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COVID-19 Recession in Texas

Texans struggle to find work in the Rio Grande Valley, where unemployment has nearly tripled

The ongoing coronavirus pandemic, limits on cross-border commerce and a downturn in the energy sector have hit the Rio Grande Valley's economy especially hard.

People cross the Mc Allen-Hidalgo International Bridge in Hidalgo.

Sandra Santos has been doing everything she can to find a job since she was laid off in mid-March from working in the billing and collections department of an ambulance service in the Rio Grande Valley.

The 47-year-old Edinburg native filed for unemployment shortly afterward and recently received her second check in the mail — weeks after she and her boyfriend were evicted from their apartment. Her boyfriend, Joey Quintanilla, is a self-employed landscaper who is also jobless. His regular salary — which fell short of their monthly $500 rent — amounted to “just enough to buy groceries,” according to Santos.

Santos has sought work at Walmart, Target and various fast food chains all over town but hasn’t heard back from hiring managers, who are flooded with applications.

“I’ll call in and follow up and check on my application,” she said. “And they’ll either tell me that they haven’t had a chance to look at it because they have so many applications, or it’s in review.”

Nearly 2.6 million Texans have filed for unemployment since mid-March — amounting to four typical years’ worth of unemployment claims. And in the Rio Grande Valley, the lack of jobs is even more pronounced. The region’s unemployment rate in May was 17.1%, well above the statewide rate of 13%.

Envelope with money in it

The impact on Texas’ economy

In February, before the pandemic gripped Texas, the Rio Grande Valley's unemployment rate was 6.5%. The increase since shows how hard the Valley has been hit by the economic collapse caused by the coronavirus pandemic and limits on the U.S.-Mexico border crossings that fuel its retail industry. Even the slowdown in the oil and gas sector has affected employees who live in the Valley and work in that industry.

On Monday, city commissioners in McAllen, another Rio Grande Valley city, amended the city budget to cover a $3.3 million shortfall caused by COVID-19 relief programs for residents and small-business owners, according to The Monitor.

Salvador Contreras, a professor of border economics at the University of Texas Rio Grande Valley, said that in Texas, Black and Hispanic workers saw larger declines in employment than white employees. So did women and young workers with low education and income levels, according to a study he published. Nationally, the unemployment rate for Hispanic and/or Latino individuals was 17.6% in May — more than 4 percentage points higher than the overall U.S. rate of 13.3%, according to data from the U.S. Bureau of Labor Statistics.

“It turns out that the RGV has a large number of Hispanics — we’re 90% Hispanic, large numbers of young people, and we tend to have lower average levels of education in this region,” he said. “So this group who was significantly impacted across the U.S., we have a lot more of them here. And so you can see how the magnitude might have been bigger than in the rest of the U.S.”

Loss of customers

The Rio Grande Valley’s perch on the U.S.-Mexico border has typically provided an economic benefit to workers and business owners on the Texas side of the river. More than 40% of McAllen’s sales tax revenues come from shoppers crossing the border from Mexico, according to the city’s mayor.

But border crossings have been limited during the pandemic. And only essential goods can go back and forth.

“So this clearly had an impact on the number of Mexican visitors into the Rio Grande Valley,” Contreras said. “So we know that the retail sector is very important to the economy of the Rio Grande Valley. And if that affects Mexican shoppers here, then clearly that’s going to have an impact.”

Gilbert Rendon, who owns the New York Deli, with locations in McAllen, Harlingen, and Brownsville, says he has “never seen anything” like the current economic situation before.

“Long bridge times are not good for business, you know?” he said, referring to the McAllen-Hidalgo-Reynosa International Bridge that travelers cross between the U.S. and Mexico. “And then I think the pandemic on that side of the border is in a bad situation. So we’re not seeing a lot of our regular customers coming through.”

While Rendon hasn’t had to shut down his business, he temporarily closed down the dining room in mid-March and laid off two or three employees, only offering carry-out services during that time. Ultimately, he has been able to rehire everyone, though he can only offer some of them fewer hours than before.

“The pandemic has affected us because the shortage of meat and poultry, like the prices have gone through the roof,” Rendon said. “So not only is this not what it used to be, you're paying a lot more for everything wholesale price.”

Meanwhile, Becky Guerra, who co-owns The Patio on Guerra with her husband, Che, said she has had to close her downtown McAllen restaurant for lunch and only open for dinner. She also rearranged tables to meet the Centers for Disease Control and Prevention’s social distancing guidelines.

“We’ve eliminated basically half of the dining tables in our restaurant,” she said. “So that has affected, literally, the number of people that, you know, we have in an evening.”

And because the restaurant is less busy, employees end up working fewer hours — something that Guerra says is an inevitable consequence of adapting to pandemic guidelines.

“I feel that that’s best, because I think the only way for all of us to step forward and out of this is for us to adhere to this strict situation we’re in now, just so that the whole community gets better,” she said.

"It wasn’t just a pandemic"

The global downturn in the oil and gas industry is also making things hard in the Valley, as it is elsewhere across the state.

Before the pandemic, Sandy Aguilar’s husband pulled in about $3,000 a week as an oil rig welder, and she didn’t work. But the energy sector has been dramatically upended by a global drop in demand during the pandemic.

The price for a barrel of oil has recently been nearing $40, an increase after more than two months of prices below $30 per barrel and one day when they dipped into the negatives. But that is still low compared with the $60 range intermediate crude cost at the start of the year.

And thousands of oil and gas workers across Texas, like Rudy Aguilar, have lost work since March. Now the Aguilars are facing eviction from an upscale rental home.

“For us, it was even worse because it wasn’t just a pandemic,” Sandy Aguilar said. “It was also the price of the oil that went below $10, so then that would kill us even worse: that there’s no jobs right now for the oil.”

Like Santos did in Edinburg, Sandy Aguilar has sought work all over nearby McAllen with little luck. As they appeal their eviction case, the Aguilars have already started looking for another home.

“It’s very hard to find,” she said. “We’ve been looking here and looking there, and everybody’s looking. Because I’m not the only one being evicted. There’s a line of people being evicted, and at least I’m not alone in this world with the same problem.”

Fear and uncertainty

Santos and Quintanilla were evicted in May, shortly after a statewide moratorium on evictions expired. They sought help from Texas RioGrande Legal Aid and the Hidalgo County Community Service Agency.

For nine days, the couple lived in a hotel. When financial assistance for that ran out, they slept in their car for three nights. Then they stayed at a relative’s home for about a week.

“We told him it was only going to be temporary until we found something,” Santos said. “I had been looking for like a month and a half, two months.”

In early June, Santos and Quintanilla found a new apartment — a one-bedroom unit that costs $65 more per month than their old place, despite its smaller size. The Hidalgo County CSA paid the couple’s deposit and first month’s rent.

But with both of them still out of work, they don’t know how long they’ll be able to stay.

“It’s very, very scary,” she said. “I don’t know what I’m gonna do or what’s gonna happen. I don’t know.”

Contreras, the economics professor, believes that while retailers will continue to hire new employees, they will do so at a slower rate until the economy ramps up to full capacity, which could take months.

“There is no cure for COVID-19, there’s no vaccine that I know of that is coming anytime soon, so it is likely to not get to full capacity for a while,” he said.

Mitchell Ferman contributed to this report.

This story was produced in part with funding from the Ravitch Fiscal Reporting Program at the Newmark Graduate School of Journalism and is part of a national project on how adequate state safety nets are for the pandemic recession.

Disclosure: Walmart Stores Inc. and the University of Texas Rio Grande Valley have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

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