Immigrant workers sending less money homeby Elizabeth Baier, Minnesota Public Radio
The financial crisis is hitting remittances, particularly to Latin America and the Caribbean. A recent report by the Inter-American Development Bank, says the amount of money sent home to families in the region by relatives living in the U.S. is projected to grow at its slowest rate on record this year.
Minneapolis, Minn. — There's one thing Valeriano Benitez won't stop doing in these tough economic times.
Once a week, Benitez drives to a second-floor, money-wiring business on East Lake Street in Minneapolis and sends money to his wife and three teenage children in Morelos, Mexico.
"I send my family money so they can build a house, buy basic necessities to survive, and, well, move forward, and give my children an opportunity to go to school," Benitez said.
Remittances are the lifeline for millions of Latin Americans. Benitez knows that all too well. The 38-year-old has sent money back home every week since he arrived in Minneapolis six years ago.
Benitez has felt the pinch of the hard economic times, but is determined to keep sending money back home.
On a recent visit to Los Gallos 2, the money wiring business, he sent $200 home. That's less than half of the $500 he earned working on the assembly line of a local printing company that week.
"I used to send three-fourths of my paychecks and would keep just what I needed to cover my food, rent and personal expenses," Benitez said. "Now, I'm only sending half, or sometimes even less than that."
Both here and around the region, Latinos are feeing the impact of the U.S. financial crisis in more ways than one.
The Inter-American Development Bank, one of the biggest lenders to Latin America, estimates the amount of money immigrants living in the U.S. will send their relatives in 2008 will grow at the slowest rate in nearly a decade.
The actual amount of money migrants will send home will increase slightly, from $66.5 billion in 2007, to $67.5 billion this year.
But when adjusted for inflation and exchange rate variations, the bank estimates that amount will contribute 1.7 percent less to household incomes in Latin America and the Caribbean than last year.
Mexico and Brazil -- the two largest recipient countries -- have already shown declines in remittances in the last several months, according to Greg Watson, remittance program coordinator for the IDB's multilateral investment fund.
Smaller, economically dependent countries in Central America are also starting to feel the pinch, he said.
"We saw the drop in remittances spread to El Salvador and Guatemala, and that's really important because those are countries where remittances represent a really high proportion of GDP -- 18 percent in El Salvador and 12 percent in Guatemala," Watson said.
Overall, the decline is a sharp contrast from the nearly 14 percent growth rate the IDB recorded annually for the region since 2000.
On the ground, this means families that rely on remittances are having to learn to make less money last longer.
Much of the money that went toward home construction and savings, is now it's being used for basic necessities, like food, clothing and shelter. This has the potential to worsen poverty across the region, according to Watson.
"You're seeing that families are going to be spending more money on those daily necessities, more of their remittances," Watson said. "They might be receiving less money from their families, but at the same time they're going to need to spend more money on the necessities at home."
Spending less is something Oscar Velasquez has had to learn how to do.
The 23-year-old has lived in Minneapolis for a year and a half and wires money back home to his mom in Morelos, Mexico bi-weekly.
To cut down on his own expenses, Velasquez lives with three relatives and splits food costs with them. He continues to send money because he knows his family is struggling back home, too.
"They tell me there's no work there, and then they ask me how things are going here," Velasquez said. "I have to tell them work is tough here now, too."
Like many migrants, Velasquez sees sending remittances as a familial obligation. And he said he'll continue to send money home -- even if it's in small amounts -- so he can help his mom fulfill her own dream of owning a home in Mexico.
- Morning Edition, 10/21/2008, 7:40 a.m.