The U.S.-Mexico border: under the economic lens and in the historical frame

us mexico border

By Jordan Young, Andrew Pollack and Megan Morales


In the United States, Hispanic immigration is one of the most salient socio-political issues discussed on the national level.  As such, it is surprising that it is a topic debated largely outside of the frame of history and with economic analysis that services emotional titillation more than lived reality.  Few that engage in the impassioned discourse of “us” and “them” recall how intertwined the histories of the United States and Mexico are and that the majority of what now constitutes the United States Southwest was, until 160 years ago, part of Mexico.  Equally lost are economic arguments that endorse the free movement of labor to meet market demands and how much of an impact this labor, documented or not, has on the national GDP.  The aims of this article are to rebut prevalent anti-Hispanic attitudes and legislation by grounding debate in the broader history of the U.S.-Mexico border and arguing the economic importance of, if not reliance on, Hispanics in the United States.


A shared wound: Manifest Destiny and the U.S.-Mexico border


Following its independence from Spain in 1821, Mexico sought a political system fit for a period in which the recently minted nation was vulnerable on two fronts: one, as Mexican leaders worked toward a form of government capable of overseeing vast portions of recently autonomous land, and two with the encroachment of an incipient expansionist country in the north on the horizon.  The results of this era left Mexico in a poor political, economic and social condition and marked the beginning of a long lasting feeling of resentment towards the United States.

When the Mexican-American War began in 1846, the two countries were in very different positions socio-economically.  During the two years of war, Mexico’s president changed seven times with the post of foreign minister changing ten times, relative to the United States who, though also in a dynamic period prior to the Civil War, brimmed with a single-minded focus to spread Anglo America.  Following the Monroe Doctrine of 1823 and in the midst of a rhetorically burgeoning Manifest Destiny, the United States had the symbolic and political tools necessary to win a prolonged war, even if it was outside of their known militaristic terrain.  Mexico, on the other hand, lacked a strong, centralized leader and struggled to fight against a nation with greater resources and a will for Pan-American expansion. 

The United States’ comparative age acted as one of its greatest assets. When Mexico gained its independence from Spain, they struggled to create a unified government well through the Mexican Revolution of 1910.  Mexican conservatives wanted to preserve the institutions that brought together their fragmented society, while liberals proposed radical economic and social reforms. The liberals sought to establish a federal state-based republic, while conservatives argued the need for a highly centralized government not dissimilar to a monarchy.  Between 1821 and 1847 alone, Mexico tested four types of government: a monarchy, a federal republic, and two forms of a centralized republic.[i]

During the same time period in the United States, a strong feeling of Manifest Destiny circulated throughout the country, allaying internal political differences with a sense of inevitable expansion.  For example, it was not until after the Mexican-American War and the fulfillment of Manifest Destiny that the Civil War began in the United States, its most prominent generals on both sides having fought together against Mexico just years earlier.  The main reason the two countries went to war was that both Mexico and the US wanted Texas and California. The United States wanted Texas for its agricultural production, especially cotton, while California was important due to its direct contact with the Pacific.

During the war, the United States invaded the North of Mexico, New Mexico and California.  After almost two years of struggle, the two countries lost approximately 38,000 soldiers, and Mexico was left in chaos.  U.S. Congress declared war on May 13,1846, and the United States invaded Texas Fort that day, which was preceded by the battle of Palo Alto on May 8.  It quickly became evident that Mexican troops would not be able to resist the cannon and artillery of the United States, and Mexican losses, during the battle, doubled that of soldiers fighting with the United States.[ii]

The war continued for two years and ended in 1848 with the Treaty of Guadalupe Hidalgo, through which the United States paid Mexico $15 million and agreed to a new border between the two nations set at the Rio Grande, the present day border between Texas and Mexico.  Mexico ceded what is now California, New Mexico, Arizona, Nevada, Utah and parts of Oklahoma, Wyoming and Colorado.  This was almost half of the land that comprised Mexico after independence.  It is sometimes thought that the leaders of the United States had an attitude of moral superiority in the treaty negotiations, which they leveraged to create a lasting military and political inequality between the United States and Mexico.  Due to the huge loss of land in the Treaty of Guadalupe Hidalgo, the United States created the very likely possibility that Mexico would experience an immediate future of underdevelopment, and, although the treaty promised U.S. citizenship to former Mexican citizens, many felt as if they were treated poorly and not equally to Anglo and original colony citizens.

