As Mexico claws toward prosperity, some in middle class slide back

Ortiz has no health insurance, and she can’t afford to take time away from her DVDs. “I can’t get ahead if I don’t work,” she said, biting her lip and worrying for her daughters. “I’m the one who keeps my family together.”

No help for the little guy

Gallery

Middle class marches along in a changing Mexico: While many Mexicans and their neighbors to the north still imagine a country of downtrodden masses dominated by a wealthy elite, the ranks of the middle class are swelling.

Graphic

Falling income inequality in Mexico

A few blocks from where Ortiz hawks the latest James Bond movie, Miguel Nieves sells his elaborate cakes, decorated to celebrate birthdays and weddings.

“When I was a kid, we didn’t have enough to eat sometimes. We didn’t have our own house or a car,” Nieves said. “We never took a vacation.”

But Nieves, 38, earned an engineering degree and an MBA, then applied his business management training to his mother’s recipes. Twenty years later, he has three bakeries and 16 employees.

“Now I have a visa to go to the U.S. whenever I want,” he said. “No problems.”

Nieves said it is especially hard for small-business owners in Mexico to get ahead. He wants to open a fourth pastry shop and hire more workers, but affordable credit is impossible to come by.

His bank offered him a commercial loan at steep rates, starting at 25 percent. Credit card interest rates, plus fees, can top 50 percent.

“There’s no financing here,” Nieves said. “I have to save everything myself, and if you can’t save, you can’t grow.”

Mexican banks have more than quadrupled the amount of money available for credit since 1994, according to Bank of Mexico, and the number of credit cards in circulation has soared from 6 million to 25 million in the past decade. But economists say access to affordable credit remains one of the biggest impediments to growth.

In response, the banks — mostly foreign-owned — say Mexican courts are dysfunctional and don’t protect loan guarantees, so lenders have to charge high rates to cover defaults.

Nieves said he still has “a lot of confidence” in Mexico’s future. But he sees a business climate stacked against entrepreneurs like himself who play by the rules.

He has seen his home town transformed. But he said it is not yet a middle-class place.

“You have to be ambitious,” he said. “You can’t be satisfied with what you have. We still lack a culture that says, ‘I want more.’ ”

“The New Mexicans” series examines the dramatic demographic changes occurring in Mexico, where the middle class is becoming a majority.