Segundo Barrio

Chihuahuita, Duranguito and Segundo Barrio Explains El Paso’s Economic Failure

Chihuahuita’s population “are potential assets of enormous value to El Paso and it is dangerous and wasteful to neglect” that community in El Paso’s economic strategy. (1925 El Paso City Planners)

El Paso’s endemic economy fueled by property taxes can be traced back to the belief that the El Paso economic engine has to be led by tourism. While chasing tourism dollars as El Paso’s only strategy to growing the city’s economy, city leaders have missed the opportunity to make El Paso an economic powerhouse in global trade. México, on El Paso’s doorstep, has around 14 free trade agreements with 50 countries giving Mexican products access to over 60% of the global market. By comparison, America only has free trade agreements with 20 countries. These include Canada and México through the North American Free Trade Agreement (NAFTA) now called the United States, México and Canada Agreement (USMCA).

Industrialization began to slowly transform El Paso, like the rest of the nation, away from agriculture and cattle. By 1878, the railroads further transformed El Paso. It is the railroads that demonstrated that El Paso’s economic future lay in its proximity to México. A 1947 thesis describes it this way: some El Pasoans “became aware of the industrial advantages” of El Paso as “that of the wide trade territory”. The thesis author goes on to add that the “El Paso market possessed the unique distinction of extending not only for a retail trading radius of 250 miles into Texas, Arizona, and New Mexico, but also far down into the interior of Old Mexico as well”. [15]

The author added that “El Paso is the largest and most important city on the Mexican border for a stretch of two thousand miles”. [15]

El Paso’s economic development strategy can best be exemplified as a failure driven by many years of investment in strategic plans that are discarded or ignored as soon as the ink on the expensive reports dry up. The city’s economic failure is evidenced by the high property taxes, lack of large private industry in the community and the constant complaints about the lack of adequate job opportunities for El Paso’s youth. There are no shortage of visionary reports and analysis created over the years to identify a strategy for El Paso’s economy to be jumpstarted out of its long morass.

In the late 1940’s, the El Paso tourism economy still flourished. In addition to its military post, Ft. Bliss, visitors to El Paso had easy access to Cd. Juárez. American citizens did not need a passport to visit Juárez, then a city of about 61,000 residents. [15]

In the 1970’s, El Paso economy was driven primarily by the garment manufacturing industry. In 1970, Farah Manufacturing generated 6,707 jobs, but according to a UTEP economist, contributed 12,700 ancillary jobs to entities dependent on Farah Manufacturing. The economist argued that the garment manufacturing company sustained about 43,000 El Pasoans. Farah was El Paso’s “single private employer” in 1969. Farah accounted for 29% of El Paso’s manufacturing jobs that year. [6]

An important benefit from Farah Manufacturing was that its product was exported out of El Paso. The money it generated came from outside of El Paso, instead of the circular economy El Paso relies on today, where the money it generates circles back around the community. This makes it so no new money enters El Paso’s economy and thus the city’s economy remains stagnant.

The garment industry remained the primary economic engine for El Paso until 1994 when Canada, México and the United States entered into a free trade agreement.

NAFTA

NAFTA was implemented in 1994 between Canada, México and the United States. It fundamentally changed the city’s economy and the economy of the three nations. Although often blamed for threatening the economy, NAFTA has benefited Texas since it was implemented. Since 1994, the Texas economy has outperformed the U.S. economy when Texas is excluded. In 2015, Texas exported $247 billion, outperforming California’s $163 billion in exports. [2] On July 1, 2020, NAFTA was updated to the U.S.-México-Canada Agreement (USMCA).

