Slow construction hits Mexican remittances

The Financial Times ^ | 10/29/07 | Adam Thomson in Juventino Rosas

[bruinbirdman]

Ermelinda Guerrero’s refrigerator is a monument to a previous and more prosperous era. Its huge gleaming bulk, with curved sides and a fat modern handle, dominates her otherwise humble kitchen. It even displays the original sales sticker.

“I bought it four years ago when there was enough money for luxuries,” she says, straightening the blue and white headscarf that frames her chubby face. “Things are very different now.”

So different, in fact, that Mrs Guerrero no longer has sufficient funds to fill it or even, sometimes, to buy meat. The days when she could go with her family to the local town at the weekend to eat tacos are gone.

At first glance Mrs Guerrero’s changing fortunes – her income is roughly $300 (€209, £146) a month now compared with more than $1,000 about two years ago – would seem to have little to do with the ups and downs of the US housing market: she lives in a small community near Juventino Rosas, a market town about three hours north of Mexico City.

But her husband – and only source of income – works as a bricklayer in Naples, Florida, and the rapidly softening US market has meant considerably less work for him and a substantial cut in remittance flows for her.

“In the good days he could go to the beach on weekends and drink beer. Now he wants to come home but doesn’t even have the $300 he needs for the journey,” she says.

In recent months the deterioration in the US construction sector has had an increasing impact on the more than $23bn in cash that Mexican migrants – both legal and those without papers – send back to their families each month.

According to Jesus Cervantes, who heads the remittances department at Mexico’s central bank, roughly 20-25 per cent of legal Mexican migrants are employed in construction in the US. “It’s reasonable to assume that the same percentage applies for the undocumented Mexican workers [the great majority of the estimated 12m illegal immigrants in the US],” he told the Financial Times.

Since the second half of last year the growth in remittance flows has slowed to a trickle. In the first half of 2006 remittances grew 23.1 per cent compared with the same period the previous year, but during the first six months of this year remittances grew just 0.6 per cent year-on-year.

Rita Mejía, a 25-year-old mother who lives near Juventino Rosas, is suffering just like Mrs Guerrero. Her husband left for the US six months ago because they could not make ends meet in Mexico.

“He was earning 800 pesos ($75, €52, £36) a month and we were spending 300 for rent, 100 for water, 150 for electricity and the food bill varied between 300 and 400 pesos a month,” she says. “It didn’t take us long to realise that he had to go.”

Today her husband works as a roofer in Oklahoma, but jobs have become increasingly scarce even in the brief period he has spent there.

The US construction downturn is not the only reason for remittances’ slow growth this year. Mr Cervantes believes a variety of factors have contributed.

They include the statistical effects of measures taken in 2000 to encourage banks and companies handling remittances to register the flows with the central bank and, in October 2002, regulations forcing them to do so.

“Before 2000 we always knew we were underestimating remittances,” he says. “The rules produced a statistical growth because we were recording the flows accurately for the first time but that is a more-or-less one-off effect.”

Other reasons for the reduced growth in remittances are the increasing difficulty Mexican migrants have in crossing the border, and the crackdown on illegal migrants living there.

Mrs Mejía’s husband is a case in point. “He tells me that when he has work the police patrol regularly and that he and his friends have to hide,” she says. “Just a few months ago the police didn’t care.”

The combined effect of all of this, says Mr Cervantes, is not that remittances will begin to fall but rather that the heady growth they have experienced in recent years will slow down.

The other is that families in Mexico who depend on plentiful – and hassle-free – employment in the US construction sector are going to have to bite the bullet.

Mrs Guerrero is already resigned. “I’m going to have to sell one of my three cows to get my husband home but there is no point in him being there any more,” she says. “There is not enough work to justify it.”

[DoughtyOne]

We shouldn’t allow those remittances to go back to Mexico.

Proof of citizenship should be required to conduct financial transactions.

[bruinbirdman]

Good one. Make them carry it across the border. Eh. They'll just buy money orders and mail them.

