Proposal for a Postal Remittance Regulation System

Remittances are counterproductive to the resident country’s economy, which in this case the United States. A class of workers reserving ten percent or more of their income in order to enhance the budget of their non-migrating family, later used to fund firms and increase consumption in the immigrant’s home country rather than in the United States. Income diverted to foreign consumption and foreign investment has its own costs in the form of reduced domestic aggregate demand, minus the receivers’ propensity to import American goods and services. Further, there is evidence to suggest that immigration may lower some Americans’ wage potential, specifically those of high school dropouts, who are some of the more unskilled workers of the American economy who often directly compete with unskilled immigrant labor. Thus, immigration does have some costs for some workers, and these costs are possibly outweighed by the benefits of immigration (innovation for example). Regardless of that calculus, it brings a set of costs nonetheless.

These costs, of either reduced wages or reduced domestic aggregate expenditure are localized to the area of the immigrant’s migratory destination, meaning the costs of immigration are primarily spatially-oriented. For example, an unskilled migrant’s remitting leaves local economies with less demand to be satiated by domestic workers, while potentially undercutting the wages of their similarly skilled counterparts--whether native- or foreign-born. There are other costs as well, like increasing rents; for example, in the period immediately after the Mariel Boatlift during the 1980s, low-quality rentals in minority neighborhoods saw rent increases (Greulich et al. 2004, pg. 151). Alternatively, some of immigration’s benefits are regionalized, such as a surge of immigration helping to compensate for recent population declines in that part of the country. In short, remittance policy can help ameliorate the spatial effects of immigration.

In 2015 the United Nations adopted a series of sustainable development goals, among which was to reduce the fees associated with remittances. They recognize the exorbitantly high fees and the negative effects for the immigrants, their families, and their home countries. By 2030, the UN wishes to see remittance fees reduced to three percent, and all corridors charging over five percent eliminated (Galatsidas 2015). If the United States were to establish this postal-remittance service, it could easily effectuate those goals well ahead of schedule in line with the spirit of American inclusion of immigrant communities. Congress could legislate fee levels to compensate for program-related costs while still ensuring affordability and accessibility to immigrant communities. Importantly, ceteris paribus, establishing this scheme of remittance-regulation designed to lead to cheaper and consistent remittance services cultivates a broader and varied appeal in immigrant communities. That broad appeal increases market size, with a resultant decrease in domestic aggregate demand commensurate to the growth in remittance flows. To combat the economic maleffects, it is proposed that a system of regulation according to local factors is proposed.