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The Informal and Underground Economy of the South Texas Border

The Informal and Underground Economy of the South Texas Border

This first comprehensive, multidisciplinary, longitudinal study of the “off-the-books” economic systems that fuel the Laredo-to-Brownsville corridor examines the complex repercussions of these legal and illegal forms of border commerce.

Series: Jack and Doris Smothers Endowment in Texas History, Life, and Culture, Number Thirty-six

November 2012
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351 pages | 6 x 9 | 1 map, 20 illus., 17 tables |

Much has been debated about the presence of undocumented workers along the South Texas border, but these debates often overlook the more complete dimension: the region’s longstanding, undocumented economies as a whole. Borderlands commerce that evades government scrutiny can be categorized into informal economies (the unreported exchange of legal goods and services) or underground economies (criminal economic activities that, obviously, occur without government oversight). Examining long-term study, observation, and participation in the border region, with the assistance of hundreds of locally embedded informants, The Informal and Underground Economy of the South Texas Border presents unique insights into the causes and ramifications of these economic channels.

The third volume in UT–Pan American’s Borderlife Project, this eye-opening investigation draws on vivid ethnographic interviews, bolstered by decades of supplemental data, to reveal a culture where divided loyalties, paired with a lack of access to protection under the law and other forms of state-sponsored recourse, have given rise to social spectra that often defy stereotypes. A cornerstone of the authors’ findings is that these economic activities increase when citizens perceive the state’s intervention as illegitimate, whether in the form of fees, taxes, or regulation. From living conditions in the impoverished colonias to President Felipe Calderón’s futile attempts to eradicate police corruption in Mexico, this book is a riveting portrait of benefit versus risk in the wake of a “no-man’s-land” legacy.

  • Preface
  • Acknowledgments
  • Introduction
  • Chapter 1: Culture, Structure and the South Texas–Northern Mexico Border Economy
  • Chapter 2: Underground Economic Activities
  • Chapter 3: Informal Economic Activities
  • Chapter 4: Informality and Undocumented Workers
  • Chapter 5: Informal Cross-Border Trade
  • Chapter 6: Border Colonias: Informality in Housing
  • Chapter 7: The Informal Health Care Economy (with Dejun Su)
  • Chapter 8: Family and Welfare Informality (with Amelia Flores)
  • Conclusion
  • Appendix A: Borderlife Survey Research Projects Utilized in This Volume
  • Appendix B: Names of Students Who Contributed Ethnographic Accounts
  • Notes
  • Bibliography
  • Index

Chad Richardson is Professor Emeritus of Sociology at the University of Texas Pan American. His previous books are Batos, Bolillos, Pochos, and Pelados: Class and Culture on the South Texas Border and On the Edge of the Law:Culture, Labor, and Deviance on the South Texas Border.

Michael J. Pisani is Professor of International Business at Central Michigan University and is also affiliated with the Julian Samora Research Institute at Michigan State University. His research emphasizes cross-border business within Central America and the U.S.-Mexico borderlands.


The people of South Texas are amazing. Like population groups everywhere, they have their mix of saints and scoundrels. We have found, however, a far heavier mix of individuals at the saints’ end of the continuum than one might find in many other locations. We admit to a bias in this conclusion, though it is a bias borne of extensive research and some very poignant personal experiences over a period of more than thirty years. Our challenge has always been not only to understand, but to hold back our own biases and let the people of the region tell their own story.

We have devoted a lifetime of academic study to the South Texas border region, which in 2010 comprised over 1.5 million inhabitants. Yet South Texas, both in Texas and within the nation, is often overlooked, disparaged, and regarded as a backwater—even an embarrassment. We believe that, to the contrary, South Texas is a vibrant region full of life and hope. It is essential that academicians, as well as political and economic leaders, understand this people and their borderlands location. Latinos are the overwhelming majority in South Texas and the soon-to-be majority population in Texas and many other regions besides the U.S.-Mexico border. We believe, then, that the tapestry of contemporary life in South Texas is a harbinger in many ways for trends elsewhere in the United States.

This book is the third in a series of monographs (all published by the University of Texas Press) exploring contemporary life in South Texas. The previous two books explored culture and cultural beliefs, class, race relations, ethnicity, immigration, education, health, criminal behavior, and labor issues. In this volume, we explore informal and underground economic activities that are generally overlooked or demonized. As with our previous efforts, we seek to share informed insights that may benefit students, academics, and policy-makers interested in the borderlands and Latinos within a unique region of Texas.