The Mexican-American War caused a lasting tension between the two countries, one that continues into the post-NAFTA, globalized 21st century.  Still colloquially known as the American Intervention, for many Mexicans, the Mexican-American War marked not so much a moment framed by historical loss as a land grab.  On both sides of the border, a very much alive Mexican identity that predates, even, formal  nationhood continues to highlight what the social critic Gloría Anzaldúa has referred to as the “open wounds” of Manifest Destiny.  And these open wounds continue to frame the way immigration is discussed at the national level.


The cultural legacy of the Mexican Cession

Each year, 600,000 immigrants come to the United States; of those, 200,000 come without documentation.[iii]  While this largely leads to a negative perception of Hispanics in the United States, anti-Hispanic sentiment and legislation ignores both the history of the United States and the benefits of immigration.  In discriminating against immigrants from Mexico, who make up a great portion of the people who come to the United States, many do not realize that, prior to the Treaty of Guadalupe Hidalgo and the Mexican Cession, much of the United States Southwest was part of Mexico, and, because of this, many Mexicans and U.S. citizens identify with Mexican and Chicana culture.   Despite the fact that the government continually attempts to stop undocumented immigration and, in turn, creates prejudice against all immigrants, the Latin American community has grown immensely and is a crucial part of presently functioning U.S. society.At the conclusion of the Mexican-American War, the two countries signed the Treaty of Guadalupe Hidalgo, to this day the oldest treaty between the United States and Mexico.[iv]  The treaty changed the two countries in many ways and gave United States citizenship to any of the Mexican citizens who had been living in the lands of the Mexican Cession.[v]  Many problems have resulted due to the treaty and the Mexican Cession, however.  Though the inhabitants of the lands that changed hands were granted United States citizenship, most did not want to change from one nationality to another.  Their families continued to identify Mexico as their homeland and felt that the land was still Mexican.  This idea created the belief among many people still in Mexico that it was their right to live on the lands of the Mexican Cession even though, according to the legislation enacted by the Treaty of Guadalupe Hidalgo, it was no longer theirs.      

Over the course of the 1900s and into the 2000s, there has been a great deal of anti-immigration legislation, and much of it has specifically targeted undocumented immigrants in the areas of the Mexican Cession.  In the 1950s, undocumented immigration skyrocketed, leading to the ultimately ineffectual Operation Wetback of 1954, which attempted to stem the free flow of labor across the border through agreements set up between U.S. president Franklin D. Roosevelt and Mexican leader Manuel Ávila Camacho under the Bracero Program  (It is worth noting that the Bracero Program did not constitute a wholly successful deployment of labor and led, in many instances, to exploitative working conditions).  Over the course of the operation, more than a million people were deported from the United States to Mexico, and many United States citizens were also arrested.  After five years, the number of illegal immigrants dropped by 95%, to as low as 50,000 people by 1959.[vi]   Yet, following the end of Operation Wetback, the number of illegal immigrants rose once again, a trend that continues in the present day, indicating that the governmental operation, itself highly problematic and arguably racist if not unconstitutional, fought natural economic and humanitarian flows.

Today there is a great amount of racism and prejudice against immigrants, and Hispanics in particular, with a continued legislative counterpart.  One of the most controversial anti-Hispanic laws passed in recent years consists of  Arizona’s 2010, S.B. 1070, a law that takes away many basic rights from immigrants and discriminates against anybody who may appear to be an undocumented immigrant.[vii]  S.B. 1070 allows police to search and arrest anybody whom the police believe may possibly be in the country illegally based on “ocular evidence.”[viii]  Despite a great deal of local and national opposition, the law was approved due to the large presence of anti-immigrant prejudice in the United States, especially in areas close to the Mexican-American border that were part of the Mexican Cession.

