Not Just the Flow of People

In When Giants Fall, I highlighted a May 2008 VoxEU.org column by Drew Keeling in which he argued that "the economic risks of working abroad, particularly the risk of cyclical recessions, and the availability of family networks to help cope with those risks, were crucial factors determining who migrated and how they migrated."

In other words, once the economic tide reversed course, it was a good bet that immigration patterns would follow suit.

As it happens, an article published in the Wall Street Journal earlier this month, "The Great U-Turn," noted that "global migration flows reverse for the first time since the Depression as work in the rich world dries up."

Well, it appears that it is not just cross-border human traffic that is changing direction. In "Immigrants Who Wired Their Wages Home Are Now Asking Their Families to Send them Money," the Associated Press reports that cross-border money flows are also being affected.

For five years, immigrant day laborer Leo Chamale wired money twice a month from New Jersey to his family in Guatemala. Recently, he stepped up to the money transfer window for a different purpose -- to ask that his family send some of his savings back to him.

"I hadn't worked for five months, and I was two months behind on rent, so I had them send $1,500," the 21-year-old Chamale said in Spanish. "My mother said, `That's a lot of money!'"

With the U.S. economy in a ditch, money transfer agencies have been reporting a decline in the wages immigrants are sending back to their home countries. Now, it appears some immigrants are going a step further -- asking their relatives to wire them money back.

"We've never seen this before," said Marlen Miranda, manager of Peerless Travel in Fairview, which runs a money transfer service. "I mean, one or two people might receive money for a special reason, but not this quantity of people."

Miranda said she has seen her customer base dwindle from 200 people to 75 who regularly use her money transfer services each month. Of those 75, Miranda said, about 20 now come in to receive money instead of sending it home.

"They can't send them much, because the economy in their countries is so bad," Miranda said. "Sometimes people only receive $20 from home."

It is not clear how much money is being sent back to the U.S. or how widespread the phenomenon is. Large money transfer agencies, such as Western Union, said they do not disclose how much money is sent or received by their field offices. Banks in foreign countries often track only money sent into the country by their citizens living abroad.

But clearly, these "reverse remittances" -- as the money wired back to the U.S. is called -- are extremely small when compared to the money immigrants send home.

Immigrants working in the U.S. sent more than $50 billion back to their native countries last year, according to the World Bank, which predicts the amount will drop 5 percent in 2009. Mexico's central bank said remittances sent to that country are down more than 18 percent in the past year, and registered their biggest decline on record in April.

Alejandro Tejada, manager of Tenares Communications, a Western Union office in Passaic, said he, too, has noticed money flowing in reverse, into the U.S. -- a phenomenon he rarely, if ever, saw before.

It began around late March, Tejada said, after a tough winter in which construction projects and other ventures that usually employ immigrant day laborers ground to a halt.

World Bank economist Dilip Ratha said he devised his own measure of how much money is sent back to immigrants living in the U.S. and other countries. Analyzing foreign currency deposits in the Dominican Republic, Mexico and India from February 2008 to January 2009, Ratha found that immigrants from those countries tapped into their savings accounts -- money they had previously wired home -- at an accelerated rate as the global economy worsened.

The amount of foreign currency on deposit declined 7 percent in the Dominican Republic, 12 percent in India, and 6 percent in Mexico during the 12-month period, Ratha said.

Nevertheless, "people are sending far, far, far more back home than what they are taking out," he said.

Ratha said the surge in money wired back to the U.S. will not last long.

"The ability of, let's say, a Mexican family or a Nepalese family to be able to send dollar remittances to maintain somebody to pay for living expenses in the U.S. or in Europe is very weak, because they are very poor," Ratha said. "And the savings that are there of the migrants are also not very significant in most cases -- so those savings will run out very quickly."

Standing on a street corner a recent morning in Palisades Park, looking for work, Chamale said he is now hoping to earn just enough for a plane ticket home.

