A recent study by the Inter American Development Bank reports that Latin America-born adults living in the United States will send some $30 billion back to their countries of origin in 2004. These remittances surpass all foreign aid provided to Latin America and rescue innumerable families from poverty. VOA’s Serena Parker reports on this phenomenon.
The Inter American Development Bank estimates that 60% of Latin American-born adults in the United States regularly send money back home to their families. This year these remittances are expected to exceed $30 billion.
According to Donald Terry at the Inter American Development Bank, every country in Latin America and the Caribbean receives remittances. “It’s substantially more than all foreign aid to the region,” he says. “In fact, it’s more than all foreign aid and foreign direct investment combined.”
On average, Latin American-born workers send money home once a month in amounts ranging from $150 to $250. According to Donald Terry, these remittances typically go to poor people in economically underdeveloped areas where the monthly stipend may make up as much as 50% to 80% of their income. “And so for many families it’s literally the difference between abject poverty and being able to have at least some decency in their lives,” he says.
The men and women who send money back to their families often work at low-wage jobs, yet manage to send home around 10% of their income each month. According to Gustavo Torres, executive director of CASA de Maryland, a Latino immigrant advocacy group active in the Washington area, they manage to save money in two ways. “One way is that they work in two or three jobs to send the money back home,” he says. “The second way is that they live together with friends. In that way they can save some money on rent.”
By scrimping and saving, these workers are able to send money back to relatives that pays the rent, puts food on the table and sends children to school. Gustavo Torres says without that money many Latin American families would sink into poverty. “In different countries of Latin America people live with one dollar a day,” he says. “So when they receive $200 a month it’s a lot of money and they utilize the money really well.”
Sometimes the penny-pinching can cause resentment among immigrant children who are growing up in the United States and don’t understand why they must sacrifice their needs for family members they may not have seen in years.
Some American citizens are critical of the remittances as well, but for different reasons. According to Ira Mehlman, media director at the Federation for American Immigration Reform, the tradition of sending 10% of each paycheck home keeps these Latin American-born workers in a permanent underclass. “Many if not most of the immigrants that we get from Mexico and Latin America today are very poorly educated people who really don’t have the wherewithal to get ahead in American society,” he says. “So they are relegated to the lower rungs of our economy earning very low wages. And out of those meager wages they’re sending part of them back to the folks in the home countries. So they really have trouble getting ahead here.”
Ira Mehlman says there is no evidence that the money sent home by these workers is used to create economic opportunities or jobs. Instead he says it creates a culture of dependency.
“These societies and these economies rely on sending their most fit and able workers out of the country and to the United States in order to get remittances back,” he says. “And what it does is it impedes the economic growth. It impedes the kind of political and social reforms that are necessary to grow those economies in Central and South America and in the long run it doesn’t do them any long term good.”
Others point out that the United States has a robust, vibrant economy that has long acted as a safety valve for poorer countries with a surplus labor force. In fact, the Inter American Development Bank’s Donald Terry is the grandson of Irish immigrants who came to America over 100 years ago.
“And that place that my grandmother sailed from is called literally the Harbor of Tears,” he says, “because that’s the part of Southern Ireland in Cork that millions of people left to come to the United States. Nobody in the United States thinks that immigration was a bad thing for the Irish economy.”
Mr. Terry says the Inter American Development Bank is working with Latin American credit unions to help them enter the remittances market. This would enable these financial institutions to expand their lending to small businesses and to offer the families who receive remittances more options for savings and investments, which in turn could spur development and job growth in the region.