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 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 expat 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 moneygrams that are here today, and may be gone tomorrow.

About Author


Bob Dane, the Federation for American Immigration Reform (FAIR)'s Executive Director, has been with FAIR since 2006. His deep belief is that immigration is the most transformational determinant of where we are heading as a nation and that our policies must be reformed in the public interest. Over many years on thousands of radio, TV and print interviews, Bob has made the case that unless immigration is regulated and sensibly reduced, it will be difficult for America to reduce unemployment, increase wages, improve health care and education and heighten national security. Prior to joining FAIR, Bob spent twenty years in network radio, marketing and communications after an earlier career in policy and budgeting within the Reagan Administration. Bob has a degree from George Mason University in Public Administration and Management.