For a country whose reputation has been eclipsed by widespread reports of brutal killings and what appears to be an incessant drug war, there is another story that has been kept largely under wraps. This story is that of Mexico’s emerging middle class.
The international community’s perception of Mexico has generally been one of a country that is divided among the haves and the have-nots. However, in recent years, and due to various factors, Mexicans have been able to participate in a growing trend of upward mobility.
According to a World Bank Report, the middle class has grown by 50% in Latin American countries. More specifically, over the course of a decade in Mexico, 17% of the population has now joined the middle class.
While in America the middle class is defined by positioning within a tax bracket, in Mexico, it is defined by what products are consumed. Since the enactment of NAFTA in 1994, the retail sector has been expanded within Mexican borders – a fact that can be proven by the existence of the 32 Costco wholesale retail stores now in Mexico. On top of this, in the past year, Costco sales in Mexico have increased by 12%.
For the Mexican middle class, if a good is produced in the US, the assumption is that it is of a higher quality. Even though US produced goods tend to be more expensive than ones produced domestically, because the middle class’ spending power has increased, there is now a market for these goods within the country. Because of this very reason, American retailers such as Wal-Mart, Sam’s Club and Costco have now become more accessible and widespread throughout Mexico.
Furthermore, the US has sold more goods to Mexico than it has to Brazil, India, Japan and Britain combined. Also, according to data produced by the Bank of Mexico and the US Commerce department, trade has increased six fold between the US and Mexico since the enactment of NAFTA – more evidence that there is now a market within Mexico with the purchasing power to buy US made goods.
Another factor that is growing the Mexican middle class is the amount of remittances that are sent from the US to Mexico. Last year alone, around $23 billion was sent to Mexico from family members in America, a quantity that is larger than the combined investments that foreign multinational companies have in the country.
Apart from greater spending power, there are other factors that separate the emerging Mexican middle class from the rest of the country. First, people within this class tend to have fewer children. In 1960, Mexican women had a fertility rate of 7.3 children; now the rate is closer to 2.3 – a figure that is not much higher than the US fertility rate of 2.1.
Also, the majority of the middle class attends school for about 12 years, on average, compared to 6 years for the poor. Children are more likely to attend private schools for their primary and secondary education. Members of the middle class are also likely to pursue higher degrees, with Mexico graduating around 115,000 engineers every year.
On top of this, members of this class are likely to own their own home and be a part of a two-income household. In terms of earnings, they will make between $10 and $50 per person, per day.
While in previous years there was a sharp divide between social classes in Mexico, in recent years and with the emergence of the middle class, it’s become apparent that this is no longer the case. Looking forward, the middle class will serve to be the fuel that is needed to help Mexico continue on the path toward progress and prosperity.