Cash Flowing to Central America Rises in a Time of COVID
Nearly 20 months into the COVID pandemic that has slammed the global economy, immigrants are sending more cash than ever back home to Central America.
Remittances to Mexico — almost entirely from legal and illegal Mexican immigrants living in the U.S. — hit a record $4.54 billion in July, up 28.6 percent over a year ago. Remittances to Honduras, El Salvador and Guatemala totaled $62.2 billion in 2020, up 10.5 percent, according to the latest World Bank data.
While the flight of U.S. dollars favors a few fortunate relatives in Central America, the continued and accelerating flow of northbound migrants and southbound money is not a healthy arrangement at either end.
For America, the outgoing currency represents a disinvestment in this country. The billions in cash that goes elsewhere cannot create jobs or serve communities here. The surging influx of migrants and outflow of their dollars is a double whammy when 45 million working-age Americans (native-born and immigrants) are jobless in a COVID-shrunken economy.
Compounding these challenges, immigrants who wire money to family back home are, in many cases, heavy users of America’s social-welfare system. The Migration Policy Institute reports that 41 percent of Central Americans here have no health insurance, and their average household incomes are lower than those of immigrants overall. Migrants from the region also make up the largest cohort of illegal aliens, who cost U.S. taxpayers more than $100 billion annually.
The World Bank maintains that remittances help less-developed nations alleviate poverty, reduce child labor and enhance nutrition. But as Central America hemorrhages its human capital, remittances are poor Band-Aids.
Instead of passive dependence on ex-pat cash funneled to select families, governments in the region should be working to widen educational and employment opportunities, while rooting out corruption that cripples domestic development and undermines civil society.
Remittances currently constitute up to one-quarter of the Gross Domestic Product (GDP) of Mexico and the three countries that compose the Northern Triangle. Yet this not a “domestic product” in any meaningful sense of the term. A nation’s true wealth comes from within, not via Western Union money grams that are here today, and may be gone tomorrow.