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Puerto Vallarta News NetworkBusiness News | February 2007 

A Record Year for Remittances
email this pageprint this pageemail usDianne Solís & Laurence Iliff - Dallas Morning News

The amount of money that Mexican immigrants sent back to their homeland hit a record $23 billion in 2006 – suggesting a greater number of workers are sending more money home.

Immigration experts attributed last year's 15 percent rise to multiple factors, including increased migration, more generosity by immigrants and cheaper sending costs.

It was the fifth straight year that remittances have risen between 15 and 25 percent.

Some experts even cited deportation fears as a reason for the spikes.

"They used to spend more money here, but now they are saving every penny here and sending it down there," said Socorro Perales, a naturalized citizen who lives in Dallas and works among immigrants from the central Mexican state of Guanajuato.

Ms. Perales regularly sends money to her grandmother in Zacatecas.

Mexico's Central Bank said in its quarterly report released Wednesday that reduced costs to send money – due to greater competition by banks and other businesses – are one reason for the increase.

For example, in 1999, the cost to send $300 from Dallas to Mexico was $27. Last year, that same transaction cost $11.50, the Central Bank said in its report.

The Central Bank said it has also done a better job counting the dollars sent home over the last several years.

Previously, there were more informal channels for sending money. Today, 98.5 percent of transfers are reported to the bank under stricter legal requirements, the bank said. It recorded six times more transactions in 2006 than it did in 1995.

Increasingly, the flow of money out of the country has been a source of rancor in the U.S.

State legislatures in Arizona and Texas have proposed taxing the money to pay for such social services as health care and education.

"The rapid rise in remittances during recent years is the result of both better registration of these transactions, as well as a genuine increase in these resources," the bank said in its report Wednesday.

Roberto Suro, director of the nonpartisan Pew Hispanic Center, cautioned that increased migration alone can't explain the rise in money transfers.

He noted that Central Bank figures show a doubling of money transfers from $10 billion five years ago, and illegal immigration hasn't doubled in that time.

"I think it is more people sending more money," Mr. Suro said, "and it has gotten cheaper and easier to send money."

A survey by the Inter-American Development Bank to be released today estimates that Mexicans received $25 billion in 2006, $2 billion more than Mexico's Central Bank said in its report.

The poll showed that of 2,415 people surveyed throughout Mexico by the Inter-American Development Bank, 17 percent said they received money from family north of the Rio Grande. The poll had a margin of error of plus or minus 2 percentage points.

Some of the increase is due to Mexican workers whose prosperity has swelled, said Sergio Bendixen, whose Miami-based firm did the poll for the Washington-based Inter-American Development Bank. Those Mexicans came over a period of a decade, he said. "These immigrants are making some good money in the United States, and, therefore, they are able to send more," Mr. Bendixen said.

He noted that the money is also being invested into more productive ventures, such as advanced education for children and small businesses.

Stronger first half Mexico's Central Bank noted, however, that money transfers in the second half of 2006 were not as vigorous as in the first half.

The bank attributed that, in part, to "greater problems faced by Mexican workers emigrating to the United States as a result of more border enforcement in that country."

It also cited "increasing difficulties finding work faced by undocumented Mexican immigrants in the United States as a result of stricter official controls."

In Austin, legislators introduced bills to tax money electronically transmitted from the U.S. to foreign countries. One of the bills, submitted by Sen. Royce West, D-Dallas, proposes a sliding fee scale.

Some have challenged the bills as Mexico-bashing. Others note that they raise Constitutional questions and that the money sent home represents only about 10 to 15 percent of what is earned.

"It would of course be double taxation," said Mr. Bendixen, the pollster. "The money they send is after they pay taxes."

Such efforts bring praise from some quarters.

At the Federation for American Immigration Reform, spokesman Ira Mehlman said: "This is money going directly out of our economy. You have many people who are here illegally, who earn money here and don't even spend it here but send it out of the country."

As for arguments that the money is already taxed, Mr. Mehlman noted that some illegal immigrants work "off the books," and, thus, pay no taxes at all.

'Indicator of success'

Rodolfo Tuirán Gutiérrez, a Mexico City newspaper columnist on immigration trends, has argued that the Central Bank's estimate of remittances could include other types of money transfers, such as payment for purchases of goods, resulting in an overestimate.

Still, he believes the dollar amount is clearly rising as a result of greater immigration to the U.S. and cheaper costs for money transfers.

Mr. Tuirán estimates that the number of Mexican immigrants in the U.S. is increasing by about half a million per year, and that is reflected in the increasing amount of money sent home.

"I think the subject of remittances has been so well publicized that it has become an indicator of success" by some Mexican immigrants, he said. And that may encourage others to try their luck, he said.

In the same report, the Central Bank announced that the economy added 880,000 jobs last year thanks to a brisk 4.8 percent growth rate, but that was still not enough to satisfy demand.

Mr. Tuirán characterized Mexico's young, energetic labor force as "a resource that Mexico cannot take advantage of and so it must find another outlet."

In Fort Worth, immigrant Sebastian Martínez said the rise in money sent back to Mexico reflects the U.S. appetite for the labor.

Mr. Martínez, who lives legally in the U.S., regularly sends money back to family in his home state of Zacatecas. Migration's roots are so deep there that the governor makes frequent trips to the U.S. to visit Zacatecan communities here.

"It is certainly the economic power of the migrants, but, also, the migrants keep coming," said Mr. Martínez, who owns a business selling music instruments.

Indeed, labor participation rates in 2006 were nearly 85 percent for Hispanic males, compared with about 76 percent for white males, according to the U.S. Bureau of Labor Statistics. and

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