Page last updated at 15:13 GMT, Thursday, 18 June 2009 16:13 UK

Mexicans in US face cashback crisis

By Karen Nye
Business reporter, BBC News, New York

Immigrant workers in the US
Immigrant workers in the US have been hit by the downturn

For centuries, workers from many parts of the globe have been coming to the US to find work and support themselves.

Many migrant workers have families back in their native countries who depend on them for remittances.

But for some, a difficult economic climate, triggered by a collapse in the housing market, is causing the dream to evaporate.

The worst US recession in decades has eliminated job opportunities for many immigrants, slowing the flow of money back home down to a trickle.

That's especially true of the traditionally high-paying construction industry, often manned by Mexican workers.

Tepeyac, a Hispanic community centre, has its offices on West 14th Street in Manhattan.

Director Joel Magallan says people coming from Mexico usually make their way there.

They ask for help finding work, shelter and healthcare. But lately, that hasn't been happening.

"All this year, I haven't heard anybody coming to our office, saying, 'I'm new, I'm arriving in New York now,'" he says.

"I don't think that everybody comes to our office, but it's kind of a signal that not many people are coming."

Holding on

Mr Magallan has seen many workers struggling to find low-paid work in the restaurant and hotel industries.

But these are also hard hit, now that here are fewer tourists occupying hotel rooms and eating out.

Across the hall from the director's office, Maclovio Arellano is attending a basic computer class.

He would like to move beyond his part-time job in housekeeping, at a hotel. He knows he is lucky to have this job, even though his hours have been cut back.

But now he is unable to send as much money to his two sisters in a village in Southern Mexico, who rely on him.

"I used to send a little bit for each of them. I don't send that much as before," he says.

Joel Magallan
Joel Magallan says there are signs that fewer Mexicans are coming to the US

He used to send $500 to $600 a month. "Now, I try to send just $300 or $350."

Mr Arellano plans to stay on, for now, thinking he can help his family best by working at least part-time in the US, rather than returning to his small farming community in Mexico.

It has become such a struggle, though, that he is telling friends and family not to emigrate: "When we call, we tell them not to come, because it's worse here. "

Going nowhere

Further east, in Jackson Heights, the Delgado Travel agency nestles in a neighbourhood settled by waves of immigrants from Italy, Ireland and lately, Mexico and Central America.

There are almost no customers, apart from the men gathered around a large, flat-screen TV, watching football with the sound off.

Owner Hector Delgado, who came from Ecuador nearly 40 years ago, says demand is down across the board - for not just for plane tickets, but especially for money transfers.

"If I used to send $200, I now send $100, $150. As for people that used to send $50, we have a lot of $20s now. And we didn't have people sending just $20 before."

Down the street at La Casa del Internet, Nataly Hernandez also says traffic has fallen off. When asked if people are sending home lower sums of money, she replies, "Less money, less often - both of them.

"Mexican people, they're not sending that much money anymore. They're mostly the same people that sent money before, and now it's slowing down."

Ms Hernandez says she has heard that some other firms are receiving reverse remittances, or money sent back to the US from abroad.

That seems upside down to her: "Over there it's supposed to be bad, and here, better. But now it's the other way."

Cash crunch

Dilip Ratha, an economist with the World Bank in Washington, studies the flow of money sent by immigrant workers to their home countries.

He estimates that remittances could fall as much as 8% this year, for a total worldwide of $290bn.

He has noticed the reverse flow, too, but cautions that it is relatively small.

"The numbers we've seen are more in the range of $1bn, so compare that with remittance flows of $50-60bn that go to Latin America on a yearly basis, from the US," he says.

Mr Ratha warns that a prolonged US downturn could reduce the number of migrant workers.

However, many of those already in the US, like Maclovio Arellano, plan to make do with smaller pay packets, in the hope that the world's largest economy rebounds sooner rather than later.

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