The present book, as well as its two preceding companions, is possible because of an innovative approach to teaching and research that officially began in 1982 with the Borderlife Project. Early in his appointment at the University of Texas-Pan American1 (then, Pan American University), the first author, Chad Richardson, engaged locally embedded students to undertake ethnographic field interviews of family, friends, and members of social networks to document the life experiences of borderlanders in South Texas/Northern Mexico. Thirty years later, the Borderlife Project Archive now houses over ten thousand in-depth interviews and ethnographies, and an additional 6,000-plus survey responses. Recently, an outside evaluator estimated the economic value of the archive at two million dollars. Work is currently underway at the University of Texas-Pan American (UTPA) to make the context-rich archive accessible through the internet to outside investigators.

The greatest value of the Borderlife Project, however, is not its monetary significance but its impact in the lives of students, researchers, and research subjects touched by the Project. From the storyteller to the student, from the reader to the researcher, the Borderlife Project provides convergent space. Storyteller and student often reflect on the importance (and personal reward) of documenting their experiences. Readers from South Texas and beyond marvel at the intimacy of context bounded by empiricism that the archive provides in the two initial publications, Batos, Bolillos, Pochos, and Pelados and On The Edge of the Law. We hope this third volume accomplishes the same purposes.

The second author, Mike Pisani, has been fortunate enough to have served in three of the previously mentioned roles, first as a student of Professor Richardson’s at UTPA in the 1990s, then as a reader of his books, and then as a researcher employing a version of the Borderlife methodology for a time in Laredo (and utilizing the Borderlife Archive at UTPA). One of the joys of a teacher using the student-ethnographer approach is the deeper connection between subject matter and student and the increased learning commitment between student and teacher.

The nexus of ethnography and empiricism and the successful integration of each research design (i.e., qualitative, quantitative) is rare in the academy. Borderlife researchers have offered these timeless gifts to students and to the coauthors.

The genesis of the current book can be traced to a meeting of the coauthors at UTPA in May of 2006. While the meeting ostensibly was about sharing current and independent research projects, it quickly moved to one of collaboration. As a comprehensive study of informality or the underground economy in South Texas had yet to be produced, we decided to undertake the research for and the publication of the current volume.

As coauthors, we share the common ground of having lived and worked not only on the border but in Mexico and Central America as well. We also have personal experience working with migrant farm workers in the U.S., teaching at both the community college and university level, and affection for South Texas. These points of commonality have made this joint effort fun, collaborative, and easy-going. We also hope our different academic approaches and disciplines (sociology and international business) enrich this volume.

Growing up in the Valley is not the easiest thing to do, especially when you’re a pale, blonde-haired white girl. The population is about 90% Hispanic, and the majority of residents are bilingual. My family moved to this unique part of the world in 1989 when I was in fifth grade. It was a tough adjustment, as I did not speak Spanish and had a west Texas accent. It was a difficult transition and a major case of culture shock. I remember a small group of kids in my class who were dropped off at school in Jaguars, Mercedes Benz, and BMWs. They all had the nicest designer clothes and trendy haircuts. When someone asked them their parent’s jobs, they could not, for the most part, come up with a job title; they had no idea what their parents did for a living. I thought I was really smart because I knew exactly what my parents did for a living. As I grew up, I began to realize that drugs were a big part of Valley culture. Drug money had bought those big, fancy cars and designer clothes. I wasn’t at all smarter than my classmates—they just didn’t have a word for what their dads did.

So, for my course project, I decided to interview one of them. I had been to his house before to buy drugs. As I pulled up to his house, he walked to the car and asked “How much?” He is now 25 yrs old. He dropped out after seventh grade. His family has lived in the same colonia (rural slum) for almost his entire life.


As visitors pause to reel in the sights, sounds, and smells of South Texas, many of the daily activities they sense may originate in the informal and underground economy. The hustle and bustle of a flea market or the serenity under a shade tree often finds vendors and workers operating informally—outside the range of government regulations—selling their wares or labor with little government authority or protection. Closer to the Rio Grande, the clandestine movement of people and illegal drugs are common underground activities. In this volume, we will document the informal and underground economy of South Texas with survey data and life stories of those who participate in informal and underground economic activities. In addition, we will relate these micro-level activities to macro-level factors of the larger global economy.

It would be well also to relate current informal and underground activities to the larger historical context. Perhaps no regional historical figure better connects the dots of this volume than Juan Nepomuceno Cortina, the quintessential informal/underground South Texas–Northern Mexico borderlander. Cortina was born in 1824 in Camargo, Tamaulipas, Mexico, across the river from present-day Rio Grande City. Camargo, the first settlement on the Lower Río Grande, was founded in 1749 by Cortina’s great-great grandfather, Blas María de la Garza Falcón. At Cortina’s birth, the Rio Grande was not a boundary, but simply a river running through the lower Rio Grande Valley.2 Even after Texas declared independence in 1836, his homeland on both sides of the river was not part of Texas (though Texans agitated to have it declared so). When President Polk sent American troops into this disputed territory to provoke a war on May 8, 1846, Cortina, a corporal in the Mexican militia and a rancher with lands on both sides of the river, joined with other Mexican residents to unsuccessfully fight off the invaders in the battles of Palo Alto and (the next day) Resaca de la Palma, the first battles of the U.S. war against Mexico. In the three decades that followed, Cortina fought over 30 other battles and skirmishes without being wounded.

