The increase in remittances to Mexico that started in April 2010 has slowed down. Photo by Irasema Romero
Adrian Dominguez has not yet met his newborn son, Diego. He moved to New York City from Guerrero, Mexico, six months ago with the goal of saving money for his new family.
Dominguez, a college graduate with a degree in information technology, now works 60 hours a week as busboy in a restaurant on the Upper East Side. As part of his weekly routine, he visits Western Union on West 231st Street in the Bronx to send money to his wife. His weekly contributions add up to $600 to $700 a month.
The amount of money Mexican immigrants like Dominguez send to Mexico increased by 9.32 percent in August 2010, compared to the previous year as reported by Banco de Mexico, the country’s central bank. But that upward trend in remittances has slowed.
According to BBVA Research, dollar remittances to Mexico decreased in September by 1.6 percent from the previous month. Remittances to Mexico exceeded $5.5 million, 4.6 percent less than the previous 2010 quarter, but with a three-point increase from the same quarter in 2009.
The report suggests that although remittances began to increase in April 2010, the recovery will be “slow and perhaps volatile” depending on the U.S. employment rate for Mexican immigrants.
“According to the data compiled by the comptroller’s office, the unemployment rate among Hispanics in the third quarter was 13.3 percent, the highest since the recession began,” said Juan Luis Ordaz Díaz, senior economist at BBVA Research.
Hispanics in the city experience higher unemployment compared to the national rates among this ethnic group, even when New York City has a lower unemployment rate than the U.S. average.
Ordaz Diaz said that although the U.S. economy may add jobs for the holiday season, BBVA doesn’t expect remittances to increase by more that two percent in the fourth quarter. In order to continue providing for their families in Mexico, workers in the U.S. are finding ways to keep their own living expenses low.
To save money for his family, Dominguez lives with his brother in the Bronx and eats at the restaurant where he works. With a daily two-hour commute to work, he says he does not have time to be a tourist.
“You don’t have time to do other things, so you’re not going around spending money,” Dominguez said of his experience saving money for his family.
For every $100 Dominguez sends in cash through Western Union, he pays a $5 fee. His wife has free access to the money the next morning when she picks it up at Elektra, a Mexican retail store that works with Western Union to conduct money transfers. Aside from Elektra, which boasts of over 1,000 stores throughout the country, Mexican families may receive money sent to them through Western Union at Mexican national banks like Banco Azteca and Banamex or grocery store chains like H-E-B and Comercial Mexicana.
Dominguez said that he plans returns to Mexico permanently in the next four to six months, but he hopes the money he is sending now will help with the medical expenses from the birth of his son.
“Unfortunately Mexico does not provide us with the opportunities we would like,” Dominguez said. “If the jobs were well paid, we wouldn’t have to go through a lot of these things.”
Dominguez said the entry-level jobs available in his home state do not pay enough for his family to live comfortably.
Besides subsidizing the basic needs of families in Mexico, remittances are used to cover education costs, buy property or create businesses, according to Darryl McLeod, an economics professor at Fordham University who has studied the trends associated with remittances.
He said although there were major decreases in remittances during 2008 and 2009, Mexican families are now receiving more pesos to the dollar. Today, the peso is approximately $12.50 to the dollar, when in 2008 it was $10.59. BBVA Research predicts the process of disinflation that started in April 2010 will continue in the coming 2011 quarters, allowing for less than four percent in core inflation, compared to the 6.5 percent experienced in October 2008.
“Even if they sent six percent less remittances, it buys more pesos,” McLeod said. “They’ve had a little bit of inflation, but not that much. They were able to make the dollar go further.”
But that isn’t much of a comfort to Marisela Castillo, who has lived in New York City for 25 years, and continues to feel the need to send extra money to her widowed mother in Mexico City.
She and her siblings send around $500 to $800 a month to their mother because they all feel an obligation to make sure all of her monthly cost are covered, she said.
“It may be almost nothing, but we are always sending money,” Castillo says of her effort to send money to Mexico. “If you don’t help them, who will?”