Dollars Going South of the Border: $247M in Transfers Sent to Foreign Countries

April 17, 2013
By

Broadway in Chelsea is a hub for small businesses, but it’s also a hub for shipping cash out of the community to foreign countries. Money Transfer stores on the Broadway corridor accounted for the transfer of $42.6 million in 2012.

In four of the poorest communities in Massachusetts (Eastie, Revere, Chelsea and Everett), money transfer stores in 2012 helped residents send $247.08 million in cash to several foreign countries around the world.

The process of sending money from the U.S. to foreign countries is nothing new, and there is certainly nothing illegal or wrong about it, but the vast amounts of money leaving the local economy leaves serious questions about the impact of such widespread practices on local businesses during tough economic times – not to mention that the large sums are being sent from areas that statistics show are terribly impoverished.

Others, however, argue that the practice – known as remittances – helps family members who are left behind in Third World countries and who struggle to survive. Many of those are children, family and friends, and it is argued that they would not make it without remittances. International Policy organizations – such as the World Bank – hail remittances as the quickest way to transform the economic stability of developing countries and prevent suffering.

LOTS OF MONEY LEAVING COMMUNITIES

The Independent News Group (ING) analyzed state statistics on money transfers for the year 2012 and for the areas of East Boston, Revere, Chelsea and Everett. The statistics are gathered annually by the state Division of Banks and are simply activity reports that list each store’s address, the total dollar amount sent during the year, the numbers of transactions and the destination country.

In that four-community area, the paper found that $247.08 million in cash was sent to numerous countries – with El Salvador ($71.6 million), Brazil ($47.6 million) and Colombia ($45.45 million) being the top recipients.

As it was, East Boston had the highest number of transactions and the highest amount sent. The breakdown went like this:

•East Boston, 293,853 transactions, $112.32 million

•Everett, 142,654 transactions, $59.56 million

•Chelsea, 162,544 transactions, $52.79 million

•Revere, 63,631 transactions, $22.39 million

Statewide, the ING estimates that more than $2 billion per year is being sucked out of local communities. A Boston Globe story in 2010 reported residents statewide sent $1.8 million overseas in 2009.

The top Money Transfer stores locally were on Bennington Street in Eastie, Superley (21 Bennington St.) and Teleonda (202 Bennington St.), both owned by Humberto Grajales. Combined, the two stores sent $25.62 million overseas, primarily to El Salvador and Colombia.

Though the paper did visit both stores and leave messages for Grajales, he had not contacted a reporter by press time. In fact, the paper visited seven of the leading transfer stores locally, and found no one who would return a message or comment on their local transfer business.

As context to the overall situation, all four cities have some of the highest rates of poverty and highest numbers of people on public assistance.

In Chelsea, the public school statistics this year indicate that 88.9 percent of students in the schools are classified as low income. In Revere, some 76 percent of students are classified as low income.

Recent statistics from the state Department of Transitional Assistance (DTA) show that 23,961 people in the four communities are on some sort of public assistance, with the numbers being Chelsea (6,995), Revere (6,353), Eastie (5,636) and Everett (4,977).

SENDING MONEY IS SENDING LOVE

Money Transfer stores dot the landscape of virtually every city in the area, usually occupying storefronts, offering accompanying services and – typically – smelling of flowery incense.

Some like Chelsea’s Spectrum Communications are simple corridors with gumball machines and a transfer agent sitting behind a secure fiberglass window.

Others like Eastie’s Aries Communications are more elaborate with flat-screen televisions, a jewelry store, a cell phone dealer and comfortable waiting areas. In Revere, there are large volume check cashing businesses that offer one-stop shopping – where you can cash a check, send a remittance and pay an electric bill. Still others, like Everett’s Petionville Bakery & Restaurant are mostly places to eat, but with a transfer station sitting separately off to the side.

Posters trumpeting ‘Envios Dinero (Send Money)’ dot the walls of most stores informing customers of the various service fees to each country. Currently, there are no fees or taxes imposed by Massachusetts or the U.S. government, but transfer businesses typically will charge a flat rate per transaction – such as $8 per $1,000 sent to El Salvador.

Most stores also have posters from major transfer companies appealing to the sentimentality of those who have left home, such as the current MoneyGram poster in almost every store that reads, “Our feet may leave, but our hearts are always home. Send cash to mom on Mother’s Day, arriving the same day.”