The endorsement of prejudice at the governmental level exacerbates other forms of common bias.  Due to the prevalent prejudice that dates back to the Mexican-American War, there is a negative perception that all Hispanics are poor and undocumented.[ix]  Some argue that this perception is intensifying, as many of the immigrants from Mexico do not want to involve themselves in traditional communities after experiencing the poverty and corruption of Mexico, though others are quick to note that Mexican immigrants bring their own forms of community back to what was previously Mexican territory and are much more open to marrying people of other races and cultures than their white and black counterparts.[x]  Negative perceptions of Hispanic immigration is widespread and, in the future, will be difficult to change if state legislatures, such as Arizona’s, continue to endorse a historically blind racism as an official governmental stance. One of the things that many people do not realize is the transnationalism that exists in the lives of immigrants.  When both documented and undocumented immigrants come from Mexico, they do not forget their culture and customs, customs that in many cases predate the Mexican Cession and the Treaty of Guadalupe Hidalgo.  A form of amnesia that clashes with the national myth of the “melting pot” comes in the fact that practically all United States citizens have family that have immigrated from another country at one point in history, if not recently.[xi]  The irony is that European immigrants do not have the original territorial claim to the present day U.S.-Mexico border that Mexicans do. 

The border between the United States and Mexico, when accounting for income disparity, is one of the most fraught in the Western Hemisphere, and, the massive amounts of immigrants who come to the United States will continue.  Since the Mexican American War in the 1840s, many Mexicans have lived in the United States and feel that they have as much of a right to live in the U.S. as anyone.  Many do not have the means to come here legally and therefore, in search of a better life and economic opportunity, cross the border as undocumented workers.  There is an extremely poor perception of these immigrants throughout the country, despite the historical precedent that what we umderstand as Mexican culture predates shifting national borders and that it is clear that, without immigrants, many areas of the country and many industries would be lost.             


The economic argument not being made


Undocumented labor contributes $395 billion to the U.S. economy every year.  If undocumented labor in the United States, largely Hispanic, were its own country, it would have the same sized national economy as Sweden and rank ahead of countries such as Switzerland, Austria and Singapore.  It would be bigger, in terms of GDP, than the economies of Ireland and Qatar combined.  Admittedly, it would be misleading to imply that this is a sole benefit to the national ledger.  Undocumented laborers use public services, and the immediate financial benefit typically stays within undocumented communities.  Yet, the two most dominant anti-immigration arguments made under the guise of economics, that of the immigrant that takes more than he contributes and that of the immigrant that takes jobs from citizens, lose steam in the face of economic analysis. 

On May 1, 2006 thousands of immigrants protested their rights on a day called “Un Día Sin Inmigrantes.”  The protest included participants from more than 50 cities, in an effort to demonstrate the immigrant’s economic importance to the United States.  The economic boycott included a widespread refusal to go to work and attend school, resulting in a drop in economic output that highlighted the economic importance of undocumented labor in the U.S.  There are many historical and humanitarian arguments to be made in favor of Hispanic immigration to the U.S., but this section focuses on what is typically viewed as a political trump-card of sorts, that of economics. 

Immigration reform has been a fundamental theme in U.S. politics, in recent years.  While the U.S. is in favor of immigration, the increase in undocumented immigration has given border-crossing a negative image.  There are around 11.5 million undocumented workers in the U.S. today, and 87% of undocumented immigrants have been living in the U.S. for more than 7 years.  Basic rules of macroeconomics tell us that as long as there are better opportunities existing in the U.S., immigration and the number of undocumented immigrants will continue to rise. 

Yet, the other side of the argument, or so it goes, is that many undocumented immigrants use social programs, such as hospitals and schools, which costs taxpayers money and contributes to the national deficit.  Undocumented immigrants put their children in public schools, which are funded by government tax revenue.  In addition, undocumented immigrants use U.S. roadways and utilities.  But do illegal immigrants actually hurt the United States more than they help it? 

