Migrant Wage Drain from U.S. Economy Increased a Little in 2010

By David North on November 16, 2011

Sadly, whenever economists write about the transfer of migrant workers' earnings from the United States to other countries – remittances – they always look at it from the point of view of the countries receiving the money, and/or that of the migrants (illegal and legal) sending them.

They never talk about the massive losses to the U.S. economy caused by wages paid to migrants, as opposed to resident workers; they never discuss the impact on our economy because of the loss of our money.

These ideological and definitional factors are prominent in the most recent report of the Multilateral Investment Fund, an arm of the Inter-American Development Bank Group, entitled "Remittances to Latin America and the Caribbean in 2010: Stabilization after the Crisis".

The report's summary puts it this way:

In 2010 remittance flows to Latin America and the Caribbean marked the end of the downward trend brought on by the 2008-2009 global financial and economic crisis. The overall regional volume of remittances sent home reached levels similar to the previous year with a slight increase of 0.2% . . .


While some of these funds came from Japan and Spain, most were from immigrants (legal and illegal) the U.S. The total was a thumping $58.9 billion. (The study doesn't bother reporting any data on where the remittances were earned.)

Let's assume that, say, $20 billion of that sum related to remittances specifically from illegal aliens working in the U.S.

Would not it be nice if those moneys had been plowed back into the U.S. economy?

The $20 billion is not the sole measure of the utility of those wages. If the U.S. workforce received those moneys, there would be less pressure on unemployment compensation funds, less need for welfare expenditures, such as Food Stamps, and maybe a few extra federal and state tax dollars as well.

Such remittances are routinely not taxed as such; only the state of Oklahoma levies anything like a tax on wired remittances, and that is a 1 percent withholding for the state income tax, something I covered more thoroughly in a CIS Backgrounder entitled "Charging More for Immigration: Closing Financial Loopholes in the U.S. Migration Process".

The $20 billion, of course, is not the total earnings of those illegal workers (assuming my rough estimate is in the ballpark); the gross earnings are much higher. Much of the migrants' income is spent in the U.S., on rent and groceries, for example – the $20 billion is just what is shipped out of the United States.

Returning to the IDB report, it, like most other Establishment conversations about foreign worker remittances, is tilted in another direction; it is only about the flow of funds to Third World nations. The press never picks up the negative impact of these arrangements on the macro economy of the host country, like the U.S., nor on the micro-economies of the resident workers who have been displaced by the migrants.


Topics: Remittances