Immigrants from around the world make their way to the United States in hopes of a better life. Instead of moving their entire families, they often come alone and send money back home overseas. This practice, known as remittances, actually boosts the world economy along with the American one. Without the constant exchange of labor and money throughout the world, many countries would see their economies sputter and stall. Here’s how migrants sending remittances actually helps Americans.
Ways To Send Money
You may be wondering what services these individuals use to send money. Just a couple of years ago, remittances were much harder to get home, because of the lack of digital money transfers. This lack of digital banking also impacted wealth advisory. Now, person to person apps, also known as P2P apps, allow you to pay friends outside of the country easily. For international money transfers, most people use OFX, because it is the cheapest money transferring services. However, there are others that prefer the speed of PayPal Xoom or MoneyGram. These are just some of the ways in which remittances are exchanged to family members oversees.
Financial Support Brings Countries Out of Poverty
Less than one percent of the American budget goes to foreign aid, but that still accounts for $50 billion. The vast majority of that budget goes toward humanitarian projects, from assisting in the fight against Ebola to supporting countries that face natural disasters. Along with that, part of the spending goes toward economic development and infrastructure.
American immigrants send money home to raise their families out of poverty. They come to work here because there are no jobs in their homelands. They may also bring their kids with them because the education system in their home country is failing. With the money they send home, their families can find homes, and their children can go to school, and then they can contribute to their local communities and governments. The more countries are able to rise out of poverty, the less they need to rely on the United States.
Remittances Make Products Cheaper for Americans
Oftentimes, immigrants end up performing the backbreaking work that Americans don’t want to do. From harvesting crops to growing our infrastructure, they end up working long hours and earning minimum wage at best. These jobs are usually “under the table” or don’t provide the full-time benefits (like health insurance) that American citizens would want. While this might not be fair to the immigrant workers, the steady work allows them to send money to Mexico and anywhere else they need to.
Meanwhile, the decreased cost of labor and benefits means companies can sell their products for less, and can continue to produce them in America. American production reduces the cost of import transportation and trade tariffs, further reducing the cost of goods. It also makes it easier for a small businesses to get started without the need for small cash loans.
Remittances Make Foreign Goods More Affordable
American goods are found all over the world, from Coca-Cola bottles to Starbucks franchises. In many places, buying American products is considered a status symbol that only the middle and upper class can afford. Oftentimes, these goods are too expensive for locals who are struggling to put food on the table, much less enjoy a carbonated beverage or a latte, especially as the cost of exporting items makes them cost more. However, when families experience the financial stability or remittances, they develop the stability to purchase American goods.
Essentially, this means the production process has come full circle: foreign labor in America has reduced the cost of creating the items, while foreign customers receiving remittances can afford to buy them. While some people worry about immigrants taking jobs and sending money overseas, they’re actually improving our trade deficit and overall economy while making their own countries better. Without this practice, Americans would be able to afford less and would have to work much harder to get the products that they love.
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