Puerto Ricans flock to US mainland as island crisis worsens
By Diego Urdaneta August 22, 2014 6:12 PM
Miami (AFP) – The island of Puerto Rico is depopulating, as residents stream to the US mainland fleeing the island’s economic crisis and political gridlock in search of jobs.
Since 2009, more Puerto Ricans have been living pn the American mainland than on the northeastern Caribbean US-territory, a trend that has accelerated in the years since, according to census figures complied by the Washington-based Pew Hispanic Center.
In 2012, some 4.9 million Puerto Ricans lived in one of the 50 US states or the US capital, while the island had a population of 3.5 million, according to the study out this week.
Furthermore, Puerto Rico lost another 144,000 people between 2010 and 2013.
“We are seeing the biggest outmigration from Puerto Rico to the US that we’ve seen since at least the 1950s,” during the US economic boom, said study author Mark Hugo Lopez.
“It looks like the island is on a long run cycle of population decline.”
– Unprecedented population drop –
The United States seized Puerto Rico from Spain in a 1898 war.
Residents of the Caribbean island are US citizens, serve in the military and have US passports, but cannot vote in US presidential elections.
The self-governing territory’s sole representative in the US Congress is a non-voting delegate in the House of Representatives. However, island residents pay no federal income tax.
Two parties dominate the political scene — one favoring statehood, and the other seeking the island’s commonwealth association with the United States.
A third, smaller party favors independence.
The two main parties have almost equal representation in the legislature, and have clashed fiercely over how to improve the anemic economy.
The massive outflow of population coincided with an economic crisis that began in 2006, when a federal tax exemption expired on local manufacturing, including food products, chemicals and machinery.
Unemployment jumped to 13.1 percent in June of that year on the island, according to official figures, more than double the 6.1 percent at the same time on the US mainland.
The exodus “has intensified,” said Jorge Duany, a Florida International University professor and expert on Puerto Rican migration.
Between 2000 and 2010, there was an unprecedented 2.2 percent population drop after nearly a century of growth, Duany told AFP.
Forty-two percent of those who leave Puerto Rico say they are looking for a job, according to Pew Hispanic.
Census figures suggest that the depopulation trend will continue at least until mid-century.
As a result, the island’s population is aging, decreasing the productive population and forcing an ever smaller number of working people to fund the tax and retirement system.
In 2010, the percentage of the population older than 65 in Puerto Rico was higher than the United States and every Latin American country except Cuba, Duany said.
Neither does the drop in the birth rate help. On average, there are 1.7 children per woman on the island, below the level of natural reproduction.
“At that level, it’s impossible for the Puerto Rican population to grow,” Duany said.
– Vicious cycle –
The hemorrhage not only includes professionals but also blue-collar workers and unskilled laborers, said Kurt Birson, researcher Center for Puerto Rican Studies at Hunter College in New York.
“They contribute to the decline of the economy,” Birson said.
A report by the Institute of Statistics of Puerto Rico said that a quarter of the island’s gross domestic product was lost between 2006 and 2011 because of the exodus.
“This is a vicious cycle,” said Edwin Melendez, head of the Center of Puerto Rican Studies at Hunter College.
“If the population drops, there is less demand, and if there is less demand, there is less economic activity, and less work, and people leave.”
Melendez suggested the situation would “eventually” get resolved, but when that would happen and how many people would remain is unclear.
The population movement has also changed parts of the United States, especially Orlando, Florida, which has become the main destination for Puerto Ricans.
Orlando, home to major amusement parks, is expected by the end of the decade to surpass New York as being the home to the largest concentration of Puerto Ricans on the mainland.
Brian drain may be escalating
Edition: July 24, 2014 | Volume: 42 | No: 28
The number of people, mainly professionals, leaving Puerto Rico, searching for better work and living conditions abroad, may have escalated in recent weeks. According to a local moving company, just last month as many as 425 families moved to Orlando, Fla., while another 382 selected Texas as their new home. “Seems like Texas is becoming the new Florida for Puerto Rican families looking for better opportunities,” a moving company employee said. But for the first time, other jurisdictions outside the mainland U.S. are also attracting Puerto Rico professionals, including Mexico, Colombia and Panama, the employee added.
