Early in the COVID-19 pandemic, experts predicted that migrant workers in the U.S. would wire home less money as the virus hammered the American economy. But those predictions didn't materialize for workers from Mexico, who have sent home huge amounts of money, called remittances.
Remittances from Arizona leapt from $239 million in the spring quarter of 2019 to a little more than $402 million for the same time period this year, according to Bank of Mexico data.
Payments from Mexican workers worldwide amounted to $3.57 billion in August, the second-highest level on record for a single month.
Puzzled economists now say their original forecasts underestimated the strength of “human networks” between Mexican migrants in the U.S. and their families back home. They also say the rise has been driven by a weakened Mexican peso and the $600-a-week U.S. unemployment benefit that expired at the end of July. Despite that, the surge continued in August.
“It talks about the resilience and the priorities that these types of families (have)," said Jonathan Fortun, an economist at the Institute of International Finance in Washington. "We are honestly very surprised at their resilience.”
Money coming from families in the U.S. has long been a lifeline in Mexico. The payments are critical to low-income families for expenses like food and clothing. They also cover medical needs, pay off debts and fund investments like homes.
In 2019, remittances reached a record $36 billion, according to central bank data — more than what Mexico earned that year from foreign tourism or annual petroleum exports. And they’re on pace to exceed that this year. Most of the money came from the U.S., home to an estimated 37 million people of Mexican origin.
The payments have only become more important. Mexico provides no federal jobless benefits and workers and businesses have received little relief during the pandemic. Between April and June, Mexico's economy contracted by 17% compared with the same period last year, and in June, a government agency that measures poverty found that 48% of the country wasn't earning enough to cover a basic basket of food.