2004 May 17 Monday
Bush Administrations Wants Immigrants To Send More Money Home

Immigrants are sending a lot of money home.

In tiny ethnic groceries and check-cashing shops, immigrants in the Washington area line up every day to send $200 or $300 to families back home. Now, a detailed study has concluded those payments add up to more than a billion dollars a year that goes to Latin America from workers in the District, Maryland and Virginia.

The massive flows are part of an estimated $30 billion annually that Latin American immigrants in the United States convey to their home countries, according to the study, to be released today by the Inter-American Development Bank.

California is the biggest source of remittances.

California ($9.6 billion), New York ($3.6 billion), Texas ($3.2 billion) and Florida ($2.5 billion) lead the ranking, but Georgia ($947 million), North Carolina ($833 million) and Virginia ($586 million) are among the top 10 states.

During the past decade, industries such as poultry processing, meatpacking, hotels, restaurants and construction attracted Latin American migrants to these non-border states and others in the Midwest. As a result, remittances from the Mid-Atlantic region (Virginia, Maryland and the District of Columbia) are over $1 billion a year, largely to countries in Central America and Mexico.

On average, Latin American immigrants send money home once a month, typically in amounts ranging from $150 to $250. Unlike previous surveys among remittance senders, this one found a great number of people who make money transfers more than once a month, probably a reflection of the fact that services have become cheaper over the past few years.

This $30 billion estimate does not include money sent home by immigrants from Haiti, English speaking Caribbean countries, or immigrants from other parts of the world.

Nearly eight in 10 remittances senders use money transfer companies. Others use informal couriers known viajeros, banks and credit union or mail. Only half the Latin American immigrants have bank accounts.

According to the responses, 24 percent of the interviewed were U.S. citizens, 39 percent were legal residents and 32 percent are undocumented. The survey was based on 3,802 interviews conducted between January and April. The states and the district covered in this survey represent more than 99 percent of the population of Latin American-born adults in the United States. It did not include Haitians and immigrants from the English-speaking Caribbean.

Poor immigrants cost middle and upper class taxpayers more than the immigrants pay in taxes. Therefore Americans who pay a lot of taxes are subsidizing the transfer of money abroad. This money transfer makes the already large US trade deficit even worse. The money these legal and illegal immigrants send abroad is money that is not used to buy goods and services locally. The immigrants also drive down the wages of Americans and therefore also decrease the taxes paid and increase the demand for social services by the native poor. Immigration is causing a shrinking of the size of the middle class in states which are receiving the most number of immigrants. This could all be avoided since immigration law really could be enforced if only our elites were not so opposed to the will of the majority on immigration.

Of course we can not expect the United States government to be bothered about money flowing out of the country in a way that involves an appreciation of American interests. Deputy Treasury Secretary Samuel Bodman wants to make it easier for leagl and illegal immigrants in America to send money back home.

"The goal here is two-fold: first to increase overall awareness of the range of services that are available; and secondly, to foster more competition, which in turn will result in affordable and accessible remittance services," Bodman said. He also re-stated the United States' support for the goal of cutting the average remittance cost by half in the Americas region by 2008.

The Bush Administration views remittances as a rapidly growing market and a market that they would like to see become more efficient. The Bush Administration sees a growing market in remittances and obvious thinks all growing markets are just peachy.

Washington -- In recognition of the growing importance of remittances (money transfers) sent from people in one country to recipients in another, two international conferences will be held on the subject: in Washington on May 17, and on May 31 in Rio de Janeiro, Brazil.

The scheduled keynote speaker at the Washington conference, sponsored by the Inter-American Development Bank (IDB), is Samuel Bodman, the U.S. Treasury Department's deputy secretary. Prior to Bodman's speech, a news conference will be held by pollster Sergio Bendixen to present the results of his survey on how much money is being transferred by immigrant workers in the United States to their home countries in Latin America and the Caribbean.

The conference in Brazil, also sponsored by the IDB, will focus on the theme of "Remittances as a Development Tool in Economic Development." Scheduled speakers at that event include Bendixen (president of the Miami-based polling firm Bendixen and Associates), a number of Brazilian government and banking officials, and representatives from the IDB.

The IDB says remittances are nowhere more important than in Latin America and the Caribbean, now the fastest-growing and largest remittances market in the world.

The IDB said that in 2003, the region received more than $38 billion from its expatriates around the world. About 75 percent of the money was sent from the United States.

These money transfers, said the IDB, outstripped the combined flow of all foreign direct investment and official development assistance to the region. The IDB added that remittances substantially exceed tourism income in each country of Latin America and the Caribbean, and account for at least 10 percent of the region's gross domestic product.

Immigrants should be made to pay for all the costs they create for American taxpayers (health care, education for their children, crime, and other costs) before being allowed to send money home. But don't expect our nation's traitorous elites to get behind that idea.

Update: Two more points should be noted about the remittances from a tax revenue perspective: First of all, money sent abroad is not going to generate local US sales tax revenue when it is spent. So that is a negative on the tax revenue side which means native Americans will have to pay more in taxes to compensate. Also, money sent abroad is far more easily hid from US tax collection agencies. The earners show a lower living standard in the United States because they do not spend here. Many illegals in particular tend to work under the table and hence their shipment of their earnings abroad makes it even less likely they will pay anything in taxes to compensate for the costs they generate for American taxpayers.

Share |      By Randall Parker at 2004 May 17 03:43 PM  Immigration Economics

Luke Lea said at May 17, 2004 8:27 PM:

A technical point: Money sent abroad tends to reduce, not add to, our trade deficit. This is because the recipients spend it to purchase real goods -- or rather, trade it for pesos, with which they buy real goods, which eventually leads to the dollars being spent to purchase real goods exported from America. You're larger point, however, is well taken.