One of Cortina’s contemporaries, John S. (“Old Rip”) Ford, had a love-hate relationship with Cortina. He described Cortina, on the one hand, as possessing high native intellect and behaving toward enemies with a clemency worthy of imitation. On the other hand, he also depicted him as being more willing to fight than to learn to read and write and a “marauding chief . . . a frontier pirate, a notorious champion . . . and the Red Robber of the Rio Grande.”

Ford, who repeatedly faced Cortina in battle, described one skirmish where his forces defeated Cortina’s small army near Rio Grande City. “Cortina was the last to leave the field,” he stated. “He faced his pursuers, emptied his revolver, and tried to halt his panic-stricken men.” When Ford ordered his men to fire at Cortina, “one shot struck the cantle of his saddle, one cut out a lock of his hair from his head, a third cut his bridle rein, a fourth passed through his horse’s ear, and a fifth struck his belt. He galloped off unhurt.”

This battle was one of many in the “Cortina Wars,” a series of battles in which Texans largely failed to stop cross-border raids by Cortina and his small army. Many of the raids were against Texas ranches and aimed to steal cattle and horses. James R. Douglas, a Cortina biographer, claimed that Cortina did engage in extensive cattle rustling, but he also maintained that “. . . such behavior was not at all unusual among the populace, both Mexican and American, along the Lower Rio Grande.” Douglas continues, “Just as the Texans used the courts to take Mexicans’ lands, or violence to subdue them, so did Juan Cortina resort to violence to defend his dignity and rights. Simply put, Juan Cortina behaved more like the wealthy and powerful Anglos of South Texas than most observers have cared to admit.”

One incident that illustrates this portrayal and that led to the Cortina Wars occurred when Cortina witnessed the Brownsville town marshal, Robert Shears, viciously pistol whipping an elderly Mexican ranch hand who had worked for Cortina’s mother. When Cortina intervened, the marshal insulted him. Cortina shot and wounded the marshal and then lifted the injured Mexican onto his horse and rode out of town to the cheers of Mexican witnesses. Three months later, Cortina led 75 men into Brownsville and killed two men who Cortina accused of having killed Mexicans with impunity. He also killed the jailer who refused to open the jail and then freed the prisoners.

For two months, Brownsville residents lived in fear of another raid by Cortina. Unable to get help from Austin or the U.S. Army, they appealed to Mexican authorities in Matamoros. Thompson relates:

In response, Matamoros authorities sent a company of fifty militiamen across the river to help defend the town. Brownsville residents watched in awe as Mexican soldiers crossed the Rio Grande to Texas to protect United States citizens from an irregular army of Mexicans being led by a man who considered himself a United States citizen and who had once been a member of the Matamoros militia that now came to protect his enemies. In Austin and Washington it all seemed very confusing.

Soon thereafter, both Mexico and the United States were gripped by major civil wars; in the U.S., between the North and the South, and in Mexico, between the aristocrats who, with the French, supported the Imperialist monarchy of Maximilian, and Mexicans who supported the elected president, Benito Juárez. Both wars soon came to the South Texas–Northern Mexico borderlands. The Confederacy sought to break a Northern blockade by shipping cotton (and importing arms) overland through South Texas and across the Rio Grande to and then out from the Mexican port of Bagdad (near Matamoros). Cortina joined the Union forces, helping them take Brownsville in their (unsuccessful) efforts to end the blockade-busting cotton trade.

Cortina also got heavily involved in the war in Mexico. The French had driven Benito Juárez and his army to the Texas border. Cortina captured and executed the Tamaulipas governor who had pro-Imperialist loyalties. He skillfully played the opposing sides (in both wars) to his advantage, eventually becoming a governor and military commander in northern Mexico. For a brief time, Cortina switched loyalty to the Imperialist cause, though it is unclear whether he did so (as he claimed) as a tactical maneuver to save his army and his artillery to fight again, or because the Imperialist forces seemed to be on the point of winning the war. After six months, he switched support back to Benito Juárez. He recovered arms he had hidden and contributed significantly to the defeat of the French-supported Imperialist army.

At the close of these two wars, Cortina’s power began to ebb. After the death of Benito Juárez, he lost the governorship of Tamaulipas, though he continued as mayor of Matamoros. He returned to his practice of stealing Texas cattle, gaining the reputation of having stolen more Texas cattle than any other individual. Texas Rangers retaliated by invading Mexico, burning villages, and indiscriminately hanging Mexican citizens. Eventually, under pressure from the U.S. government, Mexican president Lerdo de Tejada arrested Cortina and imprisoned him in Mexico City.

