Angelo Cabrera immigrated to New York City from Mexico in 1990 as an undocumented immigrant at 16 and immediately started working in bodegas throughout the city, so that he could send money to his family in Puebla, Mexico.
When the pandemic started, Cabrera increased the money he was sending to his family from $240 a month to $340 because his mother needed extra money for medicine, while being employed part-time as a researcher at Baruch College’s Marxe School of Public and International Affairs. Several months later, Cabrera had to send more money to his mother because she fell seriously ill and needed medical treatment.
Cabrera is grateful that his wife, also a Mexican immigrant, was able to pay their rent and utility bills during that period of time because most of his earnings went to his mother’s medical expenses, which cost him between $6,000 to $7,000. The entire ordeal was painful, Angelo said.
“There were times I wanted to focus on my family here, like my immediate family,” said Cabrera, who has a Green Card and lives with his wife in East Harlem, New York. “But at the same time what are you gonna do if your family can’t even buy medicine?” His mother passed away at the end of 2020.
Despite Covid lockdowns and sticky inflation, the outflow of U.S. remittances is climbing. Government programs and a robust job market have enabled U.S. immigrants to find ways to send money abroad to help families while having more immigrants entering the labor force could alleviate pressure on the tight labor market.
In the latest data compiled, the U.S. sent the most remittances than any other country and set a record of $72.7 billion in 2021, according to KNOMAD, the World Bank’s data hub for migration and economic development. U.S. remittances are estimated to reach a record of $75.7 billion in 2022 and $75.9 billion by the end of this year, according to Insider Intelligence, a market research company.
Even though remittances declined by 2.1% in 2020 compared to 2019, many economists were expecting a bigger letdown due to the economic freefall during the pandemic. The reality was that many immigrants held essential jobs that enabled them to continue to work, said Jesus Canas, a senior business economist at the Federal Reserve Bank of Dallas.
About 69% of all immigrants in the labor force and 74% of undocumented workers were essential, according to a report conducted by the Immigrant Learning Center, a nonprofit organization that provides various services to immigrants and refugees.
These same immigrants, who were essential workers and sending money back home, benefit from the wage gains in industries that have thrived since the pandemic and minimum wage increases in certain states. For example, California’s minimum wage in 2020 was $13 per hour. The state’s minimum wage is now $15.50.
Also, legal immigrants, who qualified for pandemic aid, were able to continue to send money abroad because some of their daily and monthly expenses were paid by the government and not with their earnings or savings. For instance, the government issued stimulus checks, suspended student loan payments, and, in some cases, local municipalities put a hold on rent payments, which benefited many people including immigrants.
The effects of the pandemic and inflation are acutely felt in countries like Mexico and other Latin American countries, and many immigrants feel a huge responsibility to send additional money during hardships, said Cabrera, who works as a community school director at Union Settlement, which provides underserved communities programs ranging from education to healthcare and economic development.
Uri Rojas, 36, who owns and operates a coffee cart in Times Square, has increased the money he sends to Mexico by at least $500 a year. Rojas has been sending his mother an average of $200 a month for the past 17 years, but inflation has raised the cost of living so much in Mexico that he tries to send her more when he can. Rojas also sends $100 to his grandmother five times a year since the pandemic.
U.S. inflation hasn’t left Rojas unscared. In the past two years, Rojas has increased the number of days he works at his coffee cart from five days a week to six. Also, Rojas has noticed the cost of diapers has gone and spends more on them. Rojas has five kids. Overall, saving money has been difficult lately, said Rojas.
The U.S. has always depended on immigrants like Cabrera and Rojas to participate in its labor force, and letting more immigrants in the country could alleviate the tightness of the job market, according to a report done by the Federal Reserve Bank of San Francisco.
Between 2017 to 2020, the number of immigrants declined due to government policies and the Covid-19 border closures, which contributed to the tight labor market, the report states. Eventually, immigration policies eased and the borders reopened in 2022, which brought in a significant amount of immigrants and helped close the labor force gap left by the pandemic.
To further alleviate the tightness of the labor market, the report says increased immigration flow needs to continue. This in turn could increase the outflow of remittances in the U.S. and help millions of immigrant workers’ families living abroad.