Benefiting Texas is its proximity to the border and its seaports. Almost 75% of the U.S.-México land trade, about $343 billion, in 2015 crossed via Texas ports. That trade supported almost 1 million Texas jobs (990,000), or about 8.2% of the total employment in Texas. [2]

The city’s economic viability is often associated with the unemployment rate. Today, El Paso’s unemployment rate is around 4.7%, according to the Dallas Federal Reserve. It is higher than the national average of 3.9%. [3] Prior to NAFTA (1980-1993), the unemployment rate in El Paso averaged 10.8%. Between 1994 and 2002, the unemployment rate in El Paso had dropped slightly to 9.5%. Nonetheless, El Paso’s unemployment rate before NAFTA and after NAFTA through 2002 was lower than the other border cities of Brownsville (13.3% & 10.8%), Laredo (14% & 9.6%) and McAllen (18.6% & 15.4%). [2]

Today, Brownsville’s unemployment rate is about 6.8%, 4.8% for Laredo and McAllen’s rate is about 7.8%. Clearly El Paso’s unemployment rate is lower than Texas’ other border cities. However, when compared to the national average of 3.7%, Texas border cities lag. [4]

Most El Pasoans would likely argue that NAFTA hurt El Paso’s economy as many point to the erosion of the garment and other manufacturing jobs in the city. [5] According to the Labor Department, 10,000 workers had lost their jobs in El Paso four years after NAFTA was launched. [5]

In anticipation of NAFTA, many economic strategies were launched by city and business leaders. One unnamed study “predicted the city would become a banking and commerce center for Mexico like Hong Kong” was for China in 1998. [5] It never did.

In 1998, Ray Caballero told The New York Times that “the border never seems to thrive,” because it is “designed that way”. [5] El Paso, the “busiest border crossing in the world” just could not thrive from the NAFTA economy.

Although many economic studies promoted a visionary outlook for El Paso’ economy, it always seemed that El Paso leaders never took the steps identified by the studies. In 1995, the local newspaper reported on two studies looking into El Paso’s economy. One was the Avance study and the other the DRI/McGraw-Hill Economic Assessment. [5]

Business Leaders And Politicians Lack The Will For Economic Development

The Avance study was mentioned once by the El Paso Times and seems to have disappeared. Another 1993 and 1994 study, the El Paso Tech 21 Project developed a 12-month economic strategy for the city. It looked at the seven major industrial clusters around El Paso and defined strategies to use for the region’s economic development.

Using the two studies, in 1995, 36-El Paso leaders and elected officials formed The El Paso Group for Economic Development, a “diverse group of El Paso business, government and education leaders” who met “to prioritize the city’s economic development needs”. They called themselves The El Paso Group for Economic Development. Jack Maxon was one of the group’s founders. The objectives of the group were to “help create more skilled jobs, expand the business base and bring more income to El Paso,” according to Maxon. [5]

Among the notable names making up the group included individuals like Larry Francis, Diana Natalicio and Ed Archuleta in their official capacity as city officials. Other notable names from the private sector included Art Fierro, Gilbert Moreno, Presi Ortega, Hector Holguin, Ramiro Guzman and Woody Hunt. Both the Greater El Paso Chamber of Commerce and the Hispanic Chamber of Commerce were represented in the 1995 organization. (The list of members can be found at the end of the article.)

What is notable about The El Paso Group for Economic Development is that it disappeared as quickly as it was made public. Extensive research into the group’s existence revealed only one mention of the group by the El Paso Times in 1995 announcing it and then it disappeared. However, The El Paso Group for Economic Development seems to have been the launchpad, along with Unite El Paso for the creation of the Paso Del Norte Group (PDNG). The PDNG, most notorious for the Glass Beach Study, created the economic public policy that El Paso operates under today. A policy built around using taxpayer funds to build public sports arenas while gentrifying low-income mostly Hispanic communities to make way for economic drivers based on entertainment and tourism.

As readers observed in our recent Unite El Paso article, not only did Unite El Paso launch Eliot Shapleigh’s political career but it also morphed into the PDNG. One of Unite El Paso’s primary objectives was to erase the U.S.-México border and move the border out the of El Paso’s city limits. It never happened.

The Juárez Factor

Any discussion about El Paso’s economy cannot be had without considering the sister city of Juárez. Juárez has been part of El Paso’s economy since the beginning, although only some business owners tend to acknowledge it while political leaders understand it but ignore it. The El Paso taxpayers mostly see Juárez as a drain on their wallets.

