The Financial Crisis and Refugees

By Taehohn Lee

These are hard times. As of February 2009, the seasonally-adjusted unemployment rate was 7.6% in Minnesota.

A lot of jobs have been lost, forcing us to live on our savings or take out loans. On the bright side, we know how to ride the waves. This is not our first recession, and we’ve spent our whole lives learning how to navigate around the waters of the US financial system.

But what of those who are new to this socio-economic terrain? There are about 70,500 refugees living in Minnesota, and many of them are finding it extremely difficult to stay afloat financially. Refugees are hard pressed to pay for rent and utilities, often spending 85 to 90 percent of their income on rent alone.

Of course, refugees do receive some support from the government. In Minnesota, refugees receive a $450 one-time payment per person by the State Department plus cash and medical support for the first eight months through voluntary resettlement agencies. After this, refugees are eligible to receive employment and language support from community based NPOs for another four years and four months. (For an example of a community based NPO mentioned above, visit www.capiusa.org.)

Despite such efforts of the government and community organizations, however, many refugees find it difficult to obtain financial self-sufficiency after government support dries up.

Why?

One factor may have to do with differences in the education accreditation system. Even refugees who possess higher education degrees (e.g. recent Iraqi refugees) find it hard to get their degrees recognized by U.S.-based institutions. Naturally, refugees and the children of refugees have a hard time climbing up the social ladder, because they need to first relearn how the ladder looks like in the US.

Of course, some refugees do come with little formal education. For instance, as of 2003 only 23% of minors age 5 through 17 were enrolled in school at UNHCR-sponsored refugee camps. This makes it difficult for students who have spent their youth in refugee camps to complete their secondary education and go on to university and beyond.

Differences in the structure of the economy play a big role as well. As of 2007, the top five countries of origin for refugees admitted to the US were Burma, Somalia, Iran, Burundi, and Cuba. The economies of these countries are based on industries different from that of the US, which causes a structural disadvantage to admitted refugees. In other words, refugees find that the skills that served them well back home bring few dividends in their new home. It is especially difficult for them to initiate entrepreneurial projects, as they cannot access the credit market (due to lack of credit history as well as lack of working knowledge of the system) to cover upfront costs.

The language barrier and differences in cultural/religious norms are also major factors. Such factors make communication difficult between refugees and employers on multiple levels, which sometimes bring about xenophobic actions from the latter. This presents a challenge for refugees to acquire and maintain higher paying jobs. (A recent conference titled "Racism vs. Xenophobia" at the University of Minnesota discussed this important issue in a comparative perspective.).

Refugees, by definition, have fled from a well founded fear of persecution in their home countries. America is indeed the land of the free for these people: freedom of expression, freedom of choice, and freedom to pursue happiness. It is therefore ironic indeed that these freedoms should be shackled by a more subtle form of collective socio-economic persecution from our capitalist society.

About the Author: Taehohn Lee is a Graduate School Fellow in the Hubert H. Humphrey Institute for Public Affairs, University of Minnesota. This article appears as part of a policy research project conducted by graduate students in "Immigration and Public Policy" (PA 5490, Prof. Katherine Fennelly).

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This page contains a single entry by Elizabeth Hawley published on April 2, 2009 11:36 AM.

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