As dollar falls, migrants feel pinch

Four years ago, Ricardo Machado, a Brazilian who lives in Allston, could support his daughter, his sister-in-law, and her three children with only $650 a month. Today, the regular payment has jumped to $1,200. Aside from working an additional 20 hours a week, he has had to cut virtually all luxury expenses. "I used to come to [a local Brazilian restaurant] twice a week, but I had to stop," says Mr. Machado, who has a full-time position at a car dealership and also does odd jobs.

In all, about 150 million migrant workers worldwide labor outside their countries of origin and send money home. Last year saw an estimated $240 billion in remittances – a record – reach the developing world, with roughly $90 billion from the US alone. These estimates are probably much smaller than the actual value of remittances, since many immigrants are illegal or send money through unofficial channels.

The greatest effects of the remittance strain will strike lower-income families overseas who depend on the money for survival. "A 20 percent hit for a rich man is probably tolerable ... but for poor people, a 20 percent income hit is a very big hit, and they would be hard pressed to adjust to it," says Dilip Ratha, a senior economist at the World Bank who specializes in remittances and migration.

While these families are not likely to go hungry, they will probably simplify their diets to subsist on a bare minimum, Dr. Ratha says. They're also likely to cut back on clothing purchases and limit any medical treatment to emergency situations.

As migrants look to cut costs, some businesses that cater to immigrant needs are starting to feel the pinch. Take Alberto Gomes's Superior Supermarket, a small Portuguese and Brazilian grocery store in Cambridge. In years past, Mr. Gomes, who is originally from Portugal, attracted a number of area Brazilians by stocking his shelves with goods from Brazil and Portugal. But when the dollar began to fall, the cost of goods soared, and Gomes had to raise prices.

"I do about half of the business [I used to]," he says. Currently, his operation is in the red. "I take it day by day and see how America's going to do," he says.

For some countries, however, mainly Mexico, the exchange rate remains favorable, and the economic incentives for working in the US continue. Yet in any case, it can be difficult to draw hard and fast conclusions about remittance flows, given the undocumented status of many people in the migrant workforce, says Simon Reich, director of the Ford Institute for Human Security at the University of Pittsburgh.

"The vast majority of money is going to migrants' families in Mexico and Central America," says Dr. Reich. "This means that the vast majority of migrants have not been affected by [the falling dollar value]."

Ratha, however, foresees changes if the US economy continues to struggle. "There will be in a year, [or several] years' time, effects on migration patterns … that will probably span the whole spectrum from high-skilled to low-skilled workers," he says.

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