What could the U.S. do with $37 billion?

Published on November 28th, 2011

According to the World Bank Factbook 2011, the US is the top migrant destination country and had the largest inflows of migrants between 2005 and 2010.  As of 2010, the total number of immigrants in the US is 42.8 million.  The top country with the number of emigrants (those leaving their home country) is Mexico at 11.9 million. The top migration corridor is the Mexico-United States corridor with 11.6 million people.  Combine this with the fact that in 2010, the top remittance-receiving countries are India ($55 billion) and China ($51 billion) followed by Mexico ($22.6 billion).  At the same time, the top remittance-sending countries, in 2009, were the US ($48.3 billion), Saudi Arabia ($26.0 billion) and Switzerland ($19.6 billion).

It is clear that migrant workers send over $48 billion out of the United States while we admit over 1 million legal immigrants each year and house over 12 million illegal aliens (62% of whom are Mexican).  Of the $48.3 billion sent out of the US, only 22% is due to employee compensation, the remaining 78% is remittances sent from the migrant workers to their home country.

Since only 78% of the $48.3 billion is migrant remittances, what would be the impact of the $37.6 billion if it remained within the US?

States continue to face major fiscal challenges.  At face value, the over $37 billion dollars would cover the projected FY2012 state budget shortfalls of all states except Florida, Pennsylvania, Minnesota, Illinois, Texas, New York, New Jersey & California.  Interestingly enough, those states that have not addressed the illegal immigration crisis with state legislation or those who have encouraged illegal immigration through sanctuary cities policies are the ones who have the largest projected FY2012 budget shortfalls.

Each year, there are weather-related disasters in the US; they range from hurricanes to wildfires to snowstorms.  The same $37 billion remitted to other countries could have covered all of the 2011 weather-related disasters except the Southern Plains/Southwest droughts, heatwave & wildfires ($10.0B) and Hurricane Irene.

The monies remitted are obviously not circulated within the US economy.  If the $37B were to circulate within the US economy at least 1.5 times, that could lead to $56.4B in revenues for businesses and taxes for the government coffers (e.g., unemployment insurance, infrastructure funding, etc.)

The Center for Immigration Studies (CIS) found that, "in 2009, 57% of households headed by an immigrant (legal and illegal) with children (under 18) used at least one wlefare program, compared to 39% for native households with children."  All this while illegal immigration costs US taxpayers $113 billion per year.

On the other hand, a study of Mexican states shows that monies sent back to migrants' home states enhances the incomes of recipients which enable them to increase consumption or investment although exchange rates and price effect changes can decrease the aggregate impact.  However, remittances can slow economic development by exacerbating income inequality and reducing labor supply among recipient families.

Interestingly, migrant workers remit funds to their home countries where it has minimal impact on the aggregate economy while those same monies are not at the disposal of the host country, although the host country incurs costs by merely having the migrant in the country.

References & resources:

World Bank Fact Book 2011


Migrant wage drain from U.S. economy increased a little in 2010


Do remittances boost economic development?  Evidence from Mexican states


Mexican & Central American Immigrants in the United States


Evolving demographic and human-capital trends in Mexico and Central America and their implications for regional migration


States continue to feel recession’s impact


Billion dollar U.S. weather/climate disasters


62 percent of illegal immigrants in U.S. from Mexico


Welfare use by immigrant households with children


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