"I was forced to ask for money from home during the winter months," he said. "After that, I said to myself, `That's it -- I'm heading back to my country.'"

Comments

[Steve]

Interesting article. I have experience in this area from 2 perspectives;

1) As a Mail Carrier, I have a high number of Hispanic residents (legal and I am sure many illegals) on my route. Starting about mid-'07, the apartments started turning up vacant--the maintenance workers told me they would often open the apt. and find the tenants gone, but all their belongings still there! That happened surprisingly often! The ones who stayed stopped getting COD packages, which before then averaged (total) about 7-10 a week. Now I am lucky if I see 2 a MONTH. Also, the vacancy rate went from virtually nil in the 2 apt. complexes, to about 15-20%. Also, noticeably crime in those areas went way down--as often Hispanics were the victims of crime, because they habitually carry cash--not so much as they committed the crime.

2) My wife is from Indonesia and her family still lives there. One brother lost his business about 5 years ago and no longer can help out other family members. Another sister went from having a car and home 5 years ago, to now where she has sold her car and home, and lives in a boarding house. Interestingly, she has the same job as she did 5 years ago. Things just seem to slide slowly downward.

These signs are like canaries in the coal mine. The misery and trouble if first felt at the bottom, then works its way up the ladder.

[Riddick]

So the guy can't find work here and ups and quits to fly "home" to his country. So much for assimilation of the masses; most of the immigrants are here to work, wire money home and get the hell out after using as much of our system as possible and often starting the very process by breaking our laws to enter and work.

In a market driven state such as Amerika the idea of being a native or having loyalty to a nation are quaint and old fashioned. Everyone it appears have ultimate loyalties elsewhere and those of us who had ancestors that migrated legally, learned the language and assimilated, we are suckers. The parallels to fallen Rome are undeniable. We are sunk. If only I could go home to another country.

[Vinre]

Without a doubt one of the most harmful laws in existence is the one granting children of illegals U.S. citizenship. WTF... that stipulation has been used against us, and against us and against us.

That "us" referred to is citizens... who pay taxes...and watch vast amounts of it going to illegals.

Oh,surely this will be received most unkindly in some quaters...but it MUST be said because it is the truth.

Hispanic illegals, because they are predominantly Catholic, and for certain other cultural traits... they breed like rabbits... regardless if they can support their children or not. Not to worry though...there's always Uncle Sam & the U.S. taxpaper to pay the bills for medical care and schooling for "los ninos".

This MUST stop!

[Tyrone]

1.5 hours until California I.O.U.s

Got popcorn?

[Bert]

As the unemployment rate continues to rise, and the government band-aids peel off before a torrent of red ink worthy of a Hollywood slasher movie, I think more people are going to be getting on the bus and getting out of here. And, in one way, that's a very good thing, because the growth models they were playing with in 2000 and thereabouts were flat-out unsustainable. Economics is all about numbers, and when those numbers go runaway, all bets are off. The prices got jacked up, the costs and the taxes followed, and it all just got too big, too fast to last. So, it'll probably start to get pretty quiet before long, and people will have plenty of time to get sobered up, maybe start growing their own medical marijuana or something, study some new cutting-edge technology called 'garden implements', and have plenty of practice in becoming experts in their utilization, because part of the American Scream is a discussion about class, the whole 'guest workers' thing is a euphemistic european phenomenon that supported the basic ability of people to have immaculate lawns without themselves owning a pair of work gloves, to eat lots of food without actually being directly involved in the preparation, lots of things that generally isolated people from the odious process of 'work', and it's not that there aren't enough jobs or something, it's that there aren't enough 'yuppie' jobs to placate seekers of same. In other words, back to basics time, if you want corn, be prepared to shuck it and wash it yourself...maybe even learn how to grow it, because there's no guarantee that the economic problems that we've seen so far won't extend right down to the local supermarket too. Too much speculation, too much wild-eyed Sorosian modeling, methinks the future will involve a lot more practicality and pragmatism, and periodic drug testing, especially in the finance sector...