Issued : Wednesday, July 23, 2014 12:00 AM
Just walking away
Edition: July 24, 2014 | Volume: 42 | No: 28
While everyone knows Puerto Rico’s economy has been stalled in the economic doldrums since 2006, many may be unaware of the sheer desperation of some to flee the island. The latest trend is for people to simply walk away from their homes—no matter how much equity they have invested in their residences— to start over in the mainland U.S. Instead of trying to sell their property in a depressed market and waiting to get their money back or worrying about damage to their credit rating, many people are simply closing their houses, giving the keys to the bank and walking away without looking back.
Issued : Wednesday, July 23, 2014 12:00 AM
Why we leave – Part I
By : ELISABETH ROMÁN
Edition: July 24, 2014 | Volume: 42 | No: 28
Editor’s note: A Puerto Rico economy in a devastating downward spiral dating back to before 2006 has wreaked tremendous havoc on the island’s businesses and families. Jobs in Puerto Rico, which have hit a new low of 988,000, have been so scarce that an estimated 1,000 people have been leaving the island every week to look for work. With those numbers, Puerto Rico will see up to 52,000 people leaving the island in 2014, compared with 36,000 who left in 2013. So it is that our families—many of them professionals—have been forced to depart, heading for the mainland U.S. looking for work. The following is a first in a series of four heartrending essays on the devastating impact this massive migration is having on Puerto Rico’s society and families. It is written by Elisabeth Román, a former editor of this newspaper, one of the thousands of talented professionals who was forced to leave Puerto Rico for economic and quality of life reasons in the middle of this most devastating economic apocalypse.
There have been countless stories in local and national media about the number of people who leave Puerto Rico each month. With their departure, the island loses a potentially great talent and another family is divided, driven from homes and loved ones, in an attempt to find economic survival and a sense of security. There are more than 5 million Puerto Ricans and people of Puerto Rican descent living in the U.S., compared with just over 3.6 million living on the island, and not all of these are Puerto Ricans.
Every day we must both suffer and rejoice in the departure of yet another loved one, family, friend, son or daughter, who made the painful decision to leave Puerto Rico for good, move away from the home we love, where we raised— or were raising—our children, say goodbye to parents, grandparents, brothers, sisters, sons and daughters to escape, via Luis Muñoz Marin International Airport, the ills of the island. Some of us will seek opportunity in search of employment or an education; for many of our people, especially the poorest, the only way out is to either join the U.S. military or join the drug wars in our land. The truth is that many leave Puerto Rico after struggling for years to survive economically, walking away as their beloved home, purchased with the dream of raising a family, is foreclosed by an already financially strapped institution and their businesses permanently closed or jobs lost forever.
I can’t imagine a single person reading this who hasn’t been touched by the massive migration underway in Puerto Rico. Every one of us has felt the pain of separating from family and loved ones, and saying goodbye to our children and friends, who depart in search of safety and the chance for a better life. There isn’t a family in Puerto Rico, who, in addition to living in fear for their safety, must also live with the void left in our homes and hearts when someone we love has moved, because we—those who moved away and those who stayed—have failed Puerto Rico and ourselves, both with our actions and inactions in our homes, religion, politics and businesses.
Puerto Ricans are being pushed to the point of no return as we continually fight with each other over a declining economy, bloated government, ineffective politicians and useless government policies. If you think this sound of alarm is excessive or extreme, just read the global financial news. Then, ask yourself how is it that Puerto Rico seems to lead in suicides, murders, unemployment, declining businesses, corruption, etc., yet we fail to lead in economic growth, job creation, innovation, education and healthcare? How can we attend Mass on Sunday, extend the sign of peace, not caring if you are blue, red or green, and minutes later, insult each other in the parking lot because someone cut in front of your car? We do so well as a people when we work together, sharing the same goals and values. But we’re stressed and we’re frustrated. Puerto Ricans are the type of people who run to help and support others in need, yet turn around and insult one another, sometimes publicly and on the radio, at every opportunity, simply because we don’t support the same candidates or share the same political views. In the meantime, while we senselessly argue, the governor, legislators, mayors and agency heads in charge of economic development remain clueless when it comes to developing and growing Puerto Rico’s economy in the 21st century.
How is it that we are quick to attack government corruption, yet so many reputable business people and professionals are fast to cut a juicy deal with a government contract, in exchange for funding the campaigns of the very same politicians and political parties who cut you the deal that too often deprived us of a needed service? Of course, then you pray the Feds don’t discover the scam. But they have; federal government agents are paying visits to everyone from drug dealers in public housing to judges in their chambers and mayors in their offices, and countless arrests have been made.
