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Work here, send the money home

Every day, immigrants in the U.S. send chunks of what they earn to their native countries. There, that's money for food, shelter and medicine.

By ANITA KUMAR and VANESSA DE LA TORRE
Published May 10, 2006


CLEARWATER - Every 15 days, Victor Placencia heads to a tiny shop on Drew Street carrying a wad of cash to send back home to his stay-at-home wife and two young sons in central Mexico.

Some of the money he earns from construction work pays for groceries. Some helped build the family's three-bedroom house in Teoloyucan, just north of Mexico City. The rest sits safely in a Mexican bank.

"What I make here in one hour, I make over there in one week," said Placencia on Friday after sending $1,000 from the money transfer business Arriba Mexico. "In all my life I wouldn't have earned that money."

Each day, immigrants all over the United States send money home to families and friends in their native countries.

Last year, workers around the world sent home $230-billion. Workers in the United States sent the most - $40-billion - much of it to Latin American nations, according to the most recent estimates by World Bank and the Inter-American Development Bank. One in every 10 people in the world gives or receives money.

Today, Mother's Day in most Latin American countries, is the most popular day of the year to send money. Transfers are expected to be 20 to 30 percent higher than usual.

Dollars sent to developing countries, called remittances, translate into food and medicine, TVs and washing machines, indoor plumbing and crops. In a small number of cases, money is pooled to build local schools, buy ambulances or open medical clinics.

Only in recent years were the figures understood to be so large, surpassing each of the following: government aid, private donations and foreign business investments. It is the most important source of income for 28 countries.

Mexico received almost $69-million in aid from the United States in 2003, according to the U.S. Agency for International Development, but received $13.2-billion in remittances that same year.

"The future of the social system depends on workers sending back money," said Donald Terry, head of the remittance team at the Inter-American Development Bank in Washington. "It's enormous. It's the human face of globalization."

At Envios del Valle, a small shop on Myrtle Street in Clearwater, Mexican soccer caps hang above the register, telenovela DVDs line the wall and reggaeton albums mix with banda music on the racks. But the big money goes straight to Mexico.

On a recent Saturday, 40 customers came to send cash to family in Mexico, employee Martha Pascual said. On average that means about $16,000 in remittances.

About 90 percent of immigrants sending money in the United States do so through wire transfers at one of the thousands of small stores like Envios del Valle that work with big companies like Western Union and MoneyGram, according to recent studies. They send an average of $200 or $300 at a time, 10 to 15 percent of what they earn.

Workers give cash to a clerk, who records the transaction and assigns a confirmation number. Using that number, family members can pick up the cash at one of the stores affiliated with the transfer company in their country.

In recent years, leaders of the major industrialized democracies including the United States have called for transfer costs to be reduced. Fees have dropped from 15 percent to 6 percent for an average transaction, according to recent studies.

"Sending money is something migrants have done forever, but it's easier and cheaper than it ever was," said Roberto Suro, director of the Pew Hispanic Center. In the last five years, dozens of banks and credit unions have launched programs to lure immigrants to transfer money with them.

It has been a hard sell since many immigrants don't have or don't trust banks. Some workers still send cash in the mail or use messengers or couriers to hand-deliver money.

Bank of America began a national program, SafeSend, allowing for free remittances to Mexico with a checking account. It has sent $126-million since it was launched in September 2005.

"They weren't taking advantage of what a financial institution could do. They would save in a cookie jar at home," said Diane Wagner, a spokeswoman for the SafeSend program. "What it boils down to is financial literacy."

Billions of dollars were changing hands each year, but few knew how much.

The Inter-American Development Bank didn't begin studying remittances until 2000. The World Bank followed in 2003.

Still, those who churn out reports on remittances each year acknowledge that their records are not completely accurate. Some transfers are not recorded at all because of the way they are sent. Experts estimate that unrecorded transactions may add 50 percent to the total.

"It's a clandestine trade," said Bruce Bagley, an international studies professor at the University of Miami. "That's why the money is not fully being taken advantage of. It needs legal recognition."

Foreign governments are starting to realize that the money flowing into their countries can give them a significant economic boost if they knew how much was coming.

They have embarked on ways to help workers with remittances by allowing more banks to operate overseas and providing identification cards for immigrants to access bank facilities, among other things.

Still, remittances remain controversial. Some worry that developing countries are losing their skilled people and rely too much on remittances to boost the economy.

"Migration and remittance are not a solution to a country's problems," said Dilip Ratha, a senior World Bank economist who studies remittances. "A country should try to develop their economy through their own initiatives."

Others worry that developed countries are losing out on a significant source of income. But economists say that the bulk of the money workers earn in the United States - around 90 percent - is spent here and that the amount of money leaving the country does not significantly affect the nation's economy.

"I think it's a small piece in a big global economy, and one that shouldn't dominate the thinking about how we decide to move forward on the immigration debate," said Dan Siciliano, executive director of the Program in Law, Economics and Business at Stanford Law School.

Times researcher Angie Drobnic Holan contributed to this report. Anita Kumar can be reached at akumar@sptimes.com or 202-463-0576.

Remittance in Florida

Money sent to Latin America: $2.45-billion

Number of Latin American adult immigrants: 1,796,959

Average amount sent per Latin American adult immigrant: $1,363

Percentage of immigrants that send money regularly: 47 percent

Average number of times sent per year: 12.6

Average amount sent: $230

Note: Statistics are from 2004.Source: Bendixen & Associates, Inter-American Development Bank

[Last modified May 10, 2006, 06:00:36]


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