The financial crisis in the U.S. has led to a dramatic decrease in the amount of money being sent by immigrants here to relatives and civic organizations in their native lands, with many trimming back on remittances or having to skip them altogether as they face job losses and rising prices for many necessities. The double-edged hit has the Mexican government expecting a 10% dip in the amount of money flowing south of the border this year compared to the $25 billion sent in 2007.
Yudith Cruz offers an example of how the bits and pieces of remittances sent by individual immigrants add up to big numbers for cross-border economies. Cruz came to Los Angeles from Miahuatlán in the state of Oaxaca in Mexico, and for a period of time counted her job at a Subway sandwich shop and her husband's work in construction to cover the household budget for the couple and their six-year-old daughter with money left to send to relatives in Oaxaca.
Now construction work has become scarce amid the mortgage meltdown and the contraction of the housing market, turning the screws on the Cruz family's budget.
"Until a year ago we sent money [to Oaxaca] two or three times per month," Cruz says. "Now it's once a month. We have to pay the bills, and our rent recently went up."
Cruz says the U.S. economy is still better than what her family would face back in Oaxaca, and the prospect of millions of immigrants remaining here and trimming back on remittances has the Mexican government worried about families, towns and whole regions facing a pinch on the remittances that have become part of their economic systems.
Some families are seeing cuts much deeper than the 10% expected overall in Mexico.
Tito Hugo Martinez Hernandez came to the U.S. from Santa Ana of the Valley, a town in Oaxaca, and sent $500 a month to his family until a year ago. Now he struggles to send $100 a month, an 80% decrease. Hernández works in restaurant and makes $12 an hour to support his wife and children. Anything extra goes to his parents and parents-in-law in Oaxaca.
"We used to be able to send more, but with the economic situation there are fewer customers at the restaurant and I am working fewer hours, so this is affecting us."
Hernandez says he has cut any unnecessary spending, ensuring that there's money for the rent and food, and sending what little is left these days to Oaxaca.
A manager of company that offers money-transfer service from Los Angeles to Oaxaca says that the total value of remittances has fallen by approximately 5% this year--better than the Mexican government's projection but still a disappointment. The executive, who asked that his name be withheld, said the results reflect the jobs of customers who use the service.
"Customers who work in restaurants have not cut as much as people who work in construction," he says.
Those numbers also reflect the U.S. economy, which saw the housing sector among the first to feel the hit of the economic downturn. The Mexican government's projection of a greater reduction in remittances could be on target as the slowdown spreads to the service sector.
Mireya Olivera is editor of Impulso.
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