Cash-Strapped Immigrants Rely On Family Abroad
Ana Molina at work - Ana Molina, a supervisor at La Nacional, has seen an uptick in reverse transfers. (Marisa Penaloza/NPR)
Immigrants in the United States often send money to their families back home. In fact, in some immigrant neighborhoods, money transfer offices are as common as banks and nail salons.
Last year, money transfers totaled $305 billion worldwide.
But there is an interesting new phenomenon fueled by the financial crisis: money flowing the opposite way. With the downturn in the economy, some families are sending money to their relatives in the United States.
(Marisa Penaloza/NPR)
Washington Heights is a largely Dominican neighborhood in upper Manhattan. La Nacional, a money-transfer company that caters mostly to people from the Dominican Republic and Mexico, looks like nothing much from the outside. It could be an ordinary check-cashing store.
But underneath this small office is a basement that runs the length of several buildings. Sitting in cubicles, more than 40 employees are arranging money transfers for clients all over the world: Latin America, Eastern Europe and the Middle East.
The company has more than 60 retail stores, more than 800 agents and last year it handled more than 3 million transactions. And yet, if you are white and Anglo, says Alan Friedman, president and CEO of La Nacional, "you may not even be aware this kind of business exists. We are not the largest company in the world, and we did $781 million last year. Western Union's numbers are just humongous, and nobody realizes it."
Dilip Ratha, an economist at the World Bank, says "remittances in 2008 added up to about $305 billion, three times the amount of all official development assistance put together. In Sri Lanka," he adds, "remittances are larger than their tea exports, in Egypt remittances are larger than the revenue from the Suez Canal."
Ratha says the United States is the largest source country, with at least $50 billion flowing out annually. The No. 2 country is Saudi Arabia.
The downturn in the economy has slowed the flow of money from the U.S. to other countries, but unexpectedly, there has been an increase in money flowing in reverse. La Nacional says it's gone up about 15 percent to 18 percent this year, and the company has now hired three people to do these "reverse remittances."
Ana Molina, a supervisor in the incoming remittance department, finds that her phone is constantly ringing. Speaking rapidly in Spanish she says that when she was first hired, "there were at most 30 to 50 of these reverse transfers a day; now there might be 70 to 100 from the Dominican Republic alone."
Money-transfer services are popular with immigrants because they are cheaper than transfering money from most banks, and more importantly, neither party to the transfer has to have an account.
Every Friday, Hector Hernandez walks into the offices of La Nacional. He is from the Dominican Republic, but his mother now lives in Puerto Rico.
"I used to work in a clothing factory, but I lost my job five months ago," he says in Spanish. He used to send money to his mother every month, but now that he is unemployed, his mother is sending him $50 every week. "I was good to her and now she is helping me. I am looking for a job so that I can start sending her money again."
It takes only a few minutes and Hernandez has his check.
It's very hard to estimate the amount of reverse remittances. Ratha of the World Bank says this is especially true "when money is coming from poor to richer countries and sometimes the recipients in the countries may be undocumented."
But Ratha says there is evidence that ever since the economic crisis, immigrants have been drawing down their savings accounts — the amount of money they hold in their country of origin.
Back at the offices of La Nacional, Rosa Sanchez, a single mother with two children has just gotten some money from her relatives. She says she hasn't been able to pay her rent because of the poor economy.
"Food prices have gone up," she says. "Clothing for my children, electricity, gas, everything is much higher now. You are spending more and you have less."
When asked why immigrants who lose their jobs don't just go back to their home countries, Molina of La Nacional says, "Even with a part-time job here, you can make ends meet. If I go back, I won't find a job. That's why people stay."
And in a down economy, these reverse remittances are tiding some people over.
This piece was produced for broadcast by Marisa Penaloza.
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JACKI LYDEN, host:
This is ALL THINGS CONSIDERED from NPR News. I'm Jacki Lyden. It's a ritual almost as old as the immigrant experience itself: sending money back to the family in the old country.
Last year, these money transfers added up to $305 billion worldwide. The World Bank predicts that number will drop to $290 billion this year, thanks to the economic downturn. NPR's Margot Adler reports that the world money crunch has spawned another new wrinkle for immigrants: cash flowing the opposite way.
MARGOT ADLER: On a street in Washington Heights, a largely Dominican neighborhood in Upper Manhattan, La Nacional looks like nothing much: a non-descript, check-cashing store. You would never know that underneath this small office is a basement that runs the length of several buildings.