I don't think the cops are patrolling worksites, either.

yitbos

[DoughtyOne]

The way I look at it, anything that interrupts or even disrupts the fruits of this situation, is a good thing.

No, the cops aren’t. ICE should be though.

[Westlander]

‘The days when she could go with her family to the local town at the weekend to eat tacos are gone.’

A mexican can’t make a taco at home?

[Leisler]

At least the guy worked. There are boatloads of Americans on fake disability, drug disability, alcohol disability, section 8 women with multiple men, their co-breeders Scot free. At least the Mexicans built yuppies for decades nice homes, that in many cases were the major source of individual wealth growth. If only the Mexicans were all lawyers../sarcasm.

[bruinbirdman]

"There are boatloads of Americans on fake disability"

At the risk of hijacking my own thread: the most widespread disability, once diagnosed it's good for a lifetime prescription of synthetic cocain, ritilin, attention deficit disorder and its derivitives.

yitbos

[Ben Ficklin]

"Proof of citizenship should be required"

That is the purpose of Real ID.

[freekitty]

Can these people not do this in their own country?

Oh, I forget; they must suck the blood of a US citizen.

[Leisler]

I can remember being in the third grade sitting in the back of the class. Winter in New England. Steam heat. I’d be daydreaming out the window at the snow storm thinking the playground was Bastone and the Nazi Tiger tanks were just at the limit of vision, at the tree line.

Little did I know that I too had ADS. For years I just thought it was boredom with rote, mass, low quality, number 10 can government skools.

[Leisler]

That’s what we do to each other. They might as well pile on.

[Leisler]

A Mexican can̢۪t make a taco at home?

Tacos, corn and water, have doubled in price due to corn being bid away for ethanol for greedy farmers and lefty yuppies. That's why Georgi Bush's friend ( not the Saudi friends) Vinnie Fox was here in the US. Besides checking with his bankers. Money down in Mexico. Construction guys coming back and Taco prices doubled. Let's see if the Mexican Mafia, aka the government, keep their Gucci's on the necks of the Mexican working stiff. If not, we'll have to send some riot gear, shotguns, down to help the Mexican government shoot their people.

[Drew68]

We shouldn’t allow those remittances to go back to Mexico.

It is better than foreign aid. At least somebody worked for it. And if the money wasn't going down south to provide for families, these workers would just find a way to bring their families north to support them.

[GAB-1955]

I agree. The best thing for both countries would be a secure border and controlled legal immigration for work. The Mexicans would know what the rules are and would meet them to work, and we’d know who was here. I don’t mind the legal Mexican workers at all. I hate line jumpers, that’s all.

[bcsco]

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[G Larry]

See Fred Thompson’s monologue on the subject.

If Mexico eliminated the corruption from top to bottom in it’s government, Mexico could flourish!

[central_va]

Cry me a rio.....

[TexasRedeye]

...he wants to come home but doesn’t even have the $300 he needs for the journey,” she says.

Errrr, isn't his a great example of what we conservatives have been screaming at the top of our lungs for years - Jobs dry up; illegals will "deport" themselves! The tired old canard of the pro-illegal bunch now in charge of our gubmint has told us over and over that we must have a "comprehensive" immigration plan (amnesty program) for the 12 to 20 million who are here illegally before we can deal with closing the borders.

In this simple Mexican woman's statement, we hear the real truth and see the real answer to the illegal immigrant issue. Vigorously and persistently prosecute the employers of illegal workers at every economic level and soon we won't have an "undocumented worker" problem in this country. They will have virtually all gone "home" and new economic invaders will have no incentive to come into this country.

Yea, it will take 5 years or more to implement this program but it WILL work, we see!

[nyyankeefan]

Can these people not do this in their own country?

Oh, I forget; they must suck the blood of a US citizen.

and you can thank jorge bush - the lib/dems and no cajones republicans that want all of them here!!!

[Redleg Duke]

You see, you do not have to deport all of them. When it isn’t financially viable, they will self-deport!