The concept of an international “twin city” metropolis between El Paso and Cd. Juárez where El Paso’s proximity to México was the key to economic development can be traced as far back as 1848, as the 1947 thesis explained. An El Paso 1925 planning document continued the dependence on Juárez thread when it envisioned a “distant future” where El Paso’s leadership should “cooperate most energetically with the people of Ciudad Juarez”. [9]

But tourist dollars kept El Paso’s leadership distracted with the Juárez approach.

The Prostitution Economy And Eugenics

Nothing better demonstrates the affect Juárez has had on El Paso’s need to generate economic activity for city services and money for residents than prostitution. Between 1890 and 1910, prostitution flourished in El Paso, like most of the nation. But in the 1920’s, as America was mobilizing for World War I, an eugenics movement was growing in the country and the American military had become alarmed at the incidence of sexually transmitted diseases within its ranks. The eugenics movement was “caused by deep anxiety among the Anglo elite” as demographics changed across the country. In 1920, El Paso’s white population accounted for less than 40% of the population. [8]

The 1917 Selective Service Act empowered the federal government to regulate social hygiene which allowed the military to regulate brothels near Ft. Bliss. [8] This, for a short time, allowed the federal government to leverage morality on El Paso’s leaders by forcing them to act on prostitution. However, it was short lived. Although El Paso business leaders worried about losing Ft. Bliss revenues, the revenues from prostitution won in the end.

In addition to the revenues from the fines that filled city coffers, many business owners depended on the revenues from prostitution in the form of rent payments and ancillary services needed by the prostitutes to do their work. But prostitution also was lucrative as a tourism driver for El Paso, specifically the convention business.

The Convention Industry

In 1912, El Paso “aggressively promoted itself as a major convention destination”. It landed the Spring Panhandle and Southwestern Stockmen’s Association convention in 1912. Because of the convention’s success, the Greater El Paso Chamber of Commerce “ramped up its convention business campaign”. [8]

The chamber played up the city Sin City reputation, which they “deemed vital to attracting large groups who spent freely not only in the vice district but, in hotels and shops” as well. [8]

Once vice had been removed from the city, El Paso had little to offer as a destination. Although El Paso often used its proximity to México, “Old Mexico” and Cd. Juárez it also distanced itself as well. El Paso residents often complained about migrants costing taxpayers more and about immigration in general. Operation Hold the Line, the border blockade, was lauded by El Pasoans when the North American Free Trade Agreement (NAFTA) was about to fundamentally change El Paso’s economy. As NAFTA was being implemented in 1994, El Paso had the opportunity to embrace the free trade agreement and position itself as a U.S.-México free trade gateway but instead chose inward looking politics of closing off the border to México with the border blockade. Unite El Paso tried to reopen the borders for El Paso’s economic success to no avail.

Tourist dollars kept being lauded as the economic solution although building a Silicon Valley by encouraging education and a health-based economy have been thrown into the mix as well. But an underlining problem, one seldom discussed openly, if ever, existed. It had to do with the eugenics movement across America and the fear among El Paso’s population to be identified as too Mexican. The Chihuahuita neighborhood poignantly demonstrates this problem.

Chihuahuita

To El Paso’s 1925 city planners, Chihuahuita, was “likely to remain the most congested district” in El Paso but should not razed to make way for economic development, instead, Chihuahuita should “conserve the foreign spirit, the exotic charm of unfamiliar customs” and “should be a showplace of which El Paso and all its inhabitants could be proud” to have in their community. [9]

To do so, the 1925 planners suggested that city officials invest in housing and other quality of life for the predominantly Mexican community. For best results, the 1925 planners wrote that “if ‘Americanization’ be not so construed as to attempt to do away with all that is fine and admirable” in the community of Chihuahuita. [9] (emphasis mine)

The Americanization of Chihuahuita and Segundo Barrio has been the narrative at city hall, contrary to the admonition of the 1925 city planners. When Americanization failed then eradication through gentrification was added to the menu. Many in El Paso consider Chihuahuita an eyesore. But the 1925 planners saw the Chihuahuita community as “potential assets of enormous value to El Paso and it is dangerous and wasteful to neglect them”. [9]

Chihuahuita offers two problems for many in El Paso, a Mexican identity uncomfortable to many and a proximity to México. Thus, Chihuahuita serves to demonstrate that the reason regional economic development remains off the city’s narrative is because it requires accepting that El Paso’s future is with Juárez.

