2008 January 29 Tuesday
Dollar Drop Cuts Allure Of US For Third World Immigrants

US dollars sent abroad don't buy as much back in the home country.

Cambridge, Mass. - Working in the kitchen at a mid-priced restaurant in Cambridge, Mass., Jose Lucas managed to cover all the expenses of his wife and three kids in his native Brazil. But that changed when the real appreciated 60 percent against the US dollar in the past three years.

"I had to get more hours at work so I could send more money," says Mr. Lucas. "I used to work 40 hours a week. Now, I work 56." So far, the extra hours have made up the difference.

Across the US, the falling dollar value has sent ripples through immigrant communities that send money to family overseas. As some currencies for developing countries have risen substantially against the dollar, many immigrant workers are increasing their workweek by up to 20 hours or taking second jobs. If the dollar's slide continues, the US may become less attractive to migrant workers, analysts say.

Although it's too early to tell whether this will cause a major shift in immigration, a number of migrants in Ecuador, Peru, and Bolivia are already choosing Spain over the US.

Fewer will come. Low wage jobs in the US don't generate enough extra income to make it worth the effort. But since some of those here are sending home more dollars I wonder what the net effect has been so far. But in the longer run the weaker dollar will reduce immigration and increase the number who return.

Share |      By Randall Parker at 2008 January 29 06:03 PM  Immigration Economics

Kenelm Digby said at January 30, 2008 4:05 AM:

of course, this is precisely what a free-floating devalued currency is supposed to do - make Americans poorer relative to the 'succesful' exporting countries, thus correcting the trade-balance by choking off demand.
The irony is that immigrants contribute massively to the trade benefit by repatriating dollars.
So the next time a neo-con bullsh*t artist claims that immigrants 'enrich' America - bear this in mind.

Wolf-Dog said at January 30, 2008 11:04 PM:

But if the number of immigrants diminishes dramatically, then the population of the United States will actually shrink, and hence the economic growth of the U.S. will also diminish dramatically.

Note that the economic growth and net trade surplus of the European Union was helped by the trade deficit of the US. If the population growth by immigrants diminishes, this will hurt EU also.

Engineer-Poet said at January 31, 2008 12:21 PM:

If a 10% shrinkage of the US population yields a 5% shrinkage in the economy, I am better off.

Kenelm Digby said at February 1, 2008 4:12 AM:

In fact low-skilled, low-wage, low-productivity immigrants are actually a lifetime liability on the US taxpayer and economy.
A recent paper by Robert Rector et al offers some very persuasive evidence on this point.

Wolf-Dog said at February 1, 2008 5:32 AM:

Engineer-Poet and Kenelm: It is true that shrinking the population can actually cause the quality of life to increase even if the GDP is shrinking. It is also true that low-skilled and low-productivity immigrants are a liability to th economy and tax payers, both the US and EU. But in the short run, in the welfare state system, since the government gives free, newly printed cash (in addition to tax revenue) to these low-productivity groups, the result is that the corporate profits increases dramatically (proportionally to the newly printed cash used to buy from corporations), since these low-productivity groups are forced to spend all the money the government gives to them. It seems that this precisely the reason the Republicans (who are in general not very sympathetic to foreigners in many cases), favored the immigration of low-skilled groups, both legal and illegal immigrants. But in any case, the corporate profits will shrink dramatically when the population start to decline, and EU will also incur this fate if their immigration slows down due to the war with Islam.

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