I am one of those hundreds of thousands who escaped Puerto Rico with my entire family, among them: an elderly aunt and uncle, both in their 70s, who relocated to Florida for healthcare and doctor visits that don’t require a 10-hour wait for diabetes and heart conditions. I am among those family and friends who just desire to feel safe and provide a better future and opportunities for our children and grandchildren. Most of us never considered moving away, much less welcomed the thought of dying far from home.
I recently returned from my uncle’s wake in Florida, where he moved several years ago. He arrived in the sunshine state, old and sick, like a wounded soldier, having left the only land he loved and where he lived for 75 years, because he could no longer fight the battle for accessible healthcare, the high costs of electricity, water and medicine, and the lack of security. They were robbed several times in their home; fortunately, my aunt and uncle survived, too many elderly victims don’t.
During the five years my uncle spent in Florida, he no longer had to choose between paying the electric bill and buying all of his prescriptions; he could comfortably afford both on the same Social Security income he had in Puerto Rico. Yet, he missed Puerto Rico deep down to his core, and every single day he was away from his beloved patria, he spoke about the day when he would go home again. His ashes were spread in his hometown of Ciales on Father’s Day. You see, leaving home is never that easy, no matter how successful you become or how your life has improved, you prefer to be doing that same thing, contributing in that same manner, with your talent and passion,at home, with the people you love.
Economy and Crime Spur New Puerto Rican Exodus
By LIZETTE ALVAREZFEB. 8, 2014
SAN JUAN, P.R. — Alexis Sotomayor has many reasons to stay in Puerto Rico: his two children; his mother and their gossip sessions over plates of fried rice; and the balm of salt and sun that leavens his life on the island.
But the artisanal soap business that Mr. Sotomayor built is barely hanging on amid rising costs and taxes, and sales that have sunk by 40 percent in five years. Crime is rampant; his girlfriend was nearly carjacked at gunpoint recently. So last month he boarded a flight to Orlando, Fla., to interview for a job at a rum distillery in the hope of joining the ever-growing Puerto Rican diaspora.
“I don’t see it improving,” said Mr. Sotomayor, a 47-year-old chemical engineer. “I see it getting worse. It’s the uncertainty. What am I going to do — wait until it gets worse?”
Puerto Rico’s slow-motion economic crisis skidded to a new low last week when both Standard & Poor’s and Moody’s downgraded its debt to junk status, brushing aside a series of austerity measures taken by the new governor, including increasing taxes and rebalancing pensions. But that is only the latest in a sharp decline leading to widespread fears about Puerto Rico’s future. In the past eight years, Puerto Rico’s ticker tape of woes has stretched unabated: $70 billion in debt, a 15.4 percent unemployment rate, a soaring cost of living, pervasive crime, crumbling schools and a worrisome exodus of professionals and middle-class Puerto Ricans who have moved to places like Florida and Texas.
The situation has grown so dire that this tropical island, known for its breathtaking beaches, salsero vibe and tax breaks, is now mentioned in the same breath as Detroit, with one significant difference. Puerto Rico, a United States territory of 3.6 million people that is treated in large part like a state, cannot declare bankruptcy.
From bottom to top, Puerto Ricans are watching it unfold with a mixture of disbelief and stoicism.
Alejandro García Padilla, who was elected Puerto Rico’s governor by a sliver of a margin in 2012, said that after he began to wade deeply into the island’s economic and social quagmire, his fight-or-flight instincts kicked into high gear.
“I thought about asking for a recount,” Mr. García Padilla, 42, said with a grin during a recent interview in La Fortaleza, the 500-year-old government residence, recalling, among other things, the $2.2 billion deficit. “But now it’s too late.”
A sense of pessimism pervades on the island. Streets are lined with empty storefronts in San Juan and in smaller cities like Mayagüez; small businesses, hit hard by high electricity, water and tax bills and hurt by drops in sales, have closed and stayed closed.
Schools sit shuttered either because of disrepair or because of a dwindling number of students. In this typically convivial capital, communities have erected gates and bars to help thwart carjackers and home invaders. Illegal drugs, including high-level narcotrafficking, are one of the few growth industries.