Never one to give up, Cortina managed to align himself with Tejada’s enemy, Porfirio Diaz. With the help of Diaz, Cortina returned to Tamaulipas to battle the Tejada forces. Though he eventually defeated the Tejada army in Reynosa and Camargo, another Diaz general, Miguel Blanco, attacked and defeated the Tejada army in Matamoros. Cortina and Blanco soon became bitter rivals, however. Blanco managed to arrest Cortina and ordered him shot. Cortina’s old friend/enemy, Rip Ford, crossed the river to successfully plead for leniency. Porfirio Diaz, under pressure from the Americans to rid the border of a “cattle thief” and to avoid a fight between two of his caudillos, had Cortina again arrested and imprisoned in Mexico City. He remained under arrest there for 16 years until his death in 1894.

This brief account of Juan Cortina helps illustrate several points we will return to throughout the book. First, informality and underground economic activities are well entrenched and have a long history on the South Texas border. We will make the point (with supporting evidence) that the South Texas borderlands have one of the highest rates of informality in the United States. This long history dates back to when the border came to South Texas, as described in the Juan Cortina episode. Indeed, the ability of the Confederacy to smuggle cotton through Mexico and on to Europe (as well as smuggling arms and ammunition) had a profound effect not only on South Texas but on the rest of the United States and on Mexico.

Second, informality seems to increase when economic and political institutions are not generally regarded as legitimate. If individuals see state intervention in their lives (taxes, regulation of their property, fees, licenses, inspections, etc.) as illegitimate, they often rebel or turn to informal activities, as did Cortina. In democratic societies, individuals accept governmental intrusion in their lives to the extent that they believe it is fair, evenly applied, and capable of contributing to the general welfare. Juan Cortina experienced invasion of his homeland, oppression of his fellow Mexicans and Mexican Americans by Texas and federal authorities, and state-supported land grabs—actions that produced deep resentment, rebellion, and underground economic activity (e.g., cattle rustling). In the early twentieth century, the Mexican-origin people of the “Nueces Strip” (South Texas) continued to experience brutal repression by Texas Rangers and then disenfranchisement at the voting booth, segregation, and inequality of opportunity in the marketplace.

Third, merchants and residents of the borderlands often benefit by evading, manipulating, or selectively playing the laws of one nation or faction against the other. Border merchants in Cortina’s time were able to exploit the laws of several nations to their advantage. One historian of the Civil War and the Valley, James A. Irby, for example, comments,

For France, the Rio Grande trade was especially perplexing. Although Confederate cotton was indispensable to French looms, munitions had to be kept from Juárez. Therefore France did everything possible to promote the exportation of cotton and prevent the importation of arms unless assured they were for the Confederacy. The United States, meanwhile, made every effort to stop cotton exportation, but in sympathy with Juárez, permitted the passage of munitions to him. In this situation, the speculators again took full advantage of their opportunities.

A fourth point we wish to introduce here is that South Texas–Northern Mexico borderlanders have often had to maintain somewhat divided loyalties. When they are unable to count on their respective national governments for aid or when these national governments make decisions that hurt them, they often turn to each other, using informal arrangements to solve local problems (as did Brownsville residents in asking Matamoros to help against the attack by Cortina). Today, the communities along both sides of the Rio Grande/Bravo border, for example, have united to condemn and oppose the border wall.

Finally, Cortina’s story reminds us that there are no easy answers as to the morality of informal and underground activities. From a distance it is easy to label those who, like Cortina, engage in informal or underground activities as “law breakers.” The harsh rhetoric against undocumented workers in the United States today is one example of this, as are the strong denunciations of Juan Cortina as “a cattle thief” and “a bandit.” Such rhetoric, however, hides the fact that people in power are often able not only to manipulate definitions of morality, but also the laws that allow them to exploit or steal with impunity. Many South Texas ranches, for example, were built in Cortina’s day when Anglo ranchers colluded with Anglo politicians to pass property tax laws on unsuspecting Mexican-American landowners. They would then foreclose on the land and buy it in auctions open only to themselves. This is the point that historian Douglas (quoted earlier) makes when he says, “Texans used the courts to take Mexicans’ lands, or violence to subdue them . . .” He further points out that Juan Cortina’s resorting to violence to defend his dignity and rights made him similar to the wealthy and powerful Anglos of South Texas, though history counts his enemies as the heroes and Juan Cortina as a villain.

Today, those who condemn undocumented (informal) Mexican workers and call them “illegal aliens” ignore the fact that there are few legal avenues through which poor Mexican workers can fill the insatiable demand for cheap labor in the United States. Similarly, when the poor experience significant health problems, most have no health insurance, and conventional (formal) health care is out of their reach. As a result, many self-medicate, get prescription medicine in Mexico without seeing a doctor, or visit folk practitioners. Informality is one of their few options. While we, the authors, do not wish to condone informal and underground activity, we also do not wish to too quickly condemn it. In many cases, informality is one of the few avenues open to the poor and powerless.

