Remittances to Mexico Are Up 8%
January 13, 2012, 04:41 AM
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According to the elite liberal media, illegal immigration has “sputtered to a trickle” and therefore the time is ripe for a massive amnesty, in the minds of the ever-hopeful Raza gang. (If illegal immigration were exploding to record levels, that would be time for amnesty also.)

However, it’s interesting to note that remittances to Mexico are on the uptick — $23 billion last year — which is a strong indication of millions of Mexicans working here and sending their disposable income home. If fewer Mexicans are entering illegally (doubtful), not many are packing it for a return to the dear homeland.

Naturally, the pro-Mexico Los Angeles Times (located in a county where the November unemployment rate was 11.5 percent) thinks increased remittances are a swell sign of hispanic diversity bubbling along, not the strip-mining of America.

Remittances to Mexico are rebounding, Los Angeles Times, January 11, 2011

Head to 4th Street and Broadway in downtown Los Angeles and you’ll see signs of a labor market on the mend.

At a Continental Currency Services Inc. branch, a check-cashing and money-transfer business, housekeeper Maria Guadalupe Gutierrez waited patiently in line on a recent afternoon to wire $200 to her mother in Chiapas, Mexico.

Gutierrez used to send more before the economy tanked and clients stopped having their houses cleaned as frequently. But things have picked up lately, and she is getting more calls.

“I hope it keeps getting better,” said Gutierrez, 38, before rushing off to finish errands downtown.

Ending a three-year slump, remittances to Mexico are finally on the upswing, thanks to an improving U.S. job market. Analysts expect that money sent home last year by Mexicans living abroad, most of them residing in the United States, will top $23 billion when Mexico’s central bank releases annual figures this month. Although still below the peak of $26 billion in 2007, that would be a solid 8% increase over 2010.

Money transfer giant Western Union Co., whose revenue sagged during the recession, saw its remittance business strengthen in 2011. The Colorado company reported a 5% increase in revenue from its Mexico business in the third quarter compared with the same period in 2010. Its stock price is up more than 13% over the last three months.

The fact that many (if not most) foreigners use Western Union to move money when electronic banking now exists is noteworthy. It shows my 2002 suggestion that remittances should be taxed would still work, even in our more digitized time.

The figures underscore falling unemployment rates in California and nationwide, where sectors such as construction, manufacturing, restaurants and hotels that employ large numbers of Latino immigrants are creating jobs.

“People are working more,” said Jesus Hernandez, manager of the downtown Continental Currency branch, as he and another teller hustled through a line of 12 people. Money “wires are coming back up.”

The uptick is also good news for Mexico. Remittances are the nation’s second-largest source of foreign exchange, behind petroleum sales. And they’re a lifeline for millions of low-income Mexicans who use the funds for basics such as food, education and housing. 

Remittances are also crucial for infrastructure projects in hardscrabble rural areas of Mexico. Most state governments there have a “Three for One” program in which emigres’ contributions are matched by local, state and federal governments to pay for schools, clinics and other public works projects. When remittances plunged, many projects were suspended or delayed.

“The rise in remittances will mean the Mexican economy will grow compared to the year before,” said Alfredo Coutiño, Latin America director for Moody’s Analytics. “Remittances are very important for the Mexican economy.”

Conversely, he said, if the U.S. recovery slows, it could derail Mexico’s progress.

Remittances to Mexico soared in the early 2000s as immigrants found abundant work swinging hammers and hanging drywall during the U.S. housing boom. At the peak, 1 in 5 Latino immigrants in the U.S. was employed in the building trades, according to some estimates.

But the housing bust and recession sent remittances tumbling after millions of jobs vanished. A crackdown on illegal immigrants has also take a toll. Tough new state laws aimed at undocumented residents in Alabama, Arizona and other states have forced some migrants to abandon their jobs. Others have changed their financial habits, holding on to cash in the event they’re forced to relocate, experts said.

More stringent border enforcement, workplace raids and deportations by federal authorities have also affected remittances. Nearly 800,000 illegal immigrants were deported in the last two fiscal years, many of them from Mexico, according to data from U.S. Immigration and Customs Enforcement. Migration from Mexico to the U.S. is at a virtual standstill partly because of these tough measures and continued high unemployment in the U.S., Mexican census figures suggest.

Money transfer services felt the pinch. Western Union, for example, with its ubiquitous yellow-and-black logo, saw remittances to Mexico sag during the U.S. recession, which stretched from December 2007 to June 2009. The largest decline came in 2009, when the company’s Mexico revenue slipped 15% from the previous year, to $306 million.

Still, an estimated 11 million Mexican immigrants, both legal and undocumented, reside in the U.S. For many, ties to their families in Mexico remain strong. Studies have shown foreign-born workers are more likely to accept lower wages and to relocate to find work during tough times than native-born workers. That resourcefulness is helping fuel the recent boost in remittances, experts said, even though U.S. unemployment remains relatively high.

“The migrant population [is] resilient, even with the slowdown in sectors,” said Natasha Bajuk of the Inter-American Development Bank. “If they lost their job in construction, they’ll find one in services…. One of the main motivations of having migrated is to provide for families back home. They’re, by definition, a population that is willing to take risks.”??A weakened Mexican currency is helping as well. Before the recession, a U.S. dollar bought about 11 pesos. Currently, a dollar buys 13.6 pesos, meaning dollars earned in the U.S. are stretching further south of the border.

“Immigrants have more of an incentive to send money to families even if they are having savings or unemployment problems,” said Rodolfo Garcia Zamora, an economics professor at the Autonomous University of Zacatecas, Mexico.

Pedro Morales, a 21-year-old laborer who works in construction, said that times have been tough in recent years. He and his middle-age father, who share a room in Eagle Rock, have struggled to find work. But they’ve stayed put because they’re supporting Morales’ three sisters and mother in Mexico.

Morales said he used to send them as much as $700 every couple of weeks. Now he’s lucky if he can scrape together half that to help buy food and pay for his sisters’ school uniforms. Still, he said every dollar counts.

“You do what you can,” Morales said in Spanish. “But you make more money here” than in Mexico.