THE BLOG

Other Cities Should Follow NYC Municipal Identification Card Program

05/04/2015 12:38 pm ET | Updated May 02, 2016

While the Hill continues to turn the other cheek, New York City has chosen to take immigration reform into its own hands by creating a new municipal identification card program -- a move other cities would be smart to follow.

According to NYC Mayor Bill De Blasio, this wallet-sized piece of plastic represents much more than a free trip to the Bronx Zoo. Implemented earlier this year, the new form of identification grants New Yorkers, regardless of their legal statuses, access to the bank.

Many of the 3.1 million immigrants living in the Big Apple are motivated to produce and innovate so that, at the end of the pay period, they have a portion of money to send home. Twenty-seven percent of immigrants surveyed by The Pew Hispanic Center and The Multicultural Hispanic Fund ranked remittance payments as their No. 1 priority.

While some native borns might shudder at the idea of money made on U.S. soil crossing the border, the unintended consequence is a more productive workforce. In order to consistently meet their objectives, immigrants must work hard enough every day to have income to allocate to their remittances as well as to their lives here in the U.S.

The incentive of sending remittances aids the U.S. economy today with a more profitable immigrant workforce and tomorrow with an increase in both collectable fees and public safety. By serving as valid forms of identification, NYC's municipal IDs promote the use of official financial institutions over illegitimate (and unprofitable) services. According to the fee charged by the Wells Fargo ExpressSend Service, in 2013 the U.S. reaped a whopping $3.5 billion in transfer fees off of the $500 billion sent in official remittances.

This number will only rise with increased access to legitimate transfer channels.

Even more than the influx in banking fees, the increased use of legal channels will boost public safety. When money is sent directly from one financial institution to another, there is a contract guaranteeing the money ends up in the correct place. Though a transfer fee is normally paid for illegitimate channels as well, no such guarantee exists. The money has the potential to land with middlemen in drug cartels and terrorist groups, further fueling their enterprises.

By making banking services accessible, the municipal ID cards force remittances to be earned, to be sent, and to land with integrity, exactly in the hands for whom they were intended.

According to the World Bank, in 2011 just under 30 percent of remittances sent from the U.S. were intended for hands in the Caribbean and Central America. Remittances do not go unnoticed by these starving economies. In 2000, the payments helped to reduce the national rate of poverty by 4.2 percent in El Salvador according to the IMF's Statistics Department.

Aside from the humanitarian and "good" public policy arguments, the increase in economic activity in neighboring nations has the potential to greatly impact our own economy. We will not be forced to spend tax money on their aid as these countries begin to build themselves up with the facilitation of remittances. NYC's municipal IDs contribute to the positive movement of the U.S. becoming less of a safe haven and more of a hub for potential commerce and trade.

Through its case study on El Salvador, the National Bureau of Economic Research concluded remittances significantly affect school retention rates. In rural areas, the probability that a child who does not receive any remittance discontinues primary school is 54 percent more likely than that of a child who receives a remittance of just $8 per month.

An increase in the number of minors being educated abroad means a decrease in the number of foreigners fleeing to the U.S. as refugees.

According to the Pew Research Center, in fiscal 2014, three out of every four unaccompanied minors seeking refuge in the United States originated from Central America. Poor economic conditions and violence are the two greatest factors thought to contribute to the migration. President Obama proclaimed the influx an "urgent humanitarian situation" and ordered federal agencies to provide housing and other services to the minors at the border. Services that the White House budget officials estimate to cost an upwards of $2.2 billion in fiscal 2015.

That is $2.2 billion in American taxes being spent on services supporting the physical and mental well-beings of individuals who have had no impact on our economy otherwise.
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Fariborz Ghadar is founding director of The Center for Global Business Studies at Penn State's Smeal College of Business and a senior adviser at the Center for Strategic and International Studies. He is author of the book Becoming American: Why Immigration is Good for Our Nation's Future. Follow him on Twitter @FGhadar.