Sunday, December 1, 2013
Puerto Rico: The economy has been in recession for nearly eight years, crimping tax revenue and pushing the jobless rate to nearly 15%
Meanwhile, the government is burdened by staggering debt, spawning comparisons to bankrupt Detroit and forcing lawmakers to severely slash pensions, cut government jobs and raise taxes in a furious effort to avert default. The implications are serious for Americans outside Puerto Rico both because a taxpayer bailout would be expensive and a default would be far more disruptive than Detroit’s record bankruptcy filing in July 2013. Officials in San Juan and Washington are adamant that a federal bailout is not on the table, but the situation is being closely monitored by the White House, which recently named an advisory team to help Puerto Rican officials navigate the crisis. The island’s problems have ignited an exodus not seen here since the 1950s, when 500,000 people left for jobs in the United States. Now Puerto Ricans, who are U.S. citizens, are again leaving in droves. They are choosing the uncertainty of the job market in Orlando or New York City or Philadelphia over what they view as the certainty that their dreams would be crushed by the U.S. territory’s grinding economic problems. Puerto Rico lost 54,000 residents — 1.5% of its population — between 2010 and 2012 alone. Since recession struck in 2006, the population has shrunk by more than 138,000 to 3.7 million, with the vast majority of the outflow headed to the United States. The brutal combination of a long recession, a shrinking population and overwhelming debt has left Puerto Rico’s political leaders struggling to manage a conundrum: How do they tame at least $70 billion in debt while marshaling the resources to grow a shrinking economy and battle corrosive social problems, including a homicide rate that is nearly six times the U.S. average? And while government workers make up about a quarter of the commonwealth’s workforce — much higher than the U.S. average of 16% — their ranks are shrinking as the pervasive debt and economic problems careen toward a reckoning. Now, just over 41% of working-age Puerto Ricans are in a job or even looking for one. As work has disappeared, more Puerto Ricans have relied on the government to survive: About a third of the commonwealth’s population relies on food stamps, and residents of the island are twice as likely as those in the United States to receive Social Security disability benefits, according to researchers.