Puerto Rico, about 1,000 miles from Miami, has long been poor. Its per capita income is around $15,200, half that of Mississippi, the poorest state. Thirty-seven percent of all households receive food stamps; in Mississippi, the total is 22 percent.
But the extended recession has hit the middle-class hardest of all, economists said. Jobs are still scarce, pension benefits for some are shrinking and budgets continue to tighten. Even many people with paychecks have chosen simply to parlay their United States citizenship into a new life on the mainland.
Puerto Rico’s drop in population has far outpaced that of American states. In 2011 and 2012, the population fell by nearly 1 percent, according to census figures. From July 2012 to July 2013, it declined again by 1 percent, or about 36,000 people. That is more than seven times the drop in West Virginia, the state with the steepest population losses.
“I don’t see it improving. I see it getting worse. It’s the uncertainty. What am I going to do — wait until it gets worse? ALEXIS SOTOMAYOR, 47, a chemical engineer turned artisanal soap maker who is looking for work on the United States mainland Credit Dennis Rivera for The New York Times
A Lack of Hope
Coupled with a falling birthrate, the decline is raising worries about how Puerto Rico will thrive with a rapidly aging population and such a large share of jobless residents. Of the island’s 3.67 million people, only one million work in the formal economy. The island has one of the lowest labor participation rates in the world, with only 41.3 percent of working-age Puerto Ricans in jobs; one in four works for the government.
“Today, Puerto Ricans with jobs are moving to the U.S.,” said Orlando Sotomayor, an economist at the University of Puerto Rico and the brother of Alexis. “Even people in their 40s and 50s, college professors with complete job security, are doing so. Some are starting all over. The phenomenon is highly uncommon and underscores the lack of hope that the ship can or will be righted.”
The current exodus rivals the one in the 1950s, when job shortages on the island forced farmers and rural residents to find factory work in cities like New York and Boston. Today, it is doctors, teachers, engineers, nurses, professors who are leaving Puerto Rico behind.
Just about everyone in Puerto Rico has a relative who left recently for Florida, New York, Texas or Virginia, among others. But the decision is never easy. Fathers leave behind children. Houses must be rented or sold at a loss in a glutted market. Businesses must be shut. And English must be polished, or in some cases learned, in a hurry.
Alexis Sotomayor said that on his January flight to Orlando, two acquaintances sitting nearby were also headed there hoping to find work. “Going out there in the morning and returning in the evening, after an interview,” he said.
After Coca-Cola laid him off in 2001, Mr. Sotomayor started experimenting with distilling plant extracts. He found he could make natural soaps and decided to go into business for himself, a move that would allow him more time to spend with his children.
Business boomed for years. So much so that he moved his homespun facility out of his house in 2005 and into a small building he bought in San Juan. He found that he was earning more money making soap than working as a chemical engineer.
Then in 2008, the recession pounded at his door. For five years, he has tried to lift his business; he went to fairs around the island, set up booths in shopping malls, promoted his flower-infused soaps, candles and lotions on television. He divvied up his store last year and decided to rent out half the building. He let go two of his four employees.
STAYING AFLOAT Mr. Sotomayor set up his natural soap business in San Juan after Coca-Cola laid him off in 2001.
But his expenses mounted, including $600 a month in power bills, more than double what consumers pay on the mainland. The sky-high cost is a consequence of Puerto Rico’s inefficient government-run monopoly on electricity and its 67 percent dependency on petroleum for electric power. Other utilities are exorbitant, too. Last year, water rates rose 60 percent in a bid to help cut the state-run water company’s debt.
The cost of private tuition for his children, a total of $2,000 a month, is one nonnegotiable expense for him. Like most middle- and upper-class Puerto Ricans, he long ago lost faith in the island’s troubled public schools. Public school enrollment has plummeted in recent years, in part because of declining birthrates but also because of the schools’ poor quality.
“Many parents, even lower-middle-class parents, put all their money into their children’s private school, even if sometimes they have to live in rented houses,” said Nilsa Velazquez, an economics professor at the University of Puerto Rico who plans to move to Virginia with her family this summer.
For many, the high rate of violent crime has been the capper. There were 1,136 murders in 2011, a record and far higher than the mainland’s rate. It fell to 883 homicides last year, a point of pride for the governor.
