Latin American Towns Face Economic Woes with Rise and Fall of U.S. Migration and Deportation
“Before [the villagers of San Jose Calderas, Guatemala] started leaving for the States, all the houses were made out of canes and wire,” recalls villager Maria Lopez Santos. “But thanks to the United States, those who knew how to think and manage their money began to build houses and buy vegetable plots.”
For Santos, a villager of San Jose Calderas, the money she received from her family members who migrated to work in the U.S. put her kids in high school, saving them from working in the fields. With many others in her village receiving remittance money from family members who reside in the States, San Jose Calderas turned from a land of hunger and failed crops, to a developing town with robust economic activity.
The transformation of the village of San Jose Calderas is just one of the many benefits that remittance money can have when it is sent back to villages across Latin America.
In Jalpan de Serra, Mexico, José Sánchez joins a line of hopeful Mexicans at a pet store. He is there to collect remittances being sent from loved ones working in the U.S., mostly as undocumented immigrants.
Sánchez says that the “remittances generate work in communities” as it goes towards paying the salary of three construction workers he hired to build a family ranch.
In Phoenix, Arizona, an undocumented immigrant named Daniel tells a local news network that he sends remittances to Mexico every month to pay off a bus he bought in order to start a family business. Daniel’s parents “depend 100 percent” on his remittance money and with it, are able to generate a source of income by charging locals for rides.
For many Latin American villagers, having family members migrating to the U.S. for employment opportunities is the lifeline for their economies.
The increase in total income due to remittance money (that would otherwise be limited to minimum wages or underpaid work) results in improved nutrition, more educational opportunities, an influx of capital, and an overall higher living standard, which leads to higher productivity and economic growth for villagers.
According to MarketPlace, “75% of remittances are used to cover basic needs such as food, shelter, and recurring bills. Another 10 percent of remittances are used for things like education and health, while the remaining 15 percent is used for savings and investing in businesses or real estates.”
Humberto Berrones Montes, a historian living in Jalpan, Mexico explains that “due to money made by [family members] in the U.S., the economic situations of households have completely changed. Now people have their stoves, washing machines, they have televisions, and generally, each household has three or four trucks.”
A study by The Dialogue found that the growth in remittances sent to Latin America and the Caribbean in 2017 “is substantial and far exceeds the World Bank’s forecasted 1.2% economic growth for the entire region.”
Of all the remitances that flows into Latin America, about 40 percent (approximately $27 billion) ended up in Mexico in 2017. Remittances make up one of the highest sources of foreign income for Mexico.
Since Trump’s election, remittances have mostly increased due to the fear that Trump will slap a tax on Mexican remittances to pay for one of his biggest campaign staples, the border wall.
Many economists agree that Trump’s threats to halt remittances is the driving factor for a large spike in the amount of money Mexicans sent home before any tax laws were established.
Other possible explanations for the rise in remittances include the fact that the median length of time a Mexican migrant has lived in the U.S. has increased from seven to 12 years.
But what happens to the economy when these Latin American immigrants are deported back to their home country after years of living in the U.S.?
A halt to remittance income can drastically change the lives of not only dependent family members, but can also negatively affect villagers who benefit from the increased economic activity, especially those of lower-income households. .
Sánchez, who uses the remittance money to pay the salary of his hired construction workers, says that “if [relatives in the U.S] don’t work, well sometimes you don’t have a job, because sometimes they are the ones that generate work in the communities, in the ranches that they’re from.”
After all, the salary differences between his home country of Mexico and the U.S. are pretty significant. Sánchez states that in Mexico, on average, a person earns 1,000 pesos, or 55 dollars in one week, which is less than what you can earn by working just one one day in the U.S.