Flowing Uphill

Remittances are transfers of money by foreigners to their home countries. According to Wikipedia, these cross-border payments constitute "the second largest financial inflow to many developing countries, exceeding international aid." In 2008, for example, Mexico's central bank reported that money sent to that country from Mexican immigrants in the U.S. totaled $25 billion.

However, that sum was down 3.6 percent from the year before, which was the first drop since officials began tracking the money in 1995. But things have not improved. Since then, the ongoing downturns in housing and other industries where immigrants -- legal or otherwise -- have long comprised a sizeable share of the workforce have spurred a noticeable drop in remittances.

(Source: http://filipspagnoli.wordpress.com/2009/08/14/human-rights-facts-138b-the-effect-of-the-recession-on-remittances/)

In fact, based on the following New York Times report, "Money Trickles North as Mexicans Help Relatives," it appears that some of the funds that used to flow southward may well be moving in the opposite direction:

MIAHUATLÁN, Mexico — During the best of the times, Miguel Salcedo’s son, an illegal immigrant in San Diego, would be sending home hundreds of dollars a month to support his struggling family in Mexico. But at times like these, with the American economy out of whack and his son out of work, Mr. Salcedo finds himself doing what he never imagined he would have to do: wiring pesos north.

Unemployment has hit migrant communities in the United States so hard that a startling new phenomenon has been detected: instead of receiving remittances from relatives in the richest country on earth, some down-and-out Mexican families are scraping together what they can to support their unemployed loved ones in the United States.

“We send something whenever we have a little extra, at least enough so he can eat,” said Mr. Salcedo, who is from a small village here in the rural state of Oaxaca and works odd jobs to support his wife, his two younger sons and, now, his jobless eldest boy in California.

He is not alone. Leonardo Herrera, a rancher from outside Tuxtla Gutiérrez in the southern state of Chiapas, said he recently sold a cow to help raise $1,000 to send to his struggling nephew in northern California.

Also in Chiapas, a poor state that sends many migrants to the United States, María del Carmen Montufar has pooled money with her husband and other family members to wire financial assistance to her daughter Candelaria in North Carolina. In the last year, the family has sent money — small amounts ranging from $40 to $80 — eight times to help Candelaria and her husband, who are both without steady work and recently had a child.

“When she’s working she sends money to us,” the mother said. “But now, because there’s no work, we send money to her.”

Statistics measuring the extent of what experts are calling reverse remittances are hard to come by. But interviews in Mexico with government officials, money-transfer operators, immigration experts and relatives of out-of-work migrants show that a transaction that was rarely noticed before appears to be on the rise.

“It’s something that’s surprising, a symptom of the economic crisis,” said Martín Zuvire Lucas, who heads a network of community banks that operate in poor communities in Oaxaca and other underserved Mexican states. “We haven’t been able to measure it but we hear of more cases where money is going north.”

At one small bank in Chiapas that used to see money flowing in from the United States, more money is going out than coming in.

“I’d say every month 50,000 pesos are sent from here to there,” said Edith Ramírez Gonzalez, a sales executive at Banco Azteca in San Cristóbal de las Casas. “And from there, we’d receive about 30,000 pesos.” Fifty thousand pesos is $3,840.

With nearly half its population living in poverty, Mexico is not well placed to prop up struggling citizens abroad. Mexico could lose as many as 735,000 jobs this year and its economy may decline 7.5 percent, government economists predict, making the country one of the worst affected by the global recession.

Still, poverty is a relative concept. It is easier to get by on little in Mexico, especially in rural areas, allowing the poor to help the even more precarious.

In Miahuatlán, Sirenia Avendano and her husband may be more down and out than their two sons, both in their 20s, who wait tables at a Mexican restaurant in central Florida and have seen their hours reduced and their tips drop precipitously. But they live in their own home, on land they use to grow corn and other crops.

“We’re poor, but nobody can throw us out of this house,” Ms. Avendano said, wiping away tears at her kitchen table as she spoke of her sons’ economic travails. “They worry about that. What happens if they can’t pay the rent?” To help make ends meet, she sells chiles rellenos, a popular delicacy, around the neighborhood.

“We have an obligation to help them,” said her husband, Javier. “They’re our sons. It doesn’t matter if they are here or there.”

In other cases, the migrants are returning home, as the many passengers who hop off the bus that runs regularly from northern California to a gas station in Miahuatlán make clear. “There’s nothing up there,” said a young man with an overflowing suitcase who returned one recent night.

Still, although a study by the Pew Hispanic Center from July showed a sharp decrease in the number of Mexicans heading north, there has been no sign of a mass exodus of migrants back to Mexico. Immigrants’ families say it took great effort to scrape together the thousands of dollars needed to send relatives to the United States, a sum that includes the fees charged by the people who help them sneak in.

“It’s expensive to cross, and it was a great sacrifice for us,” said Mr. Salcedo, 43, who has sent about five wire transfers to his son Alfonso, 18, who this year lost his job as a cafeteria dishwasher.

As expected during an economic slowdown, the money sent home by immigrants has fallen. The Bank of Mexico reported recently that remittances during the first nine months of this year dropped to $16.4 billion, a 13.4 percent decline compared with the same period in 2008.

The flow of money out of Mexico is believed to be a tiny fraction of the remittances still arriving. “The evidence in this regard so far is anecdotal,” said Juan Luis Ordaz, senior economist at the Spanish bank BBVA Bancomer, who has begun investigating the reverse money flow.

Families of migrants speak proudly of their successful relatives in the United States and use the remittances they receive to do anything from buying livestock to replacing dirt floors with concrete. The importance of such money, which is among Mexico’s top sources of foreign currency, cannot be overstated. An estimated 5.9 percent of Mexican households, about 1.8 million families, receive economic support from abroad, studies show. For them, the money represents roughly 19 percent of total income for urban households and 27 percent for rural ones, according to government data analyzed by BBVA Bancomer.

For the Salcedos, the economic woes are intense on both sides of the border. The ones still here had moved to the outskirts of Mexico City seeking opportunity, but now they are on the verge of returning to Oaxaca because the owner of the land they are squatting on ordered them out.

For Alfonso, the situation has been just as difficult. He crossed into the United States in December with about $500 that his father gave him, supplemented with money he earned doing odd jobs in Tijuana. He found a job in San Diego paying enough for him to send home $170 the first month and $120 the next. The third month, he told his family he could afford to send only $40.

Then, like so many others, he lost the job and stopped sending anything.

Now his father has begun sending money the other way, usually about $60, less transfer fees. “We’ve decided to tighten our belt until we’re all working again,” Mr. Salcedo said.

Comments

[GYSC]

California has so many problems its hard to know how they will come out of it. If illegal immigration was ended, they would have to close California. Not much commentary on this.

[MichaelN]

I guess that "the jobs that Americans won't due" is shrinking?

[Lip Reduction]

Lots of people from my country were well settled in USA sending good money home to the family.But the recent economic havoc and consequent lay offs have forced them to return home and look for employment.I thought "retrenchment" was only a word in Economic books.Not any more.

[Rocky]

Maybe it is time for educated young Americans to consider moving to a foreign country. US parents who can afford to send their children to college should encourage their teenage children to consider Canadian colleges as well. A good Canadian college often costs much less than its US counterpart, even for foreign students. As the US continues to squander its limited resources on military adventures abroad, it has less to spend on its own residents at home. Many young Americans face a bleak economic future. How sad.

[johnson]

God damn this guy is an idiot.