As previously mentioned, undocumented workers add to the aggregate economy by $395 billion a year.  Even in the strictest view, that is if we take for granted that the majority of the jobs that immigrants do could be done by U.S. citizens and account for the use of public services and goods, undocumented immigrants contribute a net gain to the national economy by $9 billion a year.  That number becomes much larger, when considering that immigrants fill a void in the contemporary U.S. labor market, instead of “taking away jobs.”   Two prevalent changes have occurred in the U.S. labor market over the previous two generations: one is that workers without a high school diploma have decreased greatly; the other is that the Baby Boomers are retiring, especially from blue-collar jobs, more quickly than they can be filled.  Immigration expert Gordon Hanson claims, “Over the past century, improved education and skill training in the U.S. has meant that low-skill and low-wage jobs have gone unfilled by U.S. natives, while immigrant workers are filling in the gap.”

Some argue, furthermore, that undocumented immigrants benefit the economy much more than these numbers, seen in their most conservative light, imply.  An economic argument typically waged against undocumented immigrants in the United States is that they do not pay taxes but still use governmental resources by way of social programs.  For instance, immigrants that do not have the legal documents are unable to pay income tax.  This line of thought ignores the fact that they pay many other forms of tax.  While only half of undocumented immigrants paid any federal tax in 2010, they still paid 11.2 million in other forms of payroll tax. And many undocumented laborers pay into governmental programs to which they will never have access, creating a lopsidedly positive return for those programs.   According to the Social Security Administration, for example: Over the years, undocumented workers have contributed up to $300 billion, or nearly 10 percent, of the $2.7 trillion Social Security Trust Fund. They only take out $1 billion (very few undocumented workers are eligible to receive benefits). Over the years, undocumented workers have contributed up to $300 billion, or nearly 10 percent, of the $2.7 trillion Social Security Trust Fund.”  Yet, the argument to the contrary goes that undocumented labor marks a great loss or reduction in government revenue for the U.S.  

Jobs are the ultimate reason that people immigrate to the U.S., and cost of labor is one of the fundamental parts of both national macroeconomics and day-to-day small and large business operations.  Employers are often tempted to hire undocumented immigrants because they accept lower wages than legal residents for the same services, which lowers operating costs and increases profits. Undocumented workers cut down on wages, because contractors are attracted to the ease of paying low prices for labor.  The reduction in wages, however, often occurs regardless of whether the immigrants are documented or undocumented, permanent or temporary.  Contrary to cultural and racial claims made against the presence of immigrants in the United States, in economic terms, it is the mere presence of additional workers that reduces wages, whether they are in the country legally or not.

Imagine if undocumented immigrants were suddenly stripped from the U.S. labor force.  Many service-oriented businesses would face a shortage of workers and employers would be forced to find native-born replacements, a struggle as the previously presented demographic shift indicates.  Undocumented workers tend to accept a wage established by employers, which in turn is established by an unregulated market.  Therefore, employers have an incentive to hire undocumented workers who lack governmentally backed bargaining power because they can offer a minimal wage without question.  As a result, qualified native-born workers are faced with the option of accepting lower wages or not working.  Undocumented workers mainly compete with similarly skilled adults without a high school diploma, a rapidly shrinking demographic in the United States. 

Paradoxically, it has been the right-wing in the United States that has argued against immigration, while the economics of the issue play soundly into the conservative narrative of economic liberalism.  In drawing a distinction between “legal” and “illegal” workers, the U.S right-wing belies what is arguably the United States’ clearest example of free market economics: labor, regardless of borders or cultural difference, finding its market with wages settled outside of governmental oversight.  Undocumented labor, it could be argued, represents the free market in its purest form.  Our intention is not to roundly endorse free market economics here, nor do we wish to gloss the inherent problems in a labor force weakened of its bargaining power, but to highlight the paradoxical way in which economic arguments surrounding undocumented labor play out at the political level.

