Lessons From Mexico On Combating Poverty

Given all its present woes, Mexico would not strike most as a model to follow. But as I have mentioned before, for all its political and socioeconomic challenges, namely with respect to crime and corruption, one of the world’s largest economies has a lot going for it. As a “newly industrialized nation” with a broadening middle class, the country of 120 million is taking steps to better harness its burgeoning economic potential.

A good place to start is with the agricultural workers who make up a bulk of the country’s most impoverished people. One state is taking a simple yet profound approach to the problem, as The Atlantic reports:

In the Mexican state of Baja California, which exports huge amounts of strawberries, cucumbers, and tomatoes to the U.S., labor is taking a different tack that might take some of that pressure off of employers, for better or for worse: The local government is reportedly leaning toward paying a portion of farmworkers’ wages, bringing them up to 200 pesos (about $13.30) per day.

The terms of the agreement between farmworkers and the government have yet to be nailed down (for example, how much of the wage increase will be shouldered by government versus industry) but it is refreshing to see a government recognize that significant amounts of workers simply don’t make enough money to live comfortably, and to try to do something about it. And wages are only one part of the equation. The agreement would also have the government take pains to make sure workers are receiving the healthcare and social-security benefits they’re guaranteed by law, and hopefully would make it rarer for crew bosses to sexually harass female farmworkers.

In essence, the government is filling the gap between livable wages and what most companies offer. This might seem like an unlikely or unwarranted solution to most Americans, but it is already the reality, albeit less directly:

A recent study from UC Berkeley’s Labor Center found that nearly three-quarters of people participating in government programs such as Medicaid and food stamps are in families headed by workers. The authors, calling this a “hidden [cost] of low-wage work in America”, estimated that through these programs, taxpayers provide these families with about $150 billion in public support. Additionally, programs such as the Earned Income Tax Credit essentially subsidize the wages of workers whose income is below a certain level.

Shouldn’t companies be making up this difference instead of taxpayers? That’s how some state legislatures feel. Starting next year, California will publicly name any company that has more than 100 employees on Medicaid. And in Connecticut, state legislators are considering a bill that would require large employers to pay a penalty for each worker on their rolls earning less than $15 an hour.

Ultimately, what the government of Baja California intends to do is improve the situation that workers are in—something, one would hope, that companies start feeling the pressure to do as well.

It is very telling that the forces that most strongly oppose raising the minimum wage, or providing some sort of government support to workers, are the same ones directly responsible for underpaying their workers and shifting more and more of their companies’ profits to shareholders and top executives.

If businesses (and their supporters) do not want to do more to compensate their employees better, yet also do not want the government to help make the difference, then what exactly is the end game? A sclerotic economy where everyone is just barely getting by, and the demand for goods and services — which these same businesses claim is woefully lacking — remains low? Why should poverty — in any nation, much less the richest one — be seen as an unavoidable fact for so many working people?

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