Mexicans working in the United States sending less money home to families

ATOTONILCO, Mexico -- Mexicans working in other countries are sending less money home, threatening businesses, stalling construction and choking cash flow to hamlets where as much as half the population works in the United States.

Analysts said stepped-up immigration raids and the slowdown in the U.S. economy accounted for the drop in the payments, which many migrants use to sustain families back home.

The payments, or remittances, have fallen about 2 percent this year to $11.6 billion, the first such drop in more than a decade since reliable records have been kept, Mexico's Central Bank said Wednesday.

And the buying power of this money has been battered by the weakening U.S. dollar, which has lost about 8 percent of its value against the Mexican peso so far this year.

In Mexico, businesses that once thrived selling everything from beds to bricks to the families of migrants have laid off workers. In this town of verdant fields beneath the snow-clad slopes of the Iztaccihuatl volcano, there's little left to rely on but small farms.

"There's no money anymore," Carlos Escalona said of his family's business, which sells concrete blocks and bricks to help people build houses with the money migrants send home. Sales have fallen by a third, forcing the business to lay off 70 percent of the staff.

Of migrant workers in the U.S., Escalona said, "They lose their jobs, and then they're afraid to leave the house. It's like they're trapped."

Bank of Mexico president Guillermo Ortiz said about 22 percent of Mexican workers in the U.S. have jobs in construction, an industry that has slowed sharply.

About 152,000 Mexican immigrant workers lost U.S. construction jobs in 2007, while overall unemployment for Mexican immigrants in the U.S. rose from 5.5 percent to 8.4 percent over the year, according to a June report by the Pew Research Center.

Gone are the days when migrants came back to Mexico each year flush with cash, then returned to jobs waiting in the United States, as they did during the boom years of 2002 to 2006.

Now, more migrants rounded up by U.S. immigration officials are being sent home penniless.

Others have decided to return for good, bringing as many household items as they can along with them and eliminating the need to buy much locally.

In Atotonilco, much of the business at Olivia Guzman's hardware store used to come around Christmas, when returning migrants would buy electric cables and circuit breakers to power up new appliances for their families in Mexico before returning to jobs in the north.

Now that business has mostly dried up. Where she once sold $30 or so per day, she now sells as little as $6, she said. Her business survives only because her father owns the building and doesn't charge her rent, she said.

Things are no better at Yesica Ordonez' furniture store, Muebleria El Rosal, where migrant families once had enough money for her $50 chests of drawers or $100 beds.

Now the few customers who do appear spend remittances on necessities, she said. "It's been about two years since things were good."

Ortiz said remittances will probably drop 2 to 3 percent for the full year, the first sustained drop since 1995, when the bank began keeping a tally. In small towns, about one in eight families gets money from workers in other countries, the government estimates.

The payments have become a key source of foreign currency for the bank, representing Mexico's second-largest source of outside income, after oil exports. It represents less than 3 percent of Mexico's gross domestic product.

In the first part of the decade, the recorded payments grew rapidly -- from $9 billion in 2001 to almost $24 billion in 2007 -- because of swelling immigration and better reporting methods.

The number of Mexicans crossing the border rose to an average of 400,000 a year between 2000 and 2004, more than 10 times the migrant flow of a generation ago. About three-quarters were undocumented, according to Mexico's Population Council.

The cash those migrants sent home doubled the number of Mexican households that received remittances between 1992 and 2002. Now that growth appears to have reached an end.

Jesus Cervantes, director of economic measurement for Mexico's Central Bank, predicted the trend in annual remittances will turn around, but said the days of unbroken gains are probably over.

The pain is already being felt in places like Cheran, in the Mexican state of Michoacan, where officials say 41 percent of the town's 22,000 residents had migrated to the north, mainly to North Carolina and Michigan.

Up until a few months ago, they were the town's main source of income, sending home about $500,000 per month.

Another Michoacan town, Coalcoman, is trying to find jobs for returning immigrants by promoting organic vegetable farming, said town councilman Ramiro Godinez.

"It's like a migratory phenomenon, but in reverse," he said. "We're looking for other alternatives."

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Associated Press Writer E. Eduardo Castillo contributed to this report.