But the damage had been done. Life here has always been full of trade-offs, including a high cost of living. Now, though, there is little left to trade.
‘Live Here Just to Survive?’
“Between making less money and not knowing when someone will jump you, that pushed the quality of life very low,” Alexis Sotomayor said. “To live here just to survive? No, thanks.”
For Ms. Velazquez, the tenured professor who lives in Mayagüez, and her husband, who works for the Air Force Reserve, the mental calculations were similar. She is 50, she said. The last thing she wanted to do was give up her job as an economics professor, move her two teenage children and uproot her 76-year-old mother, who speaks no English and has never left the island.
But she has grown so disillusioned with the University of Puerto Rico Mayagüez — one of the crown jewels of the island’s higher-education system, where she has worked for nearly three decades — that she no longer views it as a viable option for her children. In the face of continuing economic stress, the University of Puerto Rico has suffered the loss of a steady stream of valued professors and funding for important research projects. Even tenured professors have left, Ms. Velazquez said.
Mr. Sotomayor’s factory thrived for years, but now rising expenses are driving him out of business. Credit Dennis Rivera for The New York Times
“The most important thing for me is my children’s education, and the second is my quality of life,” she said. “You see all of these fees and taxes going up, but the streets are terrible.”
This summer she will try to rent out her house rather than selling it and take a loss, and will move to Fairfax County, Va., where her husband will work for the federal government and her children will attend a top public high school. As an economist with a law degree, she is hoping to find some kind of job.
“I thought I could do anything in Puerto Rico,” she said. “Now that is gone.”
The frustrations of Mr. Sotomayor and Ms. Velazquez speak to the depth of the island’s economic problems.
The origins of the crisis, though, stretch back more than a decade. Tax incentives have long been a draw for corporations seeking to do business in Puerto Rico, and the island in turn has benefited from its ability to offer such breaks, in large part structuring its economy around them.
Tax laws were once abundantly generous, which fueled the spread of factories that made textiles and pharmaceuticals, among other things. That came to a crash in 2006, after the 10-year phaseout of a subsidy that provided American firms operating in Puerto Rico with tax-free income. Changes to the global economy and the worldwide recession exacerbated the situation. Since 1996, factory jobs on the island spiraled from 160,000 to 75,000.
Little was done to try to revamp the island’s economic framework. Instead, deficits climbed and pensions spun out of control. In 2006, the government shut down for two weeks because it lacked the cash to meet expenses. The governor moved to raise taxes. In 2010, the next governor reduced taxes and laid off 33,000 government workers. But Puerto Rico’s governors began borrowing even more heavily to get out of the economic logjam.
“It was cheap and easy to borrow,” said Mike Soto, the president of the Puerto Rican Center for a New Economy. “It got to the point where we tapped out what we can borrow.”
UNDER PRESSURE Gov. Alejandro García Padilla has taken steps to fix the ailing economy, like rebalancing pensions and raising taxes. Credit Dennis Rivera for The New York Times
Last year, Mr. García Padilla, the first governor from the countryside, took over. With the island’s economy a shambles, and credit agencies threatening a downgrade to junk status, he had no choice but to take swift action.
Economists have given him credit for acting to remedy problems that have festered for decades. In one year, he moved to overhaul three major pensions, including for teachers, that were on a pace to run out of money soon. Two of them are still pending final court approval. He reduced the deficit by 70 percent. And he is holding the four main debt-laden government-run companies more accountable and insisting on more transparency.
Vowing not to lay off any more workers, he raised taxes sharply to provide much-needed revenue and moved aggressively to promote incentives to entice wealthy investors, like the hedge fund billionaire John Paulson, who has invested in an exclusive beach resort and condo complex. A number of businesses have left the island, scared away by the groaning economy and the high cost of electricity. But others have arrived or expanded, like Eli Lilly, Seaborne Airlines and Cooper Vision.
Four days before the junk status decision, Mr. García Padilla announced that he would present a balanced budget for next year, one year ahead of his own schedule. But his job just got harder. Analysts said the credit downgrades would make it harder to improve the economy. The governor ordered agencies to cut budgets by 2 percent.
“I’ve done everything I can to avoid a downgrade,” Mr. García Padilla said in an interview, calling the move “unjust.” “Maybe I can’t detain the winds right now, but I can build the windmills. I am an incurable optimist.”
