Ever wonder what happens to the money illegal migrants make while working in the U.S.? It is common knowledge that, for decades, the primary reason for illegals entering the U.S. is to find better employment than that available to them in their home countries — especially Mexico. Having the ability to almost at will cross the U.S. southern border, it is common for illegals to find mostly blue collar jobs that pay far more than the available jobs in Mexico. Unfortunately, many employers in the U.S. find it tempting to take advantage of those workers AND U.S. law by paying those migrants lower than normal wages and paying many in cash. Doing so saves companies millions in required Medicare, Social Security, and federal unemployment employer matching fees. Cash payments allow migrants to get these jobs AND employers to bypass federal and state employment laws by not enrolling these workers in the system.
A large majority of these illegals send a portion of their earnings back to Mexico to family members. It is shocking to know how many U.S. dollars head to Mexico in this fashion every year. It’s BILLIONS!
How much is it?
Mexicans sent home $26.1 billion from January to November 2017, according to figures released Tuesday by the central bank of Mexico. That’s the most ever recorded and better than the $24.1 billion sent in 2016 over the same period. Most of the cash sent to Mexico by Mexicans living in the U.S. is transferred by “undocumented” workers. A survey by Inter-American Dialogue of remittances to Mexico found that 67 percent were sent by these individuals living in the U.S.
Of all of the remittances sent to 11 countries in Latin America from the U.S., Mexico received the largest share by far at 36 percent – four times more than the closest competitor, Guatemala, at 9 percent, the survey found.
Remittances to Latin America and the Caribbean (LAC), which exceed US$70 billion dollars, are playing a key role in the region’s economic development,” according to the institute’s recent “Remittances scorecard.”
The majority of remittances to Mexico, 88.2 percent, are sent using the services of companies like MoneyGram and Western Union, the institute found. It said the cash transfer industry has “expanded dramatically,” and now helps migrants in the U.S. pay their bills in Latin America.
But while services have expanded, the cost of sending money to Latin America and the Caribbean has dropped to below 5 percent of the transfer amount. Ira Mehlman, media director for the Federation for American Immigration Reform, says the cash transfers reveal a “hidden cost of illegal immigration because you have millions of dollars being taken out of local communities.” “Remittances being sent out of the country represent a substantial economic impact on local communities because that money is not circulating in those communities,” Mehlman said. “On top of that, a lot of the people generating this money are working off the books and there are no payroll taxes being taken,” he added.
Data gathered by the Mexican government and BBVA Research shows nearly one-third (29.6 percent) of all of the remittances sent from the U.S. to Mexico originated in California. Just over 14 percent was sent from Texas, and 5.1 percent from Illinois. Recently obtained numbers show that remittances sent to Mexico totaled 2.3 percent of the country’s GDP. Forbes has reported that the money sent from the U.S. to Mexico by migrants “replaced oil revenues as Mexico’s number one source of foreign income.”
Some 90 percent of all remittances sent worldwide are in cash, rather than by electronic or bank transfer, according to Alix Murphy, director of mobile partnerships at the remittances company WorldRemit, which operates in 47 states of the U.S. She said the market for money transfer services in the U.S. was “very diversified.” “We’re talking hundreds of companies that are regulated by the states.” Individuals using cash transfer services are required to show identification, but not immigration status. Foreign-issued IDs, however, can be used, according to an analysis by the Congressional Research Service.
The Remittance Status Verification Act, introduced by then-Senator David Vitter (R-La.) in 2014 but never passed into law, would have fined senders of international cash transfers seven percent of the transfer amount if they could not show “proof of status under U.S. immigration laws.” If enacted, such a law could slow the flow of remittances considerably, according to David Landsman, executive director of the National Money Transmitters Association.
In remarks published in the “Remittance Industry Observatory” newsletter, Landsman said that “forcing remittance companies to be immigration enforcement agents would make remittance volumes plummet in the best of times. Their transactions would then go through more informal methods, and become completely opaque to law enforcement.”
We have known for years that most migrants slip into the U.S. illegally for job opportunities. Jobs that offer real futures to natives of Mexico are slim. And most Mexicans lack really good education because of dollars and cents. No reasonable person fails to understand the desperation that drives those from Mexico and all of Central America to the U.S. southern border. It’s all about income.
Additionally, it is unquestionable that the families of those illegals are dependent in part — and often totally dependent — on income sent back to Mexico from employed illegals in the U.S. That being said, those $26.1 billion taken out of the U.S. economy hurt the U.S. How?
No one knows an exact number if there is one, but experts state payroll dollars roll over 5 times in the markets where spent. As an example: Joe the Worker is married with 4 kids and makes $2000 a month. Joe takes home $1600 of that. Joe pays $600 rent, $100 in utilities, $400 in food, $200 for auto expense, $100 for clothing, $100 for prescription drugs, and $100 for miscellaneous expenses. Jose the worker is married with 4 kids and makes $2000 a month. Jose takes home $2000 in cash. Jose and his family share a house with his brother and they each pay $300 in rent. Jose pays $400 for food, shares the car with his brother and pays $100 for gas, $100 for clothing, $100 for drugs, and sends $1000 to his mother in Mexico.
