The Forces Behind Illegal Immigration

It's not what you think. I never hear these factors discussed, and they may surprise you.

I had no clue to this until years ago, a young man in my employ - legally - came into my office late on payday, frustrated because he was being charged so much to send his paycheck home - to Jalisco, Mexico. I loved this kid Juan, a tireless, competent worker who was also a caring and very giving individual. I would have done anything to have had more employees - and friends - just like him. Up to that point, I did not know he sent his paychecks home to Mexico. He sent every other one home, but he had to cash them first and then have them wire transferred. In those days, his weekly paycheck was about $600, and he paid about $90 to transfer the money. Juan asked my opinion as to whether I thought it would be safe to send the cash.

Would you send $600 in cash to Mexico? Me neither. Which is precisely why this is a big business, sending money to Mexico - as well as virtually every other country on the planet, but I'm going to focus on Mexico at the moment.

Juan worked for me more than 20 years ago, and this situation has grown, dramatically.

Sending money back home for immigrants, legal or otherwise, is called Remittance. And it's a big deal. So big a deal in fact, that in 2009, official remittances equalled more than 10% of Mexico's total revenues. Here's a chart from Multilateral Investment Fund of the Inter-American Bank:

That would be $21 billion dollars...and Mexico's actual revenues for 2009 were $206 billion.  But these numbers don't account for something important and difficult to pin down:  unofficial remittances.  People who hand deliver cash, or otherwise send it outside of official channels, estimated to be another 25-40%!  

This is only Mexico - I've not included in the math the remaining Latin America countries, those countries that most people in this country seem to be most upset about their "illegal" status.

The remittance practices weren't well understood until a few years ago, when the banks stepped big-time into the picture.  I mean, really, as a bank, are you not going to capitalize on all that money needing a safe way to make it to where it's going?  To a notoriously corrupt part of the world?  

As a result, fees the banks charge are astounding.  In fact, the fees got to be such a problem, that a non-profit organization was developed in recent years to give people one place where they could compare rates, fees and services offered: www.sendmoneyhome.org.  No, seriously.

Want to take a guess at how many fees are racked up on $21 billion dollars?  No one's publishing that amount.  I can't imagine why.

Since there's such streamlined methods of getting the money home, countries around the globe have realized they should capitalize on those dollars flowing into their countries, and try to use those dollars for community development funds.  

In fact, those remittance dollars, globally, exceed every kind of official foreign aid.  The World Bank has a blog where you can read all about remittances and development, it's called People Move.

So, last week, Mexican President Felipe Calderon said that Arizona's new law would hurt relations between the US and Mexico.  Are you starting to understand why?

If illegal immigration were stopped in this country, do you think it would pinch the banks who make so much money off the remittance payments?  

Are you starting to understand why...really why this issue has not been addressed until now?  And why so many politicians just want it to go away?  

Illegal immigration won't stop remittances, it'll just take a good size chunk out of the total value of them.  

But I bet you never actually thought about how many dollars earned don't go back into YOUR local community where they were earned.  From a local economic standpoint, these numbers are devastating, and should be considered as we deal with job losses and what those job losses mean in totality.  If money is sent abroad, it doesn't get spent at the local grocery store, in turn paying more local wages, etc.; that concept, if you're not familiar, is called the "velocity of money", and it's critical in terms of community development, and an important factor in determining economic status.

But don't kid yourself:  take a really good look at the chart above.  Then go roam around on the World Bank's blog listed above, maybe even Google "remittance", and see where else our money is going, and why being afraid of the brown-skinned people in southern states is merely tilting at windmills.