Free market proponents might, instead of opting for cultural jingoism, see economic benefit.  One argument could go like this.  As a result of undocumented labor, construction industry contractors no longer have to pay higher qualified, yet no better skilled, professionals to perform basic tasks.  The use of undocumented workers reduces construction costs, therefore increasing the number of job orders within a company.  Thus, if one company hires an undocumented workforce, all companies are forced to participate in order to be competitive in the industry.  If operating costs reduce, there are more opportunities for customers and more revenue for companies, not to mention more tax generated for state and federal governments.  If undocumented immigrants were not hired as construction workers, prices would increase from a surge in labor costs.  The change in employment would force employers to increase their service costs without any noticeable improvement in the service quality.  Contractors would be forced to explain the price increase, which would prevent customers from purchasing their products or services.  This is not so much a hypothetical situation as what has been occurring for decades.

The hiring of undocumented workers, of course, comes with risks and rewards.  It is true that the employment of undocumented immigrants is illegal in the U.S. and, in recent years, the Department of Homeland Security has cracked down on employers who hire undocumented immigrants, mandating hundreds of companies to submit their employment data for the inspection.  Under the Obama administration, officials have begun targeting the hiring of undocumented immigrants and shifting focus to employers rather than workers.  It costs a little more than $23,000 to capture, process, and transport an individual in the process of deportation, and since January 2009, the Obama administration has audited at least 7,533 suspected patterns of illegal hiring practices and issued $100 million in administrative fines and penalties, exceeding the sanctions imposed during all the presidency of George W. Bush.

The administrate costs to police the movement of labor markets are costly both to individual companies – one could view these fines as a de facto tax – and the government.  Instead of focusing on narratives of social services and infrastructure cost, economic analysis indicates that more attention should be paid to the cost of policing the natural macro-economic flows of labor finding its market, and this money could be better served by issuing visas with a path to citizenship to needed workers, bringing these undocumented immigrants above board.  No doubt, free-market economics and driving wages down to their lowest possible point present their own set of social problems, and ungoverned labor, as it did during Bracero Program, can lead to exploitation.  But the economic arguments waged against Hispanic immigrants, much like those arguments against their historical and cultural claim to the U.S. Southwest, ring hollow in the face of objective analysis. 


This article is the product of a collective study undertaken in Dr. Brantley Nicholson’s Latin American politics course at the University of Richmond (USA).

[i]Griswold del Castillo, Richard. “Treaty of Guadalupe Hidalgo.” PBS. N.p., 14 Mar. 2006. Web. 4 Apr. 2013. <>.





[iii] Espenshade, Thomas J., and Charles A. Calhoun. “An Analysis of Public Opinion toward Undocumented Immigration.” Population Research and Policy Review: 189-224. JS. Web. 21 Mar. 2013. <>.


[iv] Griswold del Castillo, Richard. “Treaty of Guadalupe Hidalgo.” PBS. N.p., 14 Mar. 2006. Web. 4 Apr. 2013. <>.


[v] Ibid.


[vi] Espenshade, Thomas J. “Unauthorized Immigration to the United States.” Annual Review of Sociology: 195-216. JSTOR. Web. 21 Mar. 2013. <>.


[vii] “Is Arizona’s Anti-Illegal Immigration Law, S.B. 1070, Constitutional?” Supreme Court Debates. Vol. 15. N.p.: n.p., 2012. N. pag. Academic Search Complete. Web. 4 Apr. 2013. <>.


[viii] Ibid.


[ix] Davies, Ian. “Latino Immigration and Social Change in the United States: Toward an Ethical Immigration Policy.” Journal of Business Ethics: 377-91. JSTOR. Web. 21 Mar. 2013. <>.


[x] Ibid.


[xi] Jones-Correa, Michael. “Transnationalism and Dual Loyalties.” Woodrow Wilson International Center for Scholars. Migration Policy Institute, n.d. Web. 25 Apr. 2013. <>.