Our Geographical Focus: The South Texas–Northern Mexico Borderlands

The land that Cortina and his compatriots sought to preserve (and regain) as part of Mexico was called the “Nueces Strip.” When Mexico gained its independence from Spain in 1821, the Nueces River was the official boundary between Tejas and Tamaulipas (formerly Nuevo Santander). The Strip included the land south of the Nueces River to the Rio Grande, encompassing everything from present-day Laredo and on to the mouth of the Nueces, just south of present-day Corpus Christi. Even maps used by Stephen F. Austin to attract settlers to Texas showed the southern boundary of Texas as the Nueces River. When Santa Ana was defeated, he was captured and forced to sign the Treaty of Velasco, which named the Rio Grande as the southern boundary of Texas. Mexico, however, refused to concede that the Strip was or ever had been part of Texas. The treaty was never ratified or accepted by the Mexican congress.

Today, this region is not only a land bordered by two rivers and the Gulf of Mexico, but a distinct historical and cultural region (see Figure I.1). Daniel D. Arreola calls it the Tejano homeland. He states, as the underlying assertion of his book, “. . . Mexican South Texas is a distinctive borderland, unlike any other Mexican American subregion.” One of our underlying assertions in this book is that this distinctiveness is closely tied to the high level of participation in the informal and underground economy of South Texas. To understand this distinctiveness and how it is related to informality, we will briefly describe the two major sections of this region: Webb County (which includes Laredo) and the Lower Rio Grande Valley (LRGV).

While most of the Spanish settlements along the Lower Rio Grande River were on the southern bank (Matamoros, Reynosa, Camargo, and Mier), Laredo was mostly on the northern bank when originally settled in 1755. In 1846, Zachary Taylor led U.S. troops into Laredo and declared it part of the United States. When the Treaty of Guadalupe Hidalgo ended the war with Mexico in 1848, the Rio Grande River was finally established as the southern boundary of Texas. Residents of Laredo who did not want to be Americans moved across the river into Mexico and established Nuevo Laredo as a separate (though connected) city. As a result, the cities of Laredo and Nuevo Laredo not only border each other (as do Matamoros and Brownsville), but include many residents who have common family lines.

A key distinguishing feature of Laredo is that it has always been predominantly Latino16, with an entrenched Hispanic elite. Though Anglos arrived after the war with Mexico, they mainly intermarried with Hispanic families. McAllen and Brownsville in the LRGV, in contrast, were established by Anglo elites who marginalized the Mexican residents. As a result, Latinos in LRGV communities struggled for many years, gaining significant political power only in the last 25 years of the twentieth century.

Since its establishment in the 1750s, Laredo has been an important crossroads between San Antonio, Texas, and Monterrey (Mexico’s third largest city and an industrial center). With the coming of the cross-border railroad in 1881, Laredo became even more recognized as a gateway for trade between Mexico and the United States. Today, more commercial trade between the United States and Mexico passes through the city of Laredo than by all land routes and through all sea ports in the entire state of California. Indeed, products shipped through the Port of Laredo today account for more than 60 % of the entire import and export trade between the U.S. and Mexico.

According to the latest U.S. Census Bureau figures, Hispanics are the largest ethnic group in both Laredo and the LRGV. They comprise 87% of the population of the LRGV and 95 % of the Webb County population. In the LRGV, Anglos make up around 10% of the population, while in Webb County their representation in the total population is about 4%. Blacks comprise less than 1% of the population in each of these two border locations.

Both areas have also experienced very rapid population growth. The LRGV and Webb County are home to three of the fastest growing metropolitan statistical areas (MSAs) in the nation: Between 1999 and 2009 the McAllen-Edinburg-Mission MSA showed a 33% growth rate (from 555,875 to 741,152). During this same period, the Laredo MSA grew from 189,014 to 241,438, a 28% growth rate. Not too far behind these two was the Brownsville-Harlingen MSA in Cameron County, which increased at a 20% growth rate (from 330,277 to 396,371) in this same period. The growth rate for Texas as a whole during this ten-year period was 18%.

This rapid population growth has been accompanied by very strong job growth in the border metropolitan areas. The McAllen-Edinburg-Mission MSA, for example, led the state in the percentage growth in nonfarm employment (47.8%) during the period from 1999 to 2009. The Laredo MSA was second with a nonfarm employment growth rate of 33.4%, and the Brownsville-Harlingen MSA was sixth in the state, with a growth rate of 19.6%.