Insistence on Tourism Dollars

Tourism in El Paso has faced the problem of having tourists transiting through El Paso on Interstate 10 without stopping in the city on their way to other locations. Gimmicks have been introduced to get traffic on the Interstate to exit in El Paso, or to use El Paso as more than a quick meal and gasoline stop.

An example in the 1970’s was the citizens band (CB) radio that allowed motorists to communicate with others as they drove on America’s highways. Most often associated with truckers, CB’s became part of Americana for travelers on the highways. To capitalize on this, the El Paso Convention and Visitors Bureau set up a base station in the convention center and staffed it with people providing travelers with information about El Paso’s destinations. The channel five callsign for the base station was Amigo Man, after the Bureau’s logo. [11]

Amigo Man (circa 1976)

The Amigo Man was created by Chuck Lee. [10] It was first used in 1976. The Amigo Man remains in use today in a more stylized version. Two attempts have been made to replace it as El Paso’ representative logo, one in 1987, when the city introduced the red script used by the city on official documents delegated the Amigo Man to the background and in 1999 when a lizard was introduced. The lizard was soon retired because of the controversy it created. A Jose Cisneros’ version that included a yucca plant, the mountains and the sun was introduced, but former city representative Stan Roberts introduced an ordinance that prohibited the city from retiring the Amigo Man in 1999. Although the Roberts ordinance kept the Amigo Man as the city’s official logo, it allowed the use of other symbols for marketing purposes.

The City of El Paso trademarked the “Let’s Be Amigos” logo in 2018 and abandoned the trademark in 2020. The city also trademarked an Amigo Man, a more stylized one in 2018 that remains valid today.

Although economic development planners understood and demonstrated that a global economy was the key to El Paso’s success, tourism remains the preferred vehicle, although it continues to be proven unattainable.

NAFTA, now the United States-Mexico-Canada Agreement (USMCA) is worth over $1 trillion dollars to America. El Paso lost badly in the trade agreement. According to the Texas Public Policy Foundation, a conservative think tank founded in 1989, by 1999, NAFTA had been “a boon to Texas cities”. Texas exports increased “by up to $16 billion” because of NAFTA and had “created over 190,000 export related jobs”. The “big winner” cities in Texas included Austin, Dallas, Houston and San Antonio.

El Pasoans point to “some 10,000 of its workers” being “certified as injured by NAFTA, more than any U.S. city” as an example of why NAFTA failed Americans. Yet, ironically, by 1999, El Paso had added $2.6 billion to its economy and created 38,000 jobs under NAFTA, according to trade data.

El Paso’s economy was perfectly suited to leverage NAFTA for economic development not only in tourism, as the gateway to México, but in positioning itself as the center of one of the largest trading blocs in the world today. However, while NAFTA was launching El Pasoans were busy lauding the border blockades.

El Pasoans soon realized the folly of ignoring NAFTA. While publicly, El Pasoans favored the border blockades, at the same time, they argued against building fences and walls along the U.S.-México border in the Anapra region. On one hand, lining the border with border guards to impede undocumented immigrants while opposing fences and walls clearly betrays the divided attitudes among El Pasoans about the city’s dependence on Cd. Juárez for the city’s economy.

It is this convoluted approach to Cd. Juárez that explains the failure of the city’s economic strategy.

Chasing Tourist Dollars with Sports Arenas

El Paso leaders continue to chase tourist dollars today through the belief that if El Paso builds enough sports arenas, tourists will flock to the city. In November 2021, Adair Margo wrote an op-ed letter writing that the controversial multi-purpose facility “is needed to enliven El Paso’s binational downtown, expand convention, and give purpose to historical buildings.” Conventions were again on the table for economic development. [12]

City officials likewise celebrated a court decision in 2018 allowing the city to proceed building the controversial sports arena. Dee Margo, then the mayor, said that “by allowing sporting events and the use of outside funding sources we can ensure this is a world class regional amenity”. Dee Margo was reenforcing the idea that El Paso’s economic future lay in attracting tourist dollars through sports amenities. [13]

