The Feds Targeted The Border For Pandemic Enforcement. Did It Work?
One of the only federal policies trying to stem the spread of COVID-19 is the U.S.-Mexico border shutdown. What were the economic impacts and implications?
For over a year Delfina Gracilazo has traveled across the Texas-Mexico border between Piedras Negras, Mexico, and Eagle Pass, Texas, to sell her blood. It’s a common way to make some extra money at the border. She stands outside one of Eagle Pass’s two plasma donation facilities waiting with a group of other Mexican citizens who can sell it multiple times a month, earning about $40 per donation. The money didn’t used to make it back.
“We would come donate, stop by the stores and shop and then we would go back,” Garcilazo said in Spanish. “Now, it’s different. We come and go straight back.”
But now all that has changed. The Texas-Mexico border has been closed to non-essential travel for nine months. Since then Gracilazo has been advised they are only allowed to sell their blood but not to shop.
The U.S. is happy to take their blood as part of its $21 billion plasma industry — which in turn sells it to big pharmaceutical companies. But the message is — under the border closure: their blood may be welcome here but their money is no good.
The United States Government passed $2 trillion in economic relief this spring for businesses and residents, but the federal response abating the disease has been limited to things like travel, and one of the only active enforcement actions taken is here on Texas’ southern border.
A press conference back in March severed a huge part of travel along Texas’ southern border. Unless traveling for education, military or big supply chains like the auto industry, you weren’t getting across. But there are a number of grey areas and loopholes — like the fact that Americans often aren’t stopped when crossing into Mexico at these land crossings...and of course the blood.
And that is exacerbating an already bad situation for brick and mortar small businesses suffering because of the pandemic.
It’s just one example of how the border closure falls mostly on the people who can afford it the least on both sides of the border. And it’s just one of many inconsistencies — one of the bizarre facets — of the policy that affects an area where the Dallas Fed says $450 billion in economic transactions happen each year and where 80% of our Mexican imports come through. Mexico is our second largest trading partner.
The Impact Of A Sister-City Economy
Since shopping is considered non-essential, small businesses on the U.S. side of the border are really getting hit hard by this.
Jaime Rodriguez is a business owner in downtown Eagle Pass, where he notes on a recent Tuesday morning there’s pretty much no traffic.
He knows that people are keeping their money in Mexico. His family’s grocery store is a few blocks away from one of Eagle Pass’ international bridges and from the two plasma donation centers downtown.
Garlands and red bows decorate the store for the holidays, but there are many empty or boarded stores with “For Rent” or “For Sale” signs on almost every street. Some wholesale, clothing and flower shops remain, but the bulk of their customers have been missing for more than nine months now.
“There’s only one main street in all of Eagle Pass. And it’s sad to see it go down the way it is. You know it’s thrived through everything else, and it’s supported by the Mexican shopper,” said Rodriguez.
Eagle Grocery, which sits on Main Street, has been a pillar of the area since it was first established by Rodriguez’s grandfather and his brother in 1939. In the upper level, old photos of the store and memorabilia line the walls. It’s been recognized by the Texas government for its historic value.
The store has weathered multiple disasters.
“This place flooded and then it burned,” Rodriguez said. “We’ve rebuilt, but COVID got us.”
During the rise of big supermarkets, Rodriguez’s dad, Benny, said their customers from Piedras Negras remained loyal.
“We are twin sisters. We only have the Rio Grande between us, and all of our customers — we don’t advertise. Why? Because we have had the same prices for years. People come in with the right amount of change to come and buy what they’re going to buy,” said the elder Rodriguez.
Without them, they’ve taken a hit. Jaime reports that in November 2020, they had 15,696 customers come through our door. In November 2019, they had 23,353 customers.
They’re baffled by the restrictions, which allow Mexican nationals to freely fly into the U.S and for U.S. citizens and permanent legal residents to cross back and forth.
“I guess coronavirus doesn’t fly. I don’t know,” Jaime said.
He estimates about 50% of locals travel to Mexico and back on a daily basis, whether it's for food, haircuts or doctor's appointments.
All along the Texas border, small businesses are struggling to stay afloat as month after month, Mexico and the U.S. announce the extension of these travel restrictions. The latest extension lasts through Jan. 21.
Who It Hurts The Most
Gerry Schwebel is the executive vice president of the Laredo-based IBC Bank. He said border businesses are resilient. They have lived through other challenges like peso devaluations, violence along the border and the rise of online retail. But the current uncertainty is crushing them.
“We relied on that holiday shopper and we’re going to lose the Christmas shopper,” said Schwebel, noting that many retail establishments are used to seeing November and December as their best months.
“Most of these businesses are small to medium enterprises. And they're not accustomed to coming out of the newspaper for bankruptcy. They just fade away and disappear; total shut down and don't open up.”
That makes calculating the impact of the restrictions tricky. Economic indicators are limited and the ones that are available — like unemployment and sales tax allocations — aren’t painting as grim of a picture.
