Amid Job Losses, Migrants In Texas Send Less Money To Families In The Developing World

From Houston Public Media:

The World Bank is expecting remittances to low- and middle-income countries to drop 20% globally in 2020 due to COVID-19, the largest decline ever recorded.

Many of Texas’ five million immigrants send critical funds, or remittances, back home to their families. The money sent back home to family members in the developing world is often a financial lifeline that keeps people out of poverty.

Experts estimate without this additional help from families abroad, more people will go without health care and food on the table in developing regions like Central America.

Frank Lopez immigrated to the United States 12 years ago from Honduras. Since his move, he has sent thousands of dollars to his 12- and 17-year old daughters who still live with their mom in Honduras — $300 to $400 every month, he said.

Now, he’s only able to send $20 here and there. Lopez is a day laborer in Houston. Since COVID-19, he’s struggled to find work. The few hundred dollars he earns a month doesn’t even cover his own expenses now, so he worries about his family back home.

“What is going to happen with my kids?” Lopez asked. “Whose going to provide for them?”

Lopez said his children and their mom were going hungry on their own. Recently, they had to move in with family in a rural part of Honduras, to make sure they could eat.

“They had to go to the mountains,” Lopez said.  “At least they have beans and they’ve got chickens over there. They can eat eggs every morning.”

Like Lopez, millions of migrants around the world send money back home to their families in poorer countries.

A $100 billion decline

This decline comes as global remittances to low- and middle-income countries had reached an all-time high in 2019: $554 billion. Now, in 2020, remittances are expected to fall by more than $100 billion dollars.

This especially impacts migrants who depend on money from family in the United States. More remittances are sent from the U.S. than any other country — some $68.5 billion in 2018, according to the World Bank. 

“We are looking at a huge human story associated with this decline in remittances,” said Dilip Ratha, The World Bank’s lead expert on remittances and migration.  

He said countries are already reporting stark declines in regions like Central America, which is expected to be hard hit. 

“El Salvador had a year on year decline of 40% in the month of April,” Ratha said.

Unemployment in wealthy countries suffering from the Coronavirus has fueled the downturn.

In the U.S. immigrants are over-represented in the industries hardest-hit by COVID-19: retail, food service and hospitality, according to Migration Policy Institute President Andrew Selee.

“Immigrants overall are among the most vulnerable in terms of losing their jobs in the current economic downturn in the United States,” Selee said.

Cutting off a financial lifeline 

Some 430,000 immigrants in Texas are from Central America, including 215,000 in Harris County. While many now face joblessness, they can’t send critical funds back home to their families abroad who are also facing financial struggles due to COVID-19.

“In bad times, remittances are a lifeline that keep people afloat,” Selee said. “When remittances dry up it means many more people are pushed back into poverty. But it also means that we’re going to see an increase in hunger and really lack of access to some basic needs with some families as well.”

Remittances not only affect family finances, they also have an impact on national income. The World Bank estimates in both Honduras and El Salvador remittances make up more than 20% of GDP.

And remittances aren’t the only financial inflow in decline. Another lifeline to the developing world, foreign direct investment, is expected to drop 35% this year.

These financial hits will make it even harder for the developing world to recover from COVID-19, said Dilip Ratha.

“With the crisis, the impact will be a lot more negative in poorer countries than in the richer countries,” Ratha said. “And the resilience also might be impacted in the future, that poorer countries might take longer to bounce back.”

He said as the situation in Central America becomes more dire, the region could further destabilize and lead to more migration to the U.S. in the long-term.

On this side of the border, Frank Lopez said this year has been one of the hardest since he came to Texas.

Like countless others, he feels powerless as he tries to keep his family afloat during the pandemic.

“I feel like there’s nothing I can do,” he said.

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