Thread: Remittances (read with an empty stomach!).

Immigrants send billions home

90% of money stays in local economy

By SUMMER HARLOW, The News Journal
Posted Wednesday, October 25, 2006


Every two months, Elia Guerrero sends money to her mother in Mexico City. She saves $70 or $80 a paycheck so she can send $300 or more at a time.

Her mother needs the money to pay rent and other bills, said Guerrero, 27, who works at El Mexicano Tienda on Fourth Street in Wilmington.

The money Guerrero sends home, called remittances, is part of an increasingly larger cash flow between the United States and Latin America.

Delaware's 30,240 adult Latin American and Caribbean immigrants are expected to send $105 million to their home countries this year, according to a report released last week by the Inter-American Development Bank, the largest official lender to the region.

Delaware is tied with Virginia, Maryland, Pennsylvania and Washington, D.C., for the highest percentage -- 88 percent -- of adult Latin American and Caribbean immigrants who send remittances on a regular basis, according to the report.

Luz Divina Diaz, director of the Hispanic agency Progreso Latino in Wilmington, said she has started to recognize the people who come in on a regular basis to send money to their homelands.

"One guy from the Dominican has a list of people he sends money to," Diaz said. "He comes in with $100 every two or three weeks."

Sixty-one percent of remittances, at an average amount of $300 -- up from $240 in 2004 -- are sent at least once a month, according to the report.

This week, Marisa Rodriguez of the Dominican Republic was paying a phone bill at a Western Union.

She tries to send home a couple of hundred dollars each month.

"My family uses the money for food, for everything," she said.

Banks get in on action

This year, immigrants in the United States will send a record $45 billion back to Latin America and the Caribbean -- an increase of about 50 percent since 2004, according to the Inter-American Development Bank.

As the cash flow to Latin America, along with the U.S. Latino population, continues to increase, banks are devising programs designed for immigrants in an effort to tap into the sending-money-home market, which had been cornered by wire-transfer companies.

Bank of America has launched SafeSend, a free service that allows anyone with a checking account to send money to 4,500 locations in Mexico.

"This way, more money is put into the hands of family members in Mexico," said Diane Wagner of Bank of America.

More than $126 million has been sent through SafeSend since September 2005. Wagner said there is no breakdown to determine how much of that was sent from Delaware banks. Along with the SafeSend service, the bank rolled out bilingual brochures and bilingual television and radio ads.

"We have a large Hispanic base within our nationwide footprint," she said. "For us, this lets us educate them, demystify finances, let them know how they can get into the mainstream of banking and how their money is safe."

The Federal Reserve has launched its "Directo a Mexico" program, which partners with the Mexican central bank, Banco de Mexico, to allow for cheap money transfers. About $200,000 a month -- not including Social Security payments -- is sent to Mexico through the program, said Jean Tate, spokeswoman for the Federal Reserve Bank of Atlanta.

No banks in Delaware participate in Directo a Mexico, Tate said.

Neither Bank of America nor the Federal Reserve requires account holders to have U.S. identification. Both services accept the matricula consular, or the identification issued by the Mexican consulate to persons with Mexican birth certificates or proof of Mexican citizenship.

The Federal Reserve's informational brochure on the service poses the question: "Will I lose the money in my bank account if I return to Mexico or am deported?" The answer: "No. The money belongs to you and you can easily access it through an ATM in Mexico using your debit card."

Practice has its detractors

As Congress grapples with how to deal with an estimated 12 million undocumented immigrants, banks should not be making it easier to live and work in this country, said Ira Mehlman, spokesman for the Federation for American Immigration Reform, which favors restricting immigration.

"Our position is that if somebody doesn't have a verifiable Social Security number, they shouldn't be doing business with our banking system," he said. "This is just another example of how business believes that laws shouldn't apply to them as long as they can make money off illegal immigrants."

The banks are facilitating illegal immigration, Mehlman said, and "creating a situation where billions of dollars are shipped directly out of our economy."

According to the Inter-American Development Bank's report, immigrants are sending home only 10 percent of their income, meaning the remaining 90 percent goes into the local economy.

Immigrants in Delaware will contribute an estimated $1.07 billion to the local economy this year, according to the report. Nationally, about $460 billion of the income generated by Latin American-born immigrants will stay in the United States.

Ravi Yatawara, assistant professor of economics at the University of Delaware, said immigrant labor also helps the economy.

"They're bringing the prices of our goods down," Yatawara said. "The cost of a meal would go up if they didn't have these migrants willing to work for that particular pay."

Money sent home also strengthens the currency of those countries, Yatawara said.

According to the report, money sent from the United States accounts for at least 10 percent of the gross domestic product of Nicaragua, El Salvador, the Dominican Republic, Haiti, Jamaica and Guyana.

Mexico receives the most -- more than $16 billion -- of any Latin American country.

The money going to more than 20 million households in the region, the report concluded, constitutes "one of the broadest and most effective poverty alleviation programs in the world."

"It basically just puts food in their mouths," Yatawara said. "The money comes in, but the country as a whole is not necessarily developing."

But in households that receive it, he said, children stay in school longer, nutrition is better and poverty is decreased.

And poverty is the reason immigrants are coming to this country, experts say.

According to the report, 56 percent of immigrants who send money back to Latin America did not have full-time jobs before coming to the United States. Most found a job in the United States within a month.

Guerrero followed her brother to the United States.

"We can live a better life here than in Mexico," she said.

Contact Summer Harlow at 324-2794 or sharlow@delawareonline.com.

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The Federal Reserve has launched its "Directo a Mexico" program, which partners with the Mexican central bank, Banco de Mexico

Another step in the "merging" plan.

All this money being sent to countries like Mexico is why those countries don't complain about illegal immigration to the U.S. It definitely fuel their economies. Would it be nice if most Americans could afford to put that kind of money in a savings account? I am sure most can't afford it but then we pay taxes, put money into a health plan, co pay medical expenses and don't live with numerous families in one house or condo.