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Mexican migrants send more money home to help virus-hit economy

Remittances have increased since start of pandemic, helped by US welfare

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For Jorge Hernández, the prospect of a cut in United States unemployment pay came as a shock.

His hours at the Manhattan restaurant where he works as a chef have been slashed since the start of the coronavirus pandemic, so he has come to rely on the benefit to support his elderly relatives back home in Mexico.

Hernández used to send a quarter of his salary to his parents and grandmother in Huajuapan in the highlands of Oaxaca, a poor state in southwestern Mexico. More than 10% of Oaxaca’s gross domestic product comes from remittances from family abroad.

“They’re going to halve my unemployment pay — I won’t be able to send as much. This will mean more poverty at home,” said Hernández, aged 65.

He is not the only Mexican abroad who has continued to send money home since the pandemic began.

Remittances to Mexico have proved resilient since the start of the Covid-19 crisis, after hitting a record US $36 billion last year. Mexico now earns more in remittances than it does from foreign direct investment, tourism or oil exports.

In the opening weeks of the crisis in March, remittances hit a record monthly high of $4 billion. And data published on Monday showed that in June, they rose 4.7% month on month to $3.5 billion, according to the Bank of México.

As a result, total remittances in the first six months of this year reached a record $19.1 billion — 10.6% higher than in the same period in 2019.

The figures suggest that some U.S. benefit checks are finding their way to Mexican families back home.

“It’s an unusual recession in the U.S. because average incomes haven’t fallen due to government aid,” said Carlos Serrano, chief economist at BBVA in Mexico City.

Hispanic unemployment in the U.S. is running at more than double the pre-pandemic level, according to the Bureau of Labor Statistics, and Serrano noted that about 60% of Mexicans in the U.S. had official immigration paperwork and could therefore be eligible for official aid.

And some workers’ incomes have proved resilient. About 10% of Mexicans work in the agriculture sector, which largely kept going through the pandemic-related shutdowns, and another 17% work in the construction industry, which has suffered less disruption than other sectors.

Even if the U.S. slashes unemployment benefits, “this could be the year in which remittances rise 6 to 7% [from 2019],” Serrano said. If benefits are not cut, the rise could be higher yet “because we’re past the worst in U.S. unemployment,” he added.

One Mexican who earns $11 an hour plus board picking peppers, cucumbers, aubergines and courgettes in Georgia, and who asked to be identified as Juan, usually sends as much as $700 home every two weeks to his father and 8-year-old son.

Work is scarce at the moment, and the 30-year-old can only send about $200-$300, but “for me, it’s a blessing because I haven’t stopped working.”

“A blessing” is also how Mexican president Andrés Manuel López Obrador describes his country’s migrants. He has hailed the rise in remittances as “a positive indicator.”

The pandemic is wreaking havoc on the Mexican economy, where GDP fell by more than 17% quarter on quarter in the three months to June, data published last week showed. Mexico has no federal unemployment pay and Coneval, the state agency responsible for measuring poverty, found 55% of workers did not earn enough to buy a basic basket of food in May, a surge from 36% in the first quarter.

As a result, the number of Mexicans heading to the U.S. is rising. Apprehensions of Mexican adults at the U.S. border have nearly doubled since February, hitting 135,626, according to U.S. Customs and Border Protection data compiled by the Washington Office on Latin America, a think tank. This is the highest tally since September last year.

Adam Isacson at WOLA said that, unlike 2018 and 2019 when caravans of Central Americans arrived at the border to turn themselves in to the U.S. authorities, migrants were now “just going and trying not to get caught” as they sought to cross between legal points of entry.

“The Mexican economy is cratering — that pushes people forward,” Isacson said. “No matter who wins the [November U.S.] election, once Covid restrictions pass, we will see a large wave of migrants … Democrats are dreading having a caravan situation in their first 100 days [if Joe Biden wins].”

For many undocumented and legal migrants alike, there is no better alternative to working in the U.S.

“I’ll keep on coming,” said Juan, whose remittance dollars sent back over the past five years are being used to revamp the family home. But for now, his main goal is to avoid Covid-19 because he would be laid off without pay for two weeks if he got sick.

“There’s no shortage of people to infect you,” he said. “And things are so hard at home, our families rely on us.”

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