Jesus Cañas is senior business economist for the Dallas Federal Reserve. He said the unemployment he’s seen along the border’s metropolitan areas is only a bit higher than for Texas, at 5.8% compared to 5.5%. The state and the areas along the border aren’t back to 2019 unemployment levels yet, and Cañas is surprised by that.
Unemployment might also be lessened along the border thanks to government jobs, like Border Patrol and trade — another major source of revenue and jobs for border communities that has even seen growth throughout this time.
Cañas said border sales tax allocations or rebates, the share of money local governments get back from the state from taxes on local sales, are only down 3.3% But these numbers lag by a few months, and include stimulus checks and the extra federal unemployment checks that have now ended.
That lag and the fact that the impact is mostly felt by small businesses and people who are low-income means these metrics may not be capturing the real picture.
“I don’t want to leave you with the impression that the region is not under tremendous stress,” he said.
Pedestrian and passenger traffic plummeted by about 62% at Texas’ 13 border ports of entry from April to September of this year, compared to 2019, according to a December report from the Baker Institute for Public Policy.
That report also estimates that border counties have lost almost $2 billion in retail sales because of the travel restrictions.
For example, on Black Friday, Laredo’s typically sleepy outlet mall, strategically located right next to one of the city’s international bridges, crowded a bit.
But the American shoppers, evident by the Texas license plates, didn’t trickle to Laredo’s downtown, according to business owners like Yvette.
Her store sits on a strip next to the outlets, but remained empty most of the day.
“Some people will come out, people out of town or some people will remember there’s a downtown, but when they look in our space, there’s only three stores open,” she explained. “So, they go back to the outlets. If it weren’t for the COVID or the bridges closed, then people would come to us because those people (Mexicans) do come to us.”
Eagle Pass Mayor Luis Sifuentes said the city’s bridge revenue is down 40% to 50%. He’s frustrated that the federal government has prioritized replacing a border fence in the area, awarding a construction contract for approximately $46 million.
“And that's why I've been saying, you know, this $50 million could go a long way to help out these businesses, that the government is hurting because they're not allowing Mexican nationals to cross over,” he said.
Similarly in Laredo where border wall construction also looms, businesses — old and new — are hurting.
Ricardo (JR) Arce opened a T-shirt and printing shop in downtown Laredo in February, right before the pandemic. He uses social media and plays music outside the store to try to attract customers, but he says it’s hard to get locals downtown and there’s not much foot traffic.
The pandemic has brought him some business, in the form of requests for commemorative shirts for funerals. But, the store is still behind on rent after having to close for about two months under stay-at-home orders.
“The guy is going to arrive and he’s going to say ‘Hey, you got the check? And I’m going to say ‘You gotta wait,’” Arce said. “I got the mortgage at the house too. It’s me and my wife here. We’re trying to meet the ends but it’s kind of hard.”
Congressman Henry Cuellar, a Laredo Democrat, proposed enhanced health screenings at U.S. bridge ports of entry. He says travelers could be screened by both U.S. Customs and Border Protection and local government, which he says could allow for a reopening.
But coronavirus cases and hospitalizations began to rise, and both Mexico and Canada requested for the travel restrictions to be renewed in November. And last week, the head of the Department of Homeland Security announced they would once again be extended through Jan. 21.
For now, border businesses and Mexican nationals along the border will have to wait and see until next year.
Forced To Adapt
The border closure didn’t just damage brick and mortar stores on the U.S. side. It has had a devastating impact on business and informal workers on the Mexican side.
The El Paso-Juarez border is the largest binational region in the Western Hemisphere. The main artery connecting the two sides is South El Paso Street to Avenida Juarez.
Alberto Moreno is a street vendor who sells hand-stitched tablecloths that are usually big sellers for Thanksgiving and Christmas gatherings. He said sales are down by 80-90%, and he blames the virus.
Pharmacies and dentists are still seeing some business because medical reasons are considered an essential travel, but things have dropped off significantly. People go to Mexico for much lower cost prescription drugs. And patients from across the U.S. routinely visit dentists in Mexico, which are also much affordable especially for those who need extensive work.
“We have a lot of patients from the U.S. and they’re not coming because they’re discouraging travel. Our workload has gone down by a lot,” said Dr. Margarita Cruz, a dentist in Juarez.
Even local El Paso patients are reluctant because bridge lanes are not fully staffed by the U.S. Customs and Border Protection, meaning longer lines to get back home; hours in some cases.
A lot of the small vendors catered to those border-crossing customers from the U.S., including Maria Velasquez, who sells snacks from a cart, are just hanging on by a thread.
“One of two: I die from the virus or I starve to death. God help us all,” Velasquez said, pointing out there is no help from the Mexican government.
Even so she’s relying on her faith, saying God will help us all get through this and is thankful for every day she is alive and able to work.
The impact of the pandemic is not only affecting brick and mortar stores, but also the informal economy including workers, customers and vendors who crisscross the border to shop, do jobs and get services.
People are forced to adapt and find new ways of getting by without crossing the border.
