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 Business News | June 2008 
U.S. Slowdown Squeezes Mexico's Migrant Worker Bounty
 Jason Lange - Reuters
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| | Mexico's government reckons more than 11 million Mexican-born workers are working north of the border in anything from carpentry to health care. A little more than half are there illegally. (Mark Blinch/Reuters) | | |
Tonatico, Mexico - The mountain of cash sent home by Mexicans in the United States is shrinking for the first time in over a decade, putting the dampers on Mexico's economy as a U.S. slowdown takes work away from immigrants.
In rural towns like Tonatico, in central Mexico, where about half the men are in the United States, rodeos and country dances are being canceled and restaurants, which play U.S. hip hop music brought home by returning sons, are languishing.
Migrant remittances have brought a major injection of dollars in Mexico over the last decade, and forced belt-tightening by the millions of families who depend on money transfers is hurting the economy's important retail sector.
"We have to be a lot more careful with our money," said Jaime Trujillo, a town councilor who depends on family members in the United States to send money that pays for oxygen tanks for his ailing grandmother.
"People aren't buying anything, and it's been a long time since we've had a rodeo," said Trujillo.
Mexico's migrant bounty, which last year totaled nearly $24 billion, slipped 2.4 percent during the first four months of this year -- the first sustained fall in remittances since the central bank started measuring them in the mid-1990s.
The money flow had risen every year, but growth slowed in 2007 and analysts expect the tighter U.S. job market to continue hurting remittances in the months ahead as Mexican get less work in jobs ranging from gardeners to factory workers.
Both economists and migrants say a U.S. crackdown on illegal migration is also making it tougher to get work, while a sharp drop in the dollar's value means money sent home doesn't go as far as it used to.
"It's a double whammy for Mexicans," said Eugenio Aleman, a senior economist at Wells Fargo in Minneapolis.
All this puts extra pressure on an economy that is already cooling.
"Overall, less money from migrants means the economy won't grow as much," Aleman said. Mexico's government sees growth slowing this year to 2.8 percent from 3.2 percent in 2007.
RAIDS, LESS OVERTIME
Remittances are a lifeline for many of Mexico's poorest families, who have incomes of just a few dollars a day, often spent on basic necessities like food and clothes.
In Tonatico, surrounded by farmland some 60 miles southwest of Mexico City, residents say fewer hours on the punch clock and rising U.S. gasoline prices leave their relatives in the United States with less money to send home.
"All their overtime hours have been taken away," says Jonathan Mendoza, whose parents work in a Chicago suburb and send money so he can go to college. He used to receive $135 each week but the amount has dwindled to $50.
"Sometimes I don't pay the rent on time," Mendoza said.
Mexico's government reckons more than 11 million Mexican-born workers are working north of the border in anything from carpentry to health care. A little more than half are there illegally.
The U.S. slowdown has been hard on them, especially at building sites where 152,000 Mexican-born laborers lost their jobs last year as the housing crisis kicked in, according to a study by the Pew Hispanic Center, a Washington think-tank.
Some researchers think Mexico's falling birth rate could also affect the flow of remittances. The average size of Mexican families shrank dramatically in 1970s and 1980s.
"There are fewer young pairs of arms looking for work," said Gustavo Verduzco, who studies remittances at Mexico City's Colegio de Mexico university.
A few young people set out for the border every week from Tonatico, but a decade ago the number was in the dozens, said Trujillo, as he sat at a plastic table swapping stories with friends about running from the U.S. Border Patrol.
Lately, an uptick in immigration raids in the United States and more intense patrolling on the border has also kept people away from work, Tonatico residents say.
"The bosses will say you shouldn't come into work next week because migration authorities could be coming," said Jose Maldonado, a town official who says most of his childhood friends are in the United States.
While migrant labor is controversial in the United States and the government is building a 670-mile border fence to keep foreigners from entering illegally, Mexico largely regards migrants as heroes.
Still, President Felipe Calderon says Mexico needs to create more jobs at home so workers don't have to leave. He is currently trying to convince Congress to pass an oil sector reform which he says would boost economic growth.
"Contrary of what some people think in the United States, we aren't looking to get more remittances sent to us, nor are we betting on it," Calderon said last week.
(Editing by Kieran Murray) |
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