Though such rapid population and job growth is generally associated with rapid economic growth, these border areas continue to be plagued with poor socioeconomic indicators, as they historically have been. For instance, according to census figures, 36% of individuals in the LRGV population and 29% in Webb County lived below the national poverty level in 2008. This compares with 16.3% for the rest of the State of Texas and 13.2% for the entire United States. Similarly, as one can determine from Figure I.2, the median household income for the LRGV counties in 2008 was around $29,000. It was somewhat better for Webb County ($37,923), though each county in the region was considerably below the median household incomes for Texas and the United States ($48,078 and $52,175, respectively).

These dismal income figures are related to other characteristics of the South Texas border population. In the United States as a whole, 12.5% of the population in 2008 was foreign born. In Texas as a whole, the comparable figure was 15.9%. Along the border, however, 27.9% in Webb County, 31% in Starr County, 28.7% in Hidalgo County, 25.1% in Cameron County, and 13.6% in Willacy County were estimated to be foreign-born, by the 2006-2008 American Community survey. Having a large percentage of the population being foreign born does not, in itself, produce poverty. When a large foreign-born population arrives in the United States with minimal levels of education, however, the results are predictably dismal. Figure I.3 shows the percentage of adults 25 years of age and older in the five border counties who in 2008 had completed high school or a higher level of education. It also provides comparable data for Texas as a whole and the United States.

The effects of low education levels are predictable. The three South Texas MSAs, for example, rank at the very bottom of MSAs in Texas in 2008 hourly wage levels. While the average hourly wage for the whole of Texas in 2008 was $18.90, in the Laredo MSA it was $14.74; in the Brownsville-Harlingen MSA it was $14.08, and, at the very bottom, in the McAllen-Edinburg-Mission MSA the average hourly wage was only $13.85.

As we shall show in the chapters that follow, the demographic character of these border counties is closely associated with informality and underground economic activities. For example, in an examination of Mexicans migrating to the border areas, Dávila and Mora documented an earnings penalty for English-deficient speakers, as well as a tendency for English-deficient Mexican migrants to trend toward “relatively low-skill jobs.” The structural unemployment found along the U.S.-Mexican border in South Texas will also be shown to be a contributing factor to the self-employed informality in the region. In addition, areas with many people who live below the poverty line, with large numbers of foreign born (living next to the country from which they emigrated), who have seasonal or part-time jobs, and who experience frequent periods of unemployment, are more likely to see high levels of informal activities.

Research Projects and Methodology

Much of the data reported in this and subsequent chapters is from the Borderlife Project, a research endeavor established at the University of Texas-Pan American in Edinburg, Texas, and subsequently incorporated at Texas A&M International, or TAMIU, in Laredo. Since 1982, faculty in this project have trained embedded student interviewers to investigate social situations along the South Texas–Northern Mexico borderlands. To date, the project has completed approximately 6,500 in-depth (ethnographic) interviews and over 5,500 survey interviews from a variety of populations on both sides of the border. Most research topics start out as in-depth (ethnographic) descriptions. The patterns revealed in these anecdotal accounts suggest questions that are built in to in-person survey interviews.

The basic purpose of Borderlife is to help students develop an appreciation for their own culture and place. It is also designed to give voice to the distinct populations of South Texas, many of whom receive little notice or, when notice is given, harsh and stereotyped notice. The research generated through this process is more exploratory than explanatory; more hypothesis-suggesting than hypothesis-testing. We offer three major reasons for this. First, the ethnographic research techniques used are much better suited to exploratory and descriptive research than to hypothesis-testing or theoretical research. Second, many of the topics selected in this South Texas environment are still in the exploratory or descriptive stages. Finally, the use of student (embedded) researchers lends itself much more to in-depth ethnographic and exploratory research. Though we do utilize survey research to propose and test select hypotheses, the project emphasizes in-depth understanding of informality in this border environment.

This methodological approach also allows us to paint a broad picture of life on the South Texas border, focusing on many populations and topics, as opposed to a single issue or phenomenon. In the Batos, Bolillos, Pochos & Pelados volume (University of Texas Press, 1999), for example, we were able to describe migrant farmworkers, colonia residents, undocumented domestic servants, maquila workers in Mexico, and Mexican street children. In addition, we looked at racial and ethnic relations among such diverse South Texas groups as Latinos, Mexican immigrants, Anglo newcomers or tourists, and African Americans. In the follow-up volume, On the Edge of the Law (coauthored with Rosalva Resendiz and also published by the University of Texas Press, in 2006), we extended the analysis to descriptions of traditional cultural practices, displaced and undocumented workers, drug and immigrant smuggling, cross-border property crimes, the Mexican criminal justice system, and school dropouts. In the current volume, we continue that multidimensional approach, focusing on a fairly diverse set of issues of particular importance to the people of the Rio Grande/Rio Bravo Valley of South Texas and Northeast Mexico.