A 2011 city-commissioned report acknowledged that El Paso’s economic development strategy remained ineffective. The El Paso Regional Economic Development Corporation (REDCo), the city’s “lead economic development organization” only had “a narrow range of economic development strategies: marketing and business attraction”. [14]

The 2011 city-funded economic report said that in 2011, “the situation in El Paso is urgent,” arguing that El Paso is “at the center of the largest international metroplex in the world,” but that city officials “as a whole lack an economic development strategy that fully recognizes, mitigates, and leverages” the dynamics of global trade. [14]

The controversy over the downtown sports arena and the threat of the gentrification of the Duranguito neighborhood, another too Mexican community for some, further demonstrates that the dependence on Juárez for economic development remains too uncomfortable for El Paso’s leaders.

The Regional Approach

As soon as the railroads arrived in El Paso they transformed El Paso’s economy. Although tourism allowed El Paso to economically benefit from its proximity to the border and, for a limited time, the vices of gambling and prostitution, El Paso’s economic future has always depended on México’s economy. In 1947, a regional approach based on global trade was already part of the discussion. El Paso could have taken a leadership role in NAFTA, but instead languished with political infighting and focused on the garment industry’s job losses. Every economic study for El Paso has shown that the regional approach around the global economy has been the key to economic growth. Nonetheless, El Pasoans ignore that reality.

A more recent $100,000 study into small businesses in El Paso in 2020 states that El Paso “operating as a region, cities within the area can offer a stronger and more diverse assets”. [16] But that would require publicly acknowledging that El Paso’s success lies in Juárez. [16]

Instead, El Paso’s leaders continue to focus on tourism through sports entertainment.

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We Would Not Ask If We Did Not Need Your Help

We are on a mission to deliver the news and information important to you. Information that no one else is covering. We believe that public policy is grounded on an informed citizenry. We provide information based on analytical analysis that is well-sourced to allow readers to understand the policy decisions that affects their lives. We keep our reporting open to give everyone access to our reports. We are self-funded. This allows us to be independent and we are not influenced by stakeholders on how and what we report.

However, we need your help to keep this resource available to everyone. The current model is not sustainable over the long haul. Your regular support allows us to fund the site and pay for the research we use to bring important topics to your attention. Support our project by making a small donation today.

We Would Not Ask If We Did Not Need Your Help

We are on a mission to deliver the news and information important to you. Information that no one else is covering. We believe that public policy is grounded on an informed citizenry. We provide information based on analytical analysis that is well-sourced to allow readers to understand the policy decisions that affects their lives. We keep our reporting open to give everyone access to our reports. We are self-funded. This allows us to be independent and we are not influenced by stakeholders on how and what we report.

However, we need your help to keep this resource available to everyone. The current model is not sustainable over the long haul. Your regular support allows us to fund the site and pay for the research we use to bring important topics to your attention. Support our project by making a small donation today.

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The El Paso Group for Economic Development Group Leaders
Larry Francis, mayor
Chuck Maddox, county judge
Major General James Cravens, Fort Bliss
Chuck Dodson, El Paso Foreign Trade Association
Hugo Bustamante, Greater El Paso Chamber of Commerce
Joe Lopez, El Paso Hispanic Chamber of Commerce
David Graham, chairman, Industrial Development Council
Nancy Heydemann, Public Service Board
Shawn McKenzie, Southwestern Bell Telephone
Alan Johnson, Southern Union Gas
Adriana Barrera, El Paso Community College
Diana Natalicio, University of Texas at El Paso
Jesse Alvarez, Expert Refrigeration
Patty Holland-Branch, PZH Contract Design
Milton Duran, International Financial Network
Jack Maxon, Jackson’s Restaurants
Gilbert Moreno, Inove International Services Group
Presi Ortega, Preso Ortega and Associates Insurance
Danny Vickers, EDM International
Ramiro Guzman, Dickshire Distributing
Joe Hanson, Hanson Development Corp.
Hector Holguin, Accugraph Corp.
Woody Hunt, Hunt Building Corp.
Mike Miles, Miles Group
Scott McLean, Texas Commerce Bank
Jim Philips, State National Bank
Randy Rolfe, Colombia Healthcare System
Bill Wise, El Paso Natural Gas Co.
Roberto Franco, Department of Economic Development
Raul Ramirez, El Paso Community College
Veronica Callaghan, El Paso Foreign Trade Association, Border Trade Alliance
Wes Jurey, Greater El Paso Chamber of Commerce
Art Fierro, El Paso Hispanic Chamber of Commerce
Ed Arhuleta, Public Service Board
Manny Pacillas, University of Texas at El Paso
Elia Mares-Purdy, World Trade Center
Source: Yvette Armendariz, “Group to identify city’s top needs,” El Paso Times, May 18, 1995.