Back on the El Paso side, Herlinda Santillana shopped in stores while talking to her granddaughter via video chat. Her granddaughter was in Torreon, nearly 600 miles south of the Texas-Mexico border in the state of Coahuila. She could be heard on the other end being very picky about which boots she wanted her grandmother to buy.
Santillana is a U.S. citizen who lives in the El Paso area, so she can still go back and forth to Mexico. The border shutdown can’t stop U.S. citizens or legal residents from coming back home. But Mexican citizens cannot come into the U.S. to shop or visit family.
She said this situation created hardships for people who need to buy items for their homes or clothing, which is lower cost and often higher quality. She’s helping her own family in Mexico, but others may rely on “pasadoras” or informal shoppers who take things across to supply small scale merchants or individuals for a fee.
The reality is there’s a thriving informal labor market. People who have border crossing cards are doing informal work, even though it’s not supposed to happen.
Domestic workers — including day laborers, gardeners, maids, child and elder care workers — all allow other women in the U.S. to work full-time.
Marisol Marin is a U.S. citizen who cleans houses, so she can work without any issues. She does jobs in El Paso but lives in Juarez with her parents and three children.
Marin said she knows she’s fortunate she is able to cross back and forth to work because she’s a U.S. citizen. Of course authorities can’t stop U.S. citizens from returning to their home country. But she knows plenty of people in Juarez who can no longer come to El Paso because of the border travel restrictions.
“I feel sorry for them because a lot of people used to cross over here to work,” said Marin.
The global online shopping companies that are doing booming business in the U.S. are also thriving in Mexico.
Companies like Amazon, Alibaba, and Mercado Libre are big winners. It used to be hard to order online; one needed a U.S. credit card. Now, anyone can order online and pay for items with cash at chain convenience stores.
There are concerns about traditional buying patterns changing for good, which will be a big blow to Texas retailers on the border and beyond. Also concerned are hotels and restaurants and entertainment and sporting venues – there used to be busloads of Cowboys fans who came up from Monterrey to games in Dallas. In some areas of the border there are ski resorts and mountain villages nearby that usually are filled with tourists from Mexico who celebrate the holidays in the U.S.
Impacts Far From The Border
The border travel restrictions have impacts well beyond the border. Mexican nationals who travel into the U.S. are often tourists who ski, stay in hotels and of course, shop.
In a Laredo parking lot, a fleet of vans sits unused. They used to take Mexican nationals to visit other Texas cities, like San Antonio 160 miles away, but no one can cross to use them, and they have sat idle for nine months.
The Shops at La Cantera — the open air mall on the city’s affluent far northwest side — are normally packed this time of year. They were mostly empty on a recent weekday.
“It's pretty close to Christmas, and I think in a normal year, the parking lot would be pretty full with, you know, Mexican nationals,” said Steve Nivin, an economist and professor at St. Mary’s University. “You just walk around in a normal year and, and see the license plates.”
Back in 2013, Nivin found international shoppers had a massive impact on the San Antonio economy. San Antonio sees $374 million a year from them, $100 million of which happens in just November and December.
Not this year though. It would have been especially good for restaurants, hotels and the whole hospitality industry, which has been clobbered by the pandemic.
“It would be wonderful (to have those customers),” said Henry Feldman, owner of the La Quinta Inn and Suites in the medical center. “Most of the hotels in San Antonio, as you know, are running in the 30 to 40% occupancy, so we all need more business. Nobody's making money today.”
Most cities don’t enjoy this yearly bump from Mexico and it’s usually a buffer in bad economic times like the Great Recession. Despite that downturn, the city still reaped the benefits of these shoppers.
This year, some may choose to fly in rather than drive as they did in past years, but it’s hard to say how many as the pandemic rages on both sides of the border.
As a policy, the shutdown has been controversial for its imbalance: People can fly into the country instead of drive. Exports and imports across our land bridges have been unimpeded. In fact, trade with Mexico is up over last year, right now around 6%.
It would be hard to argue the policy had any impact on stemming the spread of COVID-19, the reason it was enacted.
“It’s not working,” said Ramiro Cavazos, president of the U.S. Hispanic Chamber of Commerce.
He sees the only real impact of the policy is killing small businesses in border communities and beyond.
“It is odd and it seems to be an action that is taken and extended every month. To say that we're doing something about it.”
And he said — like the rhetoric of the entire Trump administration — it is about vilifying Mexico.
“It is not about COVID. COVID was used as an excuse by this administration to close the border.”
He said they need to end the shutdown.
But ending the travel restrictions outright is a hard sell to some on the border like John Barela, CEO of the Borderplex Alliance, an economic development organization located in El Paso.
“Under current conditions, I think the travel of nonessential and the prohibition on nonessential travel is probably a good idea right now,” said Barela.
Thousands of people are dying each day in this country from COVID-19. The CDC is asking everyone to limit travel.
The question is, does focusing the only enforcement action on poor Mexican families and border businesses really do anything at all?
It doesn’t seem like it.