Thursday, October 16, 2008

Filipinos in the US: What’s the real score?

Posted under OFW, subprime

(This is a guest post from Cat, another blogger who is based in the US.)

We have to categorize the Filipinos in the United States to better understand the effects of the financial crisis on their lives.

The Overseas Foreign Workers are better known as working visa holders with work authorizations that expire in three years; renewable for another three years. The corporations that hire them can sponsor their green cards within the period of the validity of their working visas. From OFWs, they become permanent legal residents.

With the financial crisis, the dreams of getting employment-based green card sponsorships may not materialize especially if the sponsoring corporations are affected by the financial meltdown. If they cannot get the green cards within the maximum six years of allowable legal stay, the working visa holders are expected to go back to the Philippines or look for other means to become legal residents.

The other category is that of permanent legal residents. Their immigrant visas expire every ten years. The only things that they can not do compared to the US citizens are:

1. To get employment in federal governments. During times of economic crisis, the government provides a stable employment.
2. They cannot stay in the Philippines for more than the allowed number of months.
Basically, they are still Filipino citizens. With the financial crisis, even those who have already retired and are receiving Social Security pensions cannot go home. They can’t bring home pensions and their Medicare coverage.

Why don’t they apply for citizenship to enjoy the privilege of staying in the Philippines to enjoy the retirement in dollars? Many of these old Filipinos have pending petitions for their dependents and a change in their immigration status will adversely affect these petitions.

Like US citizens, they live on plastic (read: credit cards). Their savings are not in the form of cash. They are in investments they don’t control. They contribute a percentage of their gross pre-taxed income to a retirement account popularly known as 401 K. Their employers match the employees’ contributions.

The retirement fund is managed by appointed trustees/investment managers which put the money in different investment instruments such as stocks, mutual funds, cds and money market.

Filams do not realize the heavy losses from their retirement funds since they think that they can still recover in due time. The statements they receive from the investment managers/trustees are too complicated to understand by laypersons who cannot distinguish what is a stock and how it differs from bonds or mutual funds. Those whose retirement kitties were put in stocks lost as much as 50 percent. The conservative investors lost about 20 percent. All in all according to the news some $2 trillion were lost in the retirement accounts of US employees.

Some Filipino old timers and those who dreamed big put up small businesses in the US thru the assistance of the Small Business Administration. The capital mostly comes from credit provided by the banks or their personal credit cards.

While publicly traded corporations source their additional capitalization through the sale of their stocks in Wall Street or capital infusion of their existing stockholders, small businesses rely on banks.

The financial crisis had affected the liquidity of most banks. Even if these banks did not engage in sub prime mortgage lending, their bigger sister corporations may have taken the risk. Once in crisis, the conglomerates rally for their white elephant-corporations by moving cash from one corporation to another until both or all them sink together.

My friend who was in the care home business can not meet the cash flow requirements of the day-to-day activities. Most of care home businesses rely on reimbursements from government agencies which payments take a long time due to strict auditing procedures of the documentations.

Some clients pay from out of their private funds which may have been managed by their investment counselors/executors. These funds may have dried up during the recent Wall Street fiasco. The relatives of the patients may transfer them to government-run convalescent facilities. Loss of patients means loss of income.

Another friend who is into online marketing is suffering from zero sales. The customers have cut down on non-essentials. His product lines are electronic and electrical products.

You may ask how about the illegal tago ng tago.

They are invisible…they have no bank accounts…they have no credit cards and they work under the table in jobs which are recession proof…caregiving. Free housing, free food and no transportation expenses. This is the decade when baby boomers are retiring. Financial crisis or not, someone has to take care of them in their homes.

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