But not everyone is applauding. His tax increases have hit some businesses hard, which could pose a further drag on the economy. Among the many taxes he initiated, the governor raised the corporate tax rate to a maximum of 39 percent. Last year, the economy continued on a slide. “The new administration has a bookkeeping mentality as opposed to an economic development mentality,” said Pedro Pierluisi, Puerto Rico’s nonvoting representative in Congress and a political opponent of the governor. “Here you find Puerto Rico with an underlying economic problem charging its corporations — its job creators — 39 percent. Hello!”
Perhaps the most maligned is the new lucrative gross receipts tax, which some owners of small- and medium-size businesses say threatens to put them out of business. Because of the way the tax is structured, it affects companies with less than a 5 percent net profit margin. This means that many food-related companies, like supermarkets, and new businesses, are hit hardest. The smaller the margin, the higher the tax.
Some stores are paying an effective tax rate of 130 percent, said Manuel Reyes Alfonso, the vice president of a trade association that represents the food industry. If the tax is not revised, some will be forced to shut down and others will have to raise prices, he said.
“It is absurd,” said Mr. Reyes Alfonso. “It’s like selling the car to buy gas.”
In response, the governor is forming a committee to take a second look at the new taxes and the island’s complicated tax code. Waivers to the tax are available, but Mr. Reyes Alfonso said they were difficult to obtain.
As he sipped coffee in the bakery section of one of his stores, José Revuelta, the president of SuperMax grocery stores in Puerto Rico, said he managed to expand during the recession. But now, with the gross receipts and corporate tax cutting into his business, he is holding back on capital investments, raises and bonuses. He said he wanted reassurance that the tax hikes would be temporary.
“I can understand doing this on a short-term basis,” he said. “But there needs to be a plan.”
Not many are confident that a long-term plan exists to lift the island from such a sustained crash. But it cannot get much worse, they say.
“Sometimes you have to hit rock bottom to restore yourself,” said Mr. Soto, of the Center for a New Economy. “I’m hoping that’s what’s happening.”
Correction: February 16, 2014
An article last Sunday about the financial struggles of Puerto Rico misidentified the governor under which laws meant to entice wealthy investors to the island were enacted. They were signed in 2012 by Gov. Luis Fortuño — not by the current governor, Alejandro García Padilla, who is aggressively promoting them.
A version of this article appears in print on February 9, 2014, on page A1 of the New York edition with the headline: Economy and Crime Spur New Puerto Rican Exodus.
One-Way Tickets To Florida: Puerto Ricans Escape Island Woes
February 05, 2013 3:22 AM ET
Puerto Rico’s population is dropping. Faced with a deteriorating economy, increased poverty and a swelling crime rate, many citizens are fleeing the island for the U.S. mainland. In a four-part series, Morning Edition explores this phenomenon, and how Puerto Rico’s troubles are affecting its people and other Americans in unexpected ways.
According to the most recent census, the 4.6 million Puerto Ricans living on the U.S. mainland now surpass those on the island of Puerto Rico. For years, they’ve been migrating out of the U.S. Caribbean territory — many to escape the escalating crime rate and economic crisis.
Today, Florida replaces New York as the primary destination for Puerto Ricans coming to the U.S. In Osceola County, Fla., the population has tripled over the past two decades largely because of the migration. It’s one of the nation’s fastest growing areas, and about half of the population is Hispanic — most of them Puerto Rican.
Bringing Puerto Rico To Florida
In Kissimmee, south of Orlando, many of the signs are in Spanish, and some businesses resemble what you might find in a city like San Juan.
One of those businesses is Miguel Fontanez’s restaurant, Pioco’s Chicken. It’s a spot that was started by his father, also named Miguel.
The elder Fontanez owned a chain of successful restaurants in Puerto Rico. But in 1996, he brought his family to Central Florida after his brother, a police officer, was killed.
“It was very bad; it was very tough,” Fontanez says. “So [my father] just wanted to move somewhere fresh and start something different. And my grandmother at that time was living already here. So the first place that came to mind was Florida.”
Many of his customers, he says, are still newcomers from the island.
“Just last week, I had a big group, a family that just moved from Puerto Rico here because of the economy, because it’s very bad,” Fontanez says. “They’re more in the truck business, and over here it’s expanding more than over there.”
Other businesses — larger endeavors — are also migrating from the island.