Sitting in cubicles, more than 40 employees are arranging money transfers for clients all over the world. Most of the money goes to Mexico and the Dominican Republic, but they also send money to Eastern Europe, to the rest of Latin America, even to the Middle East.
(Soundbite of knocking)
Unidentified Man #1: (Speaking foreign language).
Unidentified Man #2: Gracias, senor.
Unidentified Man #1: How are you?
ADLER: Alan Friedman, the president and CEO of La Nacional, is giving us a tour. Most of the employees are Latino. Friedman is white and Jewish and has limited use of Spanish. He tells us that his company has more than 800 agents in the U.S., more than 60 retail stores, and last year, handled more than three million transactions. But if you're white and Anglo like him, he says, you may not even be aware this kind of business exists.
Mr. ALAN FRIEDMAN (President and Chief Executive Officer, La Nacional): We're not the largest company in the world, and we did $781 million last year. Western Union's numbers are, you know, just humongous, and nobody realizes it.
ADLER: And Dilip Ratha says that's just a fraction. He is an economist at the World Bank.
Mr. DILIP RATHA (Economist, World Bank): Remittances in 2008 added up to something like $305 billion, now three times the size of all official development assistance put together. In Sri Lanka, remittances are larger than their tea exports. In Egypt, remittances are larger than the revenue from the Suez Canal.
ADLER: And Ratha says the U.S. is the largest source country, with at least $50 billion flowing out annually. The number two country is Saudi Arabia.
The downturn in the economy has slowed the flow of money from the U.S. to other countries. But now, there's something new: money flowing in reverse, into the United States from abroad. That's up 15 to 18 percent this year.
La Nacional has now hired three people to do what are called reverse remittances.
Ms. ANA MOLINA (Supervisor, La Nacional): (Speaking foreign language).
ADLER: Ana Molina is a supervisor in the incoming remittances department. This morning, she has already processed quite a few reverse remittances, and her phone rings constantly.
Ms. MOLINA: (Speaking foreign language).
ADLER: Molina says that when she was hired, there were at most 30 to 50 a day. Now, from the Dominican Republic alone, she says there are 70 to 100 a day.
Ms. MOLINA: (Speaking foreign language).
ADLER: These services are popular because they are cheaper than most banks, and more important, neither party to the transfer has to have an account. Up above in the storefront office, Hector Hernandez comes in every Friday.
Mr. HECTOR HERNANDEZ: (Speaking foreign language).
ADLER: He says he was working in a clothing factory, but he lost his job five months ago. He is looking for a new job, but hasn't had any luck. He used to send money home to his mother in Puerto Rico every month. But now, unemployed, he walks into this office every week to receive $50 from his mother.
Mr. HERNANDEZ: (Speaking foreign language).
ADLER: When I was working, I was sending her money every week. I was good to her, and now she's helping me. I am looking for a job so I can start sending her money again.
Unidentified Woman #3: (Speaking foreign language).
ADLER: Within minutes, they're printing his check, and he has his money.
Mr. HERNANDEZ: Gracias, bye.
ADLER: Dilip Ratha of the World Bank says it's very hard to estimate the amount of reverse remittances.
Mr. RATHA: Especially when money is coming out of poorer to richer countries. And sometimes, the recipients in the richer countries, they might be undocumented.
ADLER: That's one reason reverse remittances are hard to track. Ratha says that ever since the economic crisis, migrants have been drawing down their savings accounts, the amount of money they hold in their country of origin.
Back at the offices of La Nacional, Rosa Sanchez, a single mother with two children, has just gotten some money from her relatives. She says she hasn't been able to pay her rent due to the economy.
Ms. ROSA SANCHEZ: (Speaking foreign language).
ADLER: Food prices have gone up dramatically, clothing for my children, she says, electricity, gas, everything is much higher now. You're spending more money, and you have less money.
You might wonder why immigrants who lose their jobs don't simply go back. Again, Ana Molina of La Nacional.
Ms. MOLINA: (Speaking foreign language)
ADLER: Even if I have a part-time job here, she says, and my salary isn't enough to cover my expenses, I can make ends meet with what I have there. But if I go back, I won't find a job, and those funds won't be enough. That's why people stay.
Most immigrants coming into La Nacional don't want to leave the U.S., despite the economy. And the funds coming in, these reverse remittances, are tiding them over.
Margot Adler, NPR News, New York. Transcript provided by NPR, Copyright National Public Radio.
