Money wired to Mexico from Sacramento has plunged

Sacramento Bee
By Darrell Smith
dvsmith@sacbee.com
Monday, Dec. 14, 2009

The flow of cash from Mexican immigrants to their families back home continues to drastically dry up in the Sacramento area and nationwide as tough economic times and a beleaguered housing sector have taken their toll on paychecks and pocketbooks.

Locally, the movement of money south has been curtailed by the disappearance of construction jobs in a battered housing sector, a major employer of Mexican labor, said Carlos González Gutiérrez, Mexico's consul general in Sacramento.

Immigrants are "waiting for the economic crisis to go away, but they don't have the resources they had before and are sending less," González Gutiérrez said. "What the global (economic) crisis has shown us is that the host society and the homeland move in sync."

Those who have found new work have moved from the higher-paying building trades to lower-paying jobs, he said, reducing the amount they are able to send home.

Sacramento ranks among the top six U.S. cities when it comes to contributing to family incomes in Mexico, according to the Mexico culture and information Web site Explorando Mexico.

At the markets, carnicerÃ*as and panaderÃ*as that dot Franklin and Stockton boulevards, shoppers are often greeted by the bright red-and-white signs of money transfer service Orlandi Valuta.

The sign hangs above the entrance of Stockton Boulevard's New Sac Market, but the store was quiet last Tuesday. Clerk Abdul Fidel has only worked the counter a few months, but said he's already seen a slowdown in cash wires to Mexico.

"When I first came here, it was better, but it's been slow. Before, people came in two to three times a day, but now it's about five times a week," Fidel said.

For Western Union and its subsidiaries Vigo and Orlandi Valuta, transactions to and from Mexico account for 6 percent of the Colorado-based company's revenue.

The combined companies' revenue dropped 18 percent and transactions fell 13 percent in the third quarter compared with the year-ago quarter, said Western Union spokesman Daniel Ruiz.

The slowdown does not appear to be isolated.

Nationally, the money sent from immigrants to Mexico fell 36 percent in October from October 2008, Mexico's central bank reported. It's the largest drop since the Bank of Mexico began keeping such records in 1996, according to the Associated Press.

Mexicans abroad sent home $1.69 billion in October, nearly $1 billion less than the $2.64 billion transferred in October 2008, the Bank of Mexico said.

Remittance payments from Mexican immigrants have been an important part of life in Mexico.

The country's diaspora sends billions of dollars back home each year, much of it from the United States. The money – more than $24 billion – represents about 3 percent of the country's gross domestic product, according to the World Bank.

A 2008 study by the nonprofit Tomás Rivera Policy Institute at the University of Southern California, which studies Latino issues, showed that one in three Mexican nationals had received at least two remittances a year; 33 percent had received six or more.

"The amount of monies these remittances represent is enormous," institute president Harry Pachon said at the study's release.

But the amount and frequency of those payments has fallen sharply nationwide for the second year, according to Mexico's central bank.

The present slump is new territory after years of double-digit percentage growth in remittance payments from Mexican immigrants through the 1990s and into the early part of the decade. By 2006, the economy was beginning to slow. Since then, the cross-border flow of money has continued to dwindle.

"The stagnation we saw by 2006 and 2007 was something completely new," González Gutiérrez said. "We thought it would be a plateau."

Though the monies aren't seen as an engine of Mexican economic growth, the decline in payments is among the factors that have dragged down a Mexican economy closely tied to the United States, González Gutiérrez said.

"The main sources of hard currency came into crisis at the same time," González Gutiérrez said. "The recession caused a drop in remittances, exports and tourism dollars. The fluctuation in the price of oil and a drop in production was also very significant. All of that coincided. It was a perfect storm."

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