While most Money Transfer stores are locally owned, the actual money wiring services are operated by a handful of large companies like Western Union, Continental Exchange Solutions, MoneyGram, and New Age Financial Services. While immigrants over the centuries have always sent cash home, the new systems operated by these companies have been modernized to the point that it has become extremely easy, very reliable, and incredibly fast to send cash. In most cases, money brought to a local store in the morning can be hand delivered later that afternoon to the front door of a family member in a foreign country.

Fatou Fatty, director of Women Encouraging Empowerment, an immigrant education and civics organization in Revere, said the topic of remittances doesn’t come up often in her classes. It’s something she said makes people nervous.

“Most don’t even talk about it because it’s very sensitive,” she said. “Once you start talking about money, you will drive people away and we don’t want that to happen. A lot of people are sending money and mostly it’s because they have families and kids they leave behind. There are a lot of positives that come from sending money, like investing in businesses.”

However, others have a different view, such as Lucy Pineda – a Revere resident who runs the Latinos United in Massachusetts (LUMA) office in Everett. Pineda – who has been in the United States for 26 years – said the vast amounts of remittances being sent from the U.S. has changed her native country of El Salvador for the worse.

“My family was from the country and they worked really hard on a farm, getting up at 3 a.m. every day and working until night,” she said. “Right now, the new population [in El Salvador] dresses better than me. They look like they don’t want to work. They are just waiting every week for our money to come to them. People say we don’t work hard in America, but people there don’t want to do anything anymore. That’s the bad part of it. I built a house there and I can’t get anyone to clean it or paint it because they don’t want to work. They just wait every month for the money to arrive.”

Conversely, in America, she observed that many immigrants severely deprive themselves to send all of this money back home.

“People don’t have a better life – a better life for themselves here,” she said, estimating that most families send between $300-500 per month. “Maybe they don’t buy furniture or take very good care of themselves because they are sending all of their money back home.”

SOCIAL SECURITY SOUTH OF THE BORDER

International organizations, such as the World Bank, praise the kinds of remittances sent from the four communities here, as well as those sent from all parts of the developed world to individuals in the Third World.

“Remittances, the money sent home by migrants, are three times the size of official development assistance and they provide an important lifeline for millions of poor households,” read a World Bank report from 2012. “Remittances to developing countries are estimated to reach $372 billion in 2011. The overall economic gains from international migration for sending countries, receiving countries, and the migrants themselves are substantial. Remittances can have profound implications for development and human welfare. Remittances can contribute to lower poverty and to the building up of human and financial capital for the poor.”

The newspaper contacted the Embassies of Colombia and El Salvador for a discussion on how important remittances are to their countries and peoples. New El Salvadoran Ambassador Ruben Zamora said it is something that is crucial to the country.

“Remittances to El Salvador not only represent an economic phenomenon, but also are an element that has social and political implications,” Zamora said. “They are important for our country because they generate cash flow to the people that need it most. We could say that this is a kind of social security for these people, with the advantage that this money does not go through any red tape. Of course that remittances have enabled a consumption capacity in the sectors of the population who receive them, but also imply that El Salvador is exporting labor, usually the most capable, the most qualified, who is in search of a better situation for their family. Due to the large number of Salvadorans living in the United States, we can say that remittances are an element that greatly configures El Salvador.”

DRAINING MAIN STREET

While some see remittances as positive, others ask at what cost to the local communities – the local businesses on every community’s Main Street. Naturally, with large immigrant populations sending so much disposable income out of the community, remittances are seen as money that isn’t being spent at local stores, restaurants and markets.

“People have a right to do what they want with their money, but this aspect should be and is an important consideration in immigration policy reform,” said Ira Mehlman, a spokesman for Federation for American Immigration Reform (FAIR) – a conservative leaning organization in Washington, D.C. “You do have this when there are a large number of foreign workers in the economy. You will see a large portion of money is sent out of the country. That money sent out has a negative consequence. It doesn’t help the local economy because that’s money that is no longer in circulation in the local businesses. It’s money that isn’t stimulating the job market and creating local jobs at local businesses. It is also depriving state and local governments of revenues from sales taxes…While the money earned here is flowing out of the country, if the worker brings their families with them, the community also has to pay for education for the kids, and if they need medical attention, pay for the health care also. Both are huge costs to the community. Communities are losing revenue on one end with remittances and having to pay for all the social costs at the same time.”