Of Joe’s $2000, $400 is deducted for federal and state income tax and his share of Social Security and Medicare which are matched by his employer. Jose pays none of that. Both Joe and Jose’s rent money goes to their landlord as does cash for food, gas, and drugs. The federal and state government have $400 that goes to pay on government infrastructure for roads on which Joe drives, hospitals, and the schools which his children attend. The stores where he buys food and clothes and the utility company have money he pays them for THEM to spend paying their employees who in turn spend their checks in the town. Joe’s paycheck is spent 100% on goods and services from the federal and his state and local governments. Jose’s $2000 — with the exception of what he pays for rent, utilities, gas, and food — are paid to those in Mexico rather than being spent in his U.S. town. Just a small percentage of the portion of his local payments support government and public services he and his family use: roads, schools, medical facilities, etc. Yet he sends money home to Mexico that is paid into the economy there instead of the U.S.
If as economists claim payroll dollars roll over 5 times in the markets wherein employees work and live, Joe’s $2000 makes a $10,000 economic impact on his town and state. Of Jose’s $2000, only $1000 goes into that “rollover” cycle. The impact of his pay is just half of Joe’s, or $5000.
What’s wrong with that picture?
- Being in the U.S. without permission is a crime. I struggle to even in conversation get beyond that point. And it is stupefying that such illegalities are even allowed to occur every day in the U.S.! But they are. Many in our federal government simply turn their backs on the rule of law in this instance purely for political purposes;
- Illegals eat up the U.S. infrastructure with very little contribution for doing so while law-abiding Americans foot the bill. The two primary targets of their consumption without any (or very little) economic input on their part are medical facilities and public schools. The added weight of Spanish-speaking-only children in U.S. schools impacts how schools can even operate. It forces bilingual teachers to be provided which comes at additional taxpayer expense. And often children of illegals are significantly deficient in their level of education when enrolling in U.S. public schools. This forces schools to adjust curriculum and age/grade participation processes that impact U.S. children in major ways;
- We cannot forget one major consideration in this issue: Jose takes a job that would be available for an American who is abiding by all the rules and whose income is spent totally in the United States. Yes, there are those who maintain that Mexican illegals perform in jobs that Americans will not. There is no factual basis for that premise though there certainly are some of those positions to which it is pertinent. But even if 50% of those jobs end up with illegals, 50% could have gone to legal American citizens.
What’s The Fix?
- Stop illegal immigration! There’s no substitute for that. Many conflate the issues purposely. It certainly is true that millions of people — not just from Mexico, but from almost every other country on Earth — want to live in the U.S., primarily for economic opportunity. The U.S. legally accepts 1 million immigrants annually into the U.S. legally. And that is more than do all the other countries on Earth combined! The U.S. really cares for the poor and needy. But the U.S. infrastructure cannot survive under the weight of those who soak up its resources with little if any economic contribution. That doesn’t even consider the social and criminal justice illegals bring to the U.S.
- Stop giving financial incentives to those who come here. U.S. employers are just as guilty in many cases as the illegals. If they would not hire workers that are illegal, the incentive for their coming would be severely limited. Many of those employers do so to dodge paying payroll taxes, (they are paid in tax) and they are able to hire illegals at a much lower wage than they pay legal immigrants and Americans. Why? Illegals are not in the U.S. system as are legal immigrants and Americans, sho those employers can get away with shortcuts at not only the government’s expense but by not paying into benefits for illegals as they do for legal workers.
- Minimize the massive amounts of dollars that leave the U.S. from these workers sending large portions of their pay back to Mexico. That could easily be accomplished by limiting the legal ways for them to do so. Several of those companies that process such payments internationally are listed above. Congress could easily pass legislation that would force these companies and all banking institutions to require full identity verification for all those who transfer money out of the U.S. AND could charge a percentage transfer fee for every transfer. Do the math: Of the $26 billion transferred each year, assess a 5% fee that would help make up the cost to America’s infrastructure used every day by these illegals that so far have been provided free. (Hey, that could even be applied to the cost of President Trump’s wall!)
This is all just a piece of the big problem America’s federal government keeps dancing around: illegal immigration. There’s no need for us to discuss details further. We all know them. But it certainly is time to right the ship of immigration and takes our country back to the rule of law. Everyone who lives and visits the U.S. should abide by EVERY law in place in every city, state, and anywhere in the U.S. And those who violate laws should pay the legal penalty for doing so.
Short of doing that, the U.S. is headed toward certain anarchy. How long will law-abiding American citizens continue to standby and watch our federal government allow illegal migrants to soak up our tax dollars and break our laws with impunity? We have not reached a tipping point yet. But in American history, there are examples of Americans saying, “Enough is enough!” and doing something about government wrongdoing.
Let’s don’t go there. Let’s fix the problem…NOW!