Footnotes:

  1. Regional Stakeholders Committee, “The Paso del Norte Region, US-Mexico: Self-Evaluation Report,” OECD Reviews of Higher Education in Regional and City Development, The Paso del Norte Group, 2009.
  2. Jesus Cañas, “Texas Border Cities Illustrate Benefits and Challenges of Trade,” Southwest Economy, Federal Reserve Bank of Dallas, Fourth Quarter 2016.
  3. Aaron J. Montes, “El Paso unemployment rate remains higher than U.S.,” KTSM, February 28, 2022.
  4. “Texas Unemployment Rate Falls to 5.0 Percent in December,” Texas Workforce Commission, January 21, 2022.
  5. Sam Howe Verhovek, “Free Trade’s Benefits Bypass Border Towns,” The New York Times, June 23, 1998.
  6. Yvette Armendariz, “Group to identify city’s top needs,” El Paso Times, May 18, 1995.
  7. John M. Richards, “Farah Role Important In El Paso Economy,” El Paso Times, March 15, 1970.
  8. Belinda Román, “Ciudad Juárez-El Paso, The Formation of a Cross-border Market: Mexico-U.S. Economic Relations in Perspective, 1840s,1920s,” PhD Thesis, London School of Economics and Political Science, 2003.
  9. Nancy M. Battista, “The Case for Prostitution in El Paso, 1910-1929,” Thesis, University of North Carolina at Charlotte, 2019.
  10. “City Plan for El Paso Texas 1925,” City of El Paso, City Plan Commission, 1925.
  11. “Set Presentation,” El Paso Herald Post, June 19, 1976.
  12. “’Amigo Man’ Gives Tourist Handle On El Paso Sights,” El Paso Times, July 17, 1976.
  13. Adair Margo, “A falsehood has been spread nationwide about El Paso’s history: Adair Margo,” El Paso Times, November 5, 2021.
  14. Madlin Mekelburg, “Fight over whether proposed El Paso arena can have sports could go to Texas Supreme Court,” El Paso Times, December 1, 2018.
  15. Edward Feser, “El Paso Economic Development System Review & Recommendations,” City of El Paso, December 9, 2011.
  16. Dorothy Mae Box, “A Social And Economic History Of The El Paso Area,” North Texas State Teachers College, June 1947.
  17. “Accelerate/EP: Moving Small Businesses Forward, Final Report,” City of El Paso and University of Texas at El Paso, 2020.

1 reply »

  1. NAFTA or whatever it is now needs a new story. I remember in the 1980s when it was proposed that it called I-35 the NAFTA Superhighway with San Antonio as the next Miami, the crossroads of the Americas. Good idea and a young person could look at that and think that maybe there was a place for their life in that story. No more.

    For El Paso, NAFTA did become Ross Perot’s “giant sucking sound” for our industrial tax base that relocated across the Rio. Those jobs have been backfilled but mostly in warehousing and distribution. Just look at the line of trucks at the Zaragosa crossing to get an idea of how big it is.

    It was Beto who publicized the idea to his congressional colleagues that factories in their districts depended on parts from Mexico that passed thru El Paso, i.e., everything is connected now. He was right, too, and we are getting a painful lesson in global supply chain disruption due to COVID and now WWIII, maybe. Like it or not, El Paso and Mexico are joined at the hip and our futures are together, not separate. Too bad about the cartel thing.

    Now, if only there were enough water for that future…

    Like

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