Pineda interjected that immigration reform could help stem the tide of some of the remittances, as undocumented workers tend to send everything home because they cannot open bank accounts.

“If you’re an undocumented worker, you work and send money to El Salvador because you don’t have any legal documents to open a bank account,” she said. “You wouldn’t trust a bank to give you your money back if you have no documentation. This community sends all their money there because they can’t open an account. If we have immigration reform, they will leave the money here and buy houses, buys cars and other things – really have a life here.”

Several local Chambers of Commerce were asked to comment on the situation as well, noting that their memberships were perhaps losing out on millions of dollars in business each year due to the volume of remittances here. Such is the often-unspoken negative side of large, new immigrant populations. While those workers earn millions from the local economy, they often don’t spend that money in the same local community – but rather ship the lion’s share of it out of the country.

Chambers in Everett and Eastie took the matter under consideration, and are deliberating a position.

Revere Chamber of Commerce President Bob Upton said his organization had no official position, but his personal opinion is he hopes more of that money could stay in Revere.

“Obviously, we wish they were spending their money in Revere – spending it locally,” he said. “If in fact that is going on, that they’re sending so much money out of the country, then it’s not helping local commerce. I think it’s part of an education process. In Revere, we encourage the Spanish-speaking population, the Arabic speaking population and the Portuguese speaking population to learn about the Chamber and do business with Revere businesses. We really do that and have a grant from Speaker Bob DeLeo to help with that. Here, just the sheer volume of dollars is certainly something for businesses to pay attention to.”

THRIVING AMIDST STRUGGLE

Last Thursday, just off of Broadway in Chelsea, a steady stream of residents filed into the Spectrum Communications store and the Latino Express store – two Money Transfer locations on opposite sides of Everett Avenue.

Speaking in Spanish mostly at Spectrum, one person after another handed over hundreds of dollars in cash to a woman stationed behind a fiberglass window in a store that was nothing more than an empty corridor.

By the end of the day Thursday, that money probably arrived at someone’s doorstep in any number of points around the world.

Just around the corner, though, one can find a promising restaurant that failed quickly, and up Broadway several blocks one can also find the empty shell of an award-winning small BBQ restaurant – a restaurant that left Chelsea for South Boston and has found success there.

Sidebar –

Top 5 Money Transfer Locations in Chelsea:

Spectrum Communications, 18A Everett Ave., $10,692,300

Broadway Laundry, 899 Broadway, $8,408,676

Caribbean Liquors, 399 Broadway, $8,271,382

Latino Express, 7 Everett Ave., $8,254,447

Telepage Corp., 132 Pearl St., $6,865,152

  • http://twitter.com/kad2866 chad Davis

    This is another way immigrants are hurting the US. Much o f this money was never taxed and if you receive food stamps, rent assistance, etc, u can easily send cash, so it is American taxpayers who pay for most of the money leaving the country. This money is used to help bring more immigrants who in turn cost us more and then they send money home.
    If we don’t severely limit immigration, states economies will suffer and the country will go broke trying to support the world. This isn’t the 1700′s, America can no longer afford immigrants and refugees.

  • Dave Holzman

    This is a terrific article. Kudos to Seth Daniel from another journalist for a job very well-done, and to the Revere Journal for publishing it.

  • FREE8AMERICA

    As context to the overall situation, all four cities have some of the
    highest rates of poverty and highest numbers of people on public
    assistance.

    To all elected politicians: Ask yourselves- Is this the diversity you hoped for with your New Americans Committee. We will remember when it’s time to vote.

  • http://openbsd.org/ mmontoya

    Excuse me but the fact that immigrants (documented or undocumented) or even US citizens are sending remittances to other countries does not imply that communities are becoming poorer as this article suggest. For instance Mexican illegal workers produce 700 billions of new wealth into the US economy every year and they send 22 billions to Mexico in the average year. That means that 97% of the all new money remains in US economy and only 3% is leaving a very good business for companies in US. At the end the communities are richer and with more jobs, not poorer.

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