McAllen, Texas, a border city that has spent the last two decades reversing its economic fortunes through jobs and trade with Mexico, is now being threatened by that relationship due to a surge in violence across the border, the Wall Street Journal reported May 4.
McAllen, an agricultural center that had a whopping 22.7 percent unemployment rate in 1990, revived its stagnating economy by encouraging multinational manufacturing businesses to develop on both sides of the border. Many white-collar workers travel from McAllen to nearby Reynosa, Mexico, to work in manufacturing plants, while McAllen increasingly came to rely on Mexican vacationers from Monterrey to bolster its retail sector.
A study by the Dallas Federal Reserve showed that for every 10 percent manufacturing increase in Reynosa, McAllen witnessed a 5.9 percent employment growth — one reason why it was the only U.S. city to see employment return to its prerecession level in the fourth quarter of last year.
With the city's destiny so intimately entwined with Mexico's, however, McAllen is feeling the burden of the upsurge in drug-related violence much worse than other U.S. border towns. Last year, businesses canceled night shifts, banned south of the border travel, and some trucking companies were forced to hire security convoys to guard their merchandise.
Tourism is also suffering. Vehicle traffic from Reynosa fell 31 percent during the typically-busy Easter weekend from the previous year, while hotel occupancy is down 20 percent from two years ago.
With unemployment still at 11.6 percent, McAllen is on a precipice, local officials said. “If the violence exceeds certain tipping points and people pull out of Mexico,” said Daniel B. Hastings Jr., who has a customs-brokerage business in McAllen, “I may have to look for another career.”