workers who earn two or three times the minimum wage fall short of the mark. Los jalicienses no pueden costear la canasta básica, mucho menos para poder divertirse o ahorrar, said the report. "Jalisco residents can't afford the basic necessities, much less enjoy themselves a little, or be able to save something."

In January the State Secretary of Labor reported that an average worker in this state earns less than 6,000 pesos per month - about $460 dollars, or $5,500 annually. Mexican federal agencies agree that is considerably less than needed for basic household maintenance. Mexico's impoverished grew by more than 11% in two years, with 13 million citizens in extreme conditions.

"Economic pressures continue to place the average Mexican family under ever great stress," wrote the UGL report's authors. And the effects are being felt beyond just this state. Seven of 10 Mexican households report food shortages.

Inflation has played a leading although not exclusive role. The 121 separate products and services which collectively comprise the theoretical shopping cart have risen an average of 4.22% in the last year. Some items have risen much more: vegetables are up 10%, fish 9%, meats 8.5% and eggs 5.58%.

Other products have skyrocketed, such as heavily consumed tomatoes and onion, both up 34%. And the trend is expected to continue. The Bank of Mexico has projected 3.8% inflation for 2013, but the University of Guadalajara says it will be more than double that - 8%.

Low incomes throughout Mexico are directly linked to the anemic job market. More than half the country's labor force is self-employed, generally in family retail operations which offer no benefits and the most minimal economic security. Gross economic disparity still a hard fact of Mexican life.

The problem is compounded by the fact that even a college diploma does not necessarily open any doors. Mexico abounds with schools of higher learning, public and private, but many of them market worthless degrees which are a route to nowhere. That is especially true in remoter provinces which have no industry, and are heavily dependent upon the whims of tourists. Yucatán has well-educated labor force, but offers one of Mexico's worst job markets.

University researchers even hold environmental factors accountable for the increasing pinch felt by the consumer in the check out line. A severe U.S. drought in the summer of 2012, from which American farmers are finally beginning to recover in some regions, took its toll in Mexico. Enrique Peña Nieto's biggest challenges will be economy and environment, not drug cartels.

On his first trip abroad as Mexico's new president in January, Enrique Peña Nieto told an economic summit in Santiago, Chile, "We want to grow the economy in an equitable manner, which allows for significant development throughout the country. To that end, our focus will be on spreading prosperity while extending economic opportunities even to the remotest corners of the country. Our government wants to be a great facilitator of investment in Mexico."

But Peña Nieto's optimistic forecasts for a rapidly expanding economy have been dashed, as the peso unexpectedly turned south and relentless security problems - lately compounded by dangerous civil insurrections in some states - have repeatedly distracted the new PRI government. Fiasco in Michoacán suggests little has changed under new government; security prognosis remains poor.

Mexico's economy sputtered and all but died in the first quarter of 2013, growing a scant 0.8% on an annualized basis. That was less than one sixth of its dynamic performance in the first quarter of 2012 (4.9%, annualized). The country's central bank has offered a modest to poor prognosis for the rest of the year, largely because of continuing economic uncertainties north of the border. Banixco raises storm flag warning on Mexican economy.

More critical than the raw numbers, perhaps, is what they portend for Mexico's domestic security - a theme frequently addressed by the new government, as it was by a leftist opposition candidate during last year's presidential campaign. Economic inequality is the primary cause of Mexico's insecurity.

Aug. 19 - Guadalajara leads the nation in the number of persons who die from outright starvation - almost 200 a year over the last decade. That was the conclusion of the federal health secretariat in a recent report. For the state of Jalisco, the tally is about 1,000 per year.

Dec. 15, 2014 - Mexico's National Social Security Institute reports that extreme poverty in Jalisco grew by 13.7% between 2010 and 2012. For a family of four, food, fuel, education and health care now costs an average of 10,345 pesos monthly ($701.36 USD at today's exchange rate of 14.75 pesos to the dollar). The state's median income is far below that, at 8,401 pesos a month ($569.56).

May 2 - Jalisco wage earners average $15 per day
Jan. 5 - U.K. report: life is getting harder, not easier for Mexicans
Mar. 26 - The Jalisco secretary of government reported today that of the state's 7.7 million residents, 460,000 (almost 6%) live in extreme poverty, while 20% (1.5 million persons) are unable to afford an adequate daily diet.

Dec. 20 - Mexican minimum wage in 2014 will be $5 dollars - a day
Oct. 12 - In a land where many are poor, Mexican millionaires are increasing by leaps and bounds
Aug. 24 - Mexican unemployment stats paint a bleak picture for the most well educated
July 29 - 53.3 million - that's how many Mexicans live in poverty
Feb. 20 - Mexico has 14th largest global economy, but citizens rank 81st in food purchasing power
Jan. 3 - Mexican governors raise their salaries, while almost half the nation remains in poverty
Oct. 17 - Ending poverty key focus of incoming PRI government

Feb. 10, 2012 - Increasing poverty and rising state debt result in poor economic report for Mexico

Street vendors are common sights in Mexico at all hours, offering inexpensive food (home made, and often of excellent quality), clothing and countless other items - even music to dance by. About 60% of the employed work in such endeavors, full or part time. Guadalajara's Plaza Expiatorio was busy on a recent Sunday evening.

The Red Coyote, a popular watering hole with a great view of the plaza and its magnificent Gothic cathedral, was closed - but that didn't deter locals who wanted to showcase their mastery of Latin rhythms.

© MGR 2013-14. All rights reserved. This article may be cited or briefly quoted with proper attribution or a hyperlink, but not reproduced or rewritten without permission.

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