The New Poor

By John Farmer, KF 14, Mexico

I recently suggested to some friends that we go for a walk in Chapultepec Park on a Sunday afternoon. They didn’t like the idea, because that’s where the poor people go on the weekends.

“The poor?” I responded. I’ve spent quite a bit of time in parts of Latin America where you can identify the poor easily. The children are malnourished and grubby and the parents have an appearance of desperation. The “poor” in Chapultepec don’t look desperate.

You can find the desperately poor in and around Mexico City, but not so much in the city’s center, which looks more like Europe than Latin America. Still, here amid the colonial buildings and modern high-rise structures, the fabric of the economy is rapidly changing. Traditionally the male head of household worked while the woman raised the children. Anymore, with falling salaries and a growing cost of living, most families find that both partners must work to make ends meet.

The percentage of middle class families in Mexico has dropped sharply in recent years, from over 50% in 2006 to below 40% in 2008, while the number of those living below the poverty line has grown sharply. The situation of the New Poor in Mexico is a frequent topic of discussion here.

Mexico was hit hard by the recent recession, with a decline in GDP roughly equal to that in Greece. Though official statistics peg unemployment at around 5%, common knowledge is that severe underemployment is more like 25%. One nice thing about the economy here — if you lose your job, you can always hawk cheap items on the street or in the subway. You might earn one tenth of your former salary, but you won’t exactly be unemployed.

My friend Lucia says her family belongs to The New Poor. They were much better off two decades ago when she was a little girl. In the mid 1990s, the peso underwent a sharp devaluation and all of a sudden families found that their incomes didn’t go nearly as far as before. Her father has owned his own plumbing business as long as Lucia can remember, and had to economize creatively to keep the business afloat and continue to employ his most faithful workers. Her mother became much more involved in administering the business, freeing up her father to do much of the work that he formerly administered. Soon after that her grandfather died, and one family member took advantage of the situation and cheated the others out of their inheritance, leaving Lucia’s family in the financial situation of living day-to-day with no cushion.

Just about everyone I meet has stories like this, of how the combination of economic shake-ups and rip-offs have left their family in dire straights.

But their middle class habits have helped them manage: all four children attended university despite having to work, compete for scholarships and take out loans. They all have jobs, though none earn particularly well, and even the 35 year-old still lives at home. Lucia told me her story a few days before I saw her home for the first time. What I saw was not quite what I expected — her brother the veterinarian had just purchased a new 46-inch TV, they have several cars, the latest cell phones and there are four bedrooms. They work harder and worry more than before, but where are the distended bellies and looks of desperation? Poverty is relative…

John Farmer is a Kiva Fellow at CrediComún in Mexico City. He is quite poor by some standards, but still makes loans through Kiva.