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Immigrants in U.S. Now Begging for Money from Home

Tuesday, 30 Jun 2009 03:29 PM

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FAIRVIEW, N.J. - For five years, immigrant day laborer Leo Chamale wired money twice a month from New Jersey to his family in Guatemala. Recently, he stepped up to the money transfer window for a different purpose—to ask that his family send some of his savings back to him.

"I hadn't worked for five months, and I was two months behind on rent, so I had them send $1,500," the 21-year-old Chamale said in Spanish. "My mother said, `That's a lot of money!'"

With the U.S. economy in a ditch, money transfer agencies have been reporting a decline in the wages immigrants are sending back to their home countries. Now, it appears some immigrants are going a step further—asking their relatives to wire them money back.

"We've never seen this before," said Marlen Miranda, manager of Peerless Travel in Fairview, which runs a money transfer service. "I mean, one or two people might receive money for a special reason, but not this quantity of people."

Miranda said she has seen her customer base dwindle from 200 people to 75 who regularly use her money transfer services each month. Of those 75, Miranda said, about 20 now come in to receive money instead of sending it home.

"They can't send them much, because the economy in their countries is so bad," Miranda said. "Sometimes people only receive $20 from home."

It is not clear how much money is being sent back to the U.S. or how widespread the phenomenon is. Large money transfer agencies, such as Western Union, said they do not disclose how much money is sent or received by their field offices. Banks in foreign countries often track only money sent into the country by their citizens living abroad.

But clearly, these "reverse remittances"—as the money wired back to the U.S. is called—are extremely small when compared to the money immigrants send home.

Immigrants working in the U.S. sent more than $50 billion back to their native countries last year, according to the World Bank, which predicts the amount will drop 5 percent in 2009. Mexico's central bank said remittances sent to that country are down more than 18 percent in the past year, and registered their biggest decline on record in April.

Alejandro Tejada, manager of Tenares Communications, a Western Union office in Passaic, said he, too, has noticed money flowing in reverse, into the U.S.—a phenomenon he rarely, if ever, saw before.

It began around late March, Tejada said, after a tough winter in which construction projects and other ventures that usually employ immigrant day laborers ground to a halt.

World Bank economist Dilip Ratha said he devised his own measure of how much money is sent back to immigrants living in the U.S. and other countries. Analyzing foreign currency deposits in the Dominican Republic, Mexico and India from February 2008 to January 2009, Ratha found that immigrants from those countries tapped into their savings accounts—money they had previously wired home—at an accelerated rate as the global economy worsened.

The amount of foreign currency on deposit declined 7 percent in the Dominican Republic, 12 percent in India, and 6 percent in Mexico during the 12-month period, Ratha said.

Nevertheless, "people are sending far, far, far more back home than what they are taking out," he said.

Ratha said the surge in money wired back to the U.S. will not last long.

"The ability of, let's say, a Mexican family or a Nepalese family to be able to send dollar remittances to maintain somebody to pay for living expenses in the U.S. or in Europe is very weak, because they are very poor," Ratha said. "And the savings that are there of the migrants are also not very significant in most cases—so those savings will run out very quickly."

Standing on a street corner a recent morning in Palisades Park, looking for work, Chamale said he is now hoping to earn just enough for a plane ticket home.

"I was forced to ask for money from home during the winter months," he said. "After that, I said to myself, `That's it—I'm heading back to my country.'"

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