The vast majority of our data in this volume comes from several recent studies of informal and underground economic activities on the South Texas border. A overview of all the primary data sources are available in Appendix A. The first study includes approximately 600 ethnographic interviews that have been conducted over the past five years by student interviewers on topics related to the informal and underground economy of South Texas and Northern Mexico. Based on the patterns suggested by these ethnographic or in-depth interviews, we designed and conducted our Informal and Underground Survey of 526 adults using a purposive sampling design. Prior to this survey, we conducted a pilot survey of 309 adults. This pilot survey had fewer questions, so data from it will usually not be included. In the cases where the questions were identical, however, we combine the samples, for a total sample size of 835.

The hidden nature of the subject we were researching, along with our use of embedded student researchers, suggests a combination of both ethnographic and survey approaches. In our Informal and Underground Survey, we asked students to include anyone who was doing work “on the side” or being paid “under the table” and who did not report their income. We also asked our interviewers to include at least one individual who did cross-border trade either from or into Mexico (and as either formal or informal work). As a result, 121 respondents (23%) listed their current residence as Mexico, though virtually all of the interviews were conducted in the U.S.

In the chapters that follow, survey data will provide a quantitative portrait of informal and underground activities. As important as this is, we believe that the qualitative (ethnographic) accounts by students provide a richer description of these life situations, as well as insight into the personal causes and effects of informal and underground activities. We are deeply indebted to the students and to the people who opened their lives to them for the richness of detail that these stories provide. The names of the students whose accounts were used in this book are listed in Appendix B.

The value of these student interviews can best be illustrated by including a few examples related to our opening account of Juan Cortina. Too much time has passed, of course, for students to have interviewed actual participants in these events from the mid-nineteenth century. But the influence of those times carried on into the early twentieth century. Some students were able to capture the shadows that still lingered in the collective mind from people who lived through such events.

One man, for example, remembered how his family had lost land to one of the large South Texas ranches built during that era. “The (Anglo) rancher would buy a few acres of land,” he said, “and then fence off more than he originally bought. He would put a couple of armed men on the borders he claimed in case anyone wanted to cause trouble. It was hard to prove them wrong with that kind of system. Every time you would go to the court house, the paper work would be lost or inaccurate. Who could win in a situation like that?"

Two of the subjects interviewed had witnessed brutality committed by the Texas Rangers. One woman said she was on her way to get firewood out in the country around San Manuel, Texas, when she discovered the bodies of two Mexican men who had been hanged. “Most people knew who committed these injustices,” she said—“Los Rinches (the Texas Rangers). That was the reason we moved to Mission, Texas.”

Another Mexican American interviewee, however, reported good relationships between her family and the Rangers. “My sister and I were raised in our grandparents’ house,” she said. "It was a big house and there was a constant flow of people coming and going. My grandparents spoke English and Spanish and I was raised with both languages. Mexican Americans and Anglos alike came to visit. The Texas Rangers often ate with us.”

Hearing such different accounts about relations with the Texas Rangers causes one to wonder how such varying stories could all be true. Part of the explanation might be found in an important sociological principle—that our behavior, as well as our perceptions of the behavior of others, depends more on the cultural and structural situation than most of us care to admit. In this case, a series of events and circumstances took place in Mexico and in South Texas that produced a perfect storm of violence against the Latino residents of the Rio Grande Valley during the decade from 1910 to 1920.

In Mexico, Porfirio Diaz (the same who imprisoned Juan Cortina) had ruled for over 30 years as a dictator, igniting the Mexican Revolution. Again, the northern border became a focus of violence to remove him, followed by in-fighting among the victorious generals. Thousands of Mexican citizens fled to South Texas, creating hostility and suspicion among Anglo residents of the Valley. The victorious generals included Venustiano Carranza, Pancho Villa, and Emiliano Zapata. When Carranza turned on his former allies, the United States gave him extensive support, igniting a retaliatory raid on Columbus, New Mexico in 1916 by Pancho Villa. Carranza fomented violence across the border in South Texas to pressure the United States to recognize him as the president of Mexico (with the promise that he would quell the violence). One of his leaders, General Nafarrate, used his forces to instigate cross-border “bandit raids” into South Texas. The Carrancistas took advantage of the long-simmering resentment among Hispanic Texanos for the injustices they had endured since Texas was wrested from Mexico. As a result of this bitterness, and with the backing of Carranza, “El Plan de San Diego” emerged in San Diego, Texas. This document, known to very few South Texas Hispanics, called for a new nation in the lands lost by Mexico in 1836 and 1848 and for the extermination of every Anglo male in Texas.