Randall Parker said at May 17, 2004 8:36 PM:

Luke, How can money sent abroad reduce our trade deficit? They use the dollars to buy goods locally in other countries. How do the dollars end up getting spent to buy American goods?

If someone in America buys goods from Bolivia and those goods get sent to here that is causing an increase in the trade deficit, right? If instead someone in America sends money to someone in Bolivia and that person buys Bolivian goods that stay in Bolivia that is actually worse because the goods do not even show up here and yet the money has left in both cases.

Luke Lea said at May 18, 2004 4:20 AM:

"How do the dollars end up getting spent to buy American goods?"

I know this is tricky but, sooner or later, all dollars end up getting spent to buy American goods, because that is all they are good for. It is possible to hold them -- in effect to lend them, either by purchasing US Treasury bonds (lending to the government) or corporate bonds (lending to American companies) -- and this is exactly what is happening in China and Japan, for example, which causes our trade deficit with those countries. However, as a rule, only rich people (or elite institutions) can afford to wait. Remittances overwhelmingly go to poor people in poor countries who tend to spend them. Other things being equal, therefore, remittances abroad tend to increase the amount of real goods flowing out of this country.

Dave L. said at May 18, 2004 7:28 AM:

With all do respect to Mr. Lea, I would take issue with his assertion that dollars are only useful for buying American goods or securities. In fact many countries from the Philippines to Columbia (no kidding) have vast amounts of US currency in circulation. As of 1997 (http://www.ncpa.org/ba/gif/ba280tab.jpg) net holdings of Foreign currency were estimated at a whopping 234 Billion dollars. I wonder what it is now?

I have no doubt that some fractional amount ultimately buys American goods but in general US cash and securities circulate internally buying both local produce or foreign (not US) manufacture and services. It is not necessary at all for cash or credit issued by nominally American institutions to return home. As a Project Manager building or remodeling US Embassies for several decades, I was inevitably tasked to open and maintain several currency and securities accounts to facilitate our work. With the exception of countries with hard currency limitations, we were able to open dollar accounts, disburse and receive monies as we saw fit. Overwhelmingly, this money bought local labor, materials and services. Which in turn supported the local economy and occasionally neighboring economies. The bottom line is that the dollar is a de facto currency for many countries and it's export by US workers merely contributes to our balance of payments problem as Mr. Parker suggests.

Luke Lea said at May 18, 2004 8:55 AM:

OK, I accept Dave's point: dollars can also serve some other purposes in foreign countries, e.g., as a local medium of exchange. Still, the point I am trying to make is valid: remittances by foreign workers in this country to their families back home favors exports over imports, and therefore tends to decrease our trade deficit. Another way to appreciate this is to think of what happens if American children send money to help their American parents in another state: there is a tendency for the level of real consumption of goods and services in the recipient's state to go up (because the parents spend the money on themselves)which, other things being equal, will cause more goods and services to cross state lines into the recipient's state, not vice versa.

Greg Calixte said at November 9, 2004 2:03 PM:

I will conquer with Luke Lea's point. The dollar is used by these countries to buy all kind of services from the US:
Telecom equipement (booming in the region right now specially cell phone)
Internet Services (booming in the region Cybercafe's and Voice Over IP)
Trucks and many more
Equipment for the assembly industry

I have a small company in Haiti, we provide Internet services and we have 2 Cybercafes. Keep in mind that Haiti doesn't make computers, printers, hardrive, memory and Internet Services. We used those things on a daily basis.

Most of the people that use my services, they receive the money from family mostly from the US. The money goes in a circle a the final destination is the United States of America.

BENSON SANDRA said at July 23, 2005 6:12 AM:

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john bezeredi said at August 6, 2005 6:59 PM:

That really shows what you guys know about international balance of trade issues: Because someone receives funds in US$ does not mean that they will buy US goods. In fact, your computers were not made in the US, but probably in China. The chinese will accept US$ not to buy goods and services from the US, but to purchase US government debt so that they may sway US trade policy ( i.e. we will dump all your securities if we don't get preferencial trade status.)

In Canada, where remittances are also sent to Haiti, the dollars are used by the chinese or malays or whomever to buy our resources because we don't have any government debt to sell. We have oil, ferrous metals, wood products and the like.

Indeed, the money does hemmorage out of the US it may never return to the US, it may float around outside as Euro dollars as Haiti is more likely to purchase goods from France than the US.

Here is your problem: the longer the US stays in Iraq ( keeping us all safe for peace freedom and democracy) the more the US government will have to issue in debt, the more debt that is bought up by countries like china, etal. the less say the US government will have when low-cost high technology nations come in and undermine domestic industries. One day, a chinese company may buy an innocuos US company that makes the on/off switches for missle guidance systems, and would gain access to US defence systems through their involvement with their purchased company.

Jolanta Swords said at August 31, 2005 10:23 AM:

Nothing to do with your article, as interesting as it was, but actually few personal questions.
Is your father's name Richard, mum's Miriam and do you have sister called Rachael ? Have you been to London,UK in 1971 ? If so I'd love to hear from you.

With regards
Jolanta Swords

joe hickham said at February 23, 2006 6:41 PM:

word up

Cindy said at March 26, 2006 12:07 PM:

As a Texas resident this seems like economic terrorism to me. I'm for the state tax on money sent by legals and illegals. Spend the taxed money on a wall between the US and Mexico and on our infrastructure these people are using up and bankrupting. If the Feds won't take action it is time for each state to rise up. Yes, this country was built by immigrants, but they came her legally and adopted this country as their own.

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