Meanwhile, Texas had elected James “Pa” Ferguson, arguably the most corrupt governor in Texas history. One of his first actions was to appoint political cronies as leaders of the Texas Rangers, driving out many Rangers who had the respect of South Texas Hispanics. The railroad had also ended the isolation of South Texas, bringing in trainloads of Anglo farmers who, unlike the Anglo ranchers who preceded them, spoke no Spanish, despised Mexicans, and generally relegated Mexican Americans to a status of servitude. With Carranza instigating cross-border raids and wild newspaper accounts of “El Plan de San Diego,” South Texas Anglos called on the governor for drastic action to end the “bandit raids.”

Ferguson appointed Henry Ransom, a killer who had shot an attorney in cold blood, as captain of a special company of Texas Rangers, many of them vigilantes. He ordered Ransom to “. . . go down there [to the Valley] and clean it up if you have to kill every damned man connected with it.” In the ensuing five years, thousands of Hispanic U.S. citizens and Mexicans were rounded up, shot, hanged, or driven across the border into Mexico. Mexicans who were arrested were often shot “trying to escape,” and the vigilantes photographed themselves next to piles of bodies of “bandits.”

When Carranza received diplomatic recognition from the United States, the raids ended. Virtually nothing was done to the Rangers and others who had perpetrated this campaign of extermination. For years, “Los Rinches,” (a derogatory term for the Rangers) were seen as the enemy, though few of the pre-Ferguson Rangers actually took part in the brutality. These feelings are illustrated by an interview with an eighty-seven-year-old native of the Valley. "The Rangers caught a man accused of stealing a cow,” he said, “and they hung him. People tried to stay clear of the Texas Rangers and not cause any trouble or draw attention to themselves." Another reported that family members were often not even allowed to bury or remove the bodies.

Relations between Anglos and Hispanics in South Texas today are vastly different from those just described. One piece of evidence of this is the reactions to these stories by the students who conducted the interviews. Almost without exception, these student interviewers reported that this was the first time they had ever heard of such events. When they asked the family member they were interviewing why they had never talked about it before, almost uniformly the reply was something like, “We didn’t want you to suffer what we did.”

Nevertheless, some of the factors that produced such harsh treatment in earlier years still shape events and conditions in South Texas today, often in ways associated with the informal or underground economy. The entire U.S.–Mexico borderland, for example, continues to experience the effects of Mexican and U.S. national policies more harshly than is experienced in interior locations. The drug wars, for example, are fought mainly on the border, with a death toll in Mexico (mainly on the border) reported to be 28,000 in 4 years. Approximately 25% of these deaths have been in the border city of Ciudad Juárez alone.

Similarly, the demand for drugs and cheap labor throughout the United States is met by official actions (often merely posturing that does little to end these trades) mainly at the border. As the federal government builds more fences and puts more “boots on the ground,” the power of the cartels increases. Local families with property on the border, however, have land expropriated (often land that has been in their family for generations) to build a wall that many see more as a slap in the face of Mexico than an effective way to deter drugs or illegal immigration. Both the interdiction and the antismuggling efforts have their greatest impact in the border zone.

Likewise, as in the two previous centuries, politicians in Washington, D.C.; Mexico, D.F.; and border state capitals often exploit the borderland for political advantage. Recent examples include Governor Brewer in Arizona and Governor Perry in Texas talking about beheadings and bombings in the border zones of their respective states. In both cases, the violence they reported actually happened across the border, though these politicians chose to portray their own border communities as lawless and violent. In truth, cities on the U.S. side of the border have comparatively low rates of violent crimes. Nevertheless, rhetoric drives policy and trade. The borderland continues to see a buildup in troops and a falling off of tourism resulting from the speech making. In Arizona, the rhetoric culminated in the passage of very strong anti-immigrant legislation that mandated racial profiling. Such policies have their greatest impact in the border zones.

As we shall point out in the following chapters, the U.S.-Mexico border (especially the portion in South Texas) is a magnet for informality and underground activity. Mostly, informality is a means of survival for the very poor. Occasionally, however, it is used by ruthless individuals to exploit the poor and powerless. And, as in past centuries, individuals, good and bad, find in this border location ways to use conflicting laws to their advantage. They also find understandings and arrangements in the local culture and structure that support informality as a way over, under, and around some of the harsh policies imposed on them by outsiders.



“The Informal and Underground Economy of the South Texas Border is an engaging, important, and meticulously researched book that offers readers new insights about the intersection of locale and informal and underground economies.”
American Journal of Sociology

“A powerful and important contribution to the field. It will indeed be useful to readers and teachers in many social science and public policy fields outside sociology. . . . I found the text and data very real, solid, and fascinating.”
Joe Feagin, Professor of Sociology, Texas A&M University

“Very clear and innovative. . . . Makes a major contribution to the discussion of informal labor in the United States and covers new ground that has been studied a lot in developing countries but has been largely ignored as a component of the U.S. labor force.”
Joan Anderson, Professor Emerita of Economics, University of San Diego


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