A number of Puerto Rican colleges and universities have opened campuses in Central Florida, offering bilingual education to the area’s fast-growing Hispanic population.
Mech Tech Institute, for example, is a technical school that launched its first U.S. campus last year in Orlando at a defunct Saturn dealership. The institute offers training in everything from heating and air-conditioning repair to diesel machines.
A Long History With Florida
The connection between Florida and Puerto Rico stretches back decades. But many say the Big Bang — the event that created the huge wave of Puerto Rican migration — came on a specific date: Oct. 1, 1971, the day Walt Disney World opened its doors.
Disney World, and the theme parks that came after it, created thousands of jobs in an area that had been largely rural. Opportunities were especially ripe for bilingual speakers like John Quinones, a Puerto Rican who’s now a commissioner in Osceola County.
“I used Spanish a lot,” Quinones says. “A lot of the [people from] Latin American countries that would come to visit the parks — that would certainly cater to them.”
Quinones was 14 when his family moved to the area from Puerto Rico. He worked at Disney World’s Frontierland, at the Pecos Bill cafe, to support himself while in college.
The opening of Disney World came at a critical time for Puerto Rico, as the 1970s saw the beginning of an economic slowdown on the island that continues to this day.
But Jorge Duany, a professor of anthropology at Miami’s Florida International University, says the financial troubles arrived after decades of prosperity on the island — an era that greatly expanded the middle class.
“And there was substantial economic growth,” Duany says. “The educational system expanded. So there was actually a large group of people who were then capable of investing, migrating or at least buying land in Florida so they or their kids could use it later on.”
A New Home
Some of the Puerto Ricans in Osceola County say they came to be with family, some to get away from rising crime. But many, like Arlene Bonet, moved to find work. Bonet came from what she describes as a beautiful area on Puerto Rico’s southwest coast — a town called Cabo Rojo.
“I used to live right on the corner by the beach. I used to go every day to the beach to see the sunsets,” she recalls.
She says she misses those sunsets and the mountains nearby, where she would meditate and practice yoga every Sunday. Her town is a vacation area, and for many years, she made a good living selling real estate.
“But then the economy and the bubble exploded all around the world, and real estate went down, mortgages went down, and business went down too,” she says.
Arlene Bonet (right), shown with her daughter, Didra, and her sister Genoveva (left), lives in Orlando, Fla. Bonet’s daughter, who works part time and attends college part time, lives with her.
Bonet says she did what she could to keep going. She laid off her four employees and went back to school to get her MBA. But then Puerto Rico went into what she calls a second, politically driven downturn.
To combat a massive budget deficit, Puerto Rico’s government laid off thousands of public employees. Bonet’s business was dead, and she saw no signs of when it might come back.
After moving to Central Florida with her daughter, Bonet says finding a job wasn’t easy. But now that she has one, she’s grown to love the area and has no plans to return.
Issued: Saturday, August 9, 2014 11:06 PM
Fed says reviving PR economy is key to curbing ‘troubling’ population loss
By CB Online Staff
Puerto Rico’s population has been falling for nearly a decade, and the pace of decline has accelerated in recent years, a “troubling” trend that presents a host of difficulties for the island, according to a new report by the Federal Reserve Bank of New York.
And reviving the long-ailing Puerto Rico economy is the most fundamental step to curbing the island’s population loss, according to the report, “The Causes and Consequences of Puerto Rico’s Declining Population.”
Although the magnitude of Puerto Rico’s population loss is not unprecedented, it poses a significant challenge. Puerto Rico’s declining birthrate — like that of many developed countries — represents a significant structural trend that is unlikely to be reversed, according to New York Fed officials Jaison R. Abel and Richard Deitz, who authored the report.
“For Puerto Rico to slow or halt its population loss, it must address the out-migration of its citizens,” the report found. “How can Puerto Rico accomplish this goal? The clearest pathway seems to lie in strengthening the island’s economy.”
Without significant economic growth and the job creation that would follow, out-migration and population loss are likely to continue. Current migration patterns suggest that it is particularly important for Puerto Rico to focus on improving job opportunities for younger, lower-skilled workers.
Puerto Rico’s unemployment rate is hovering above 13 percent, more than twice the U.S. national average. The island’s labor participation rate has fallen to historic lows at under 40 percent, far smaller than the U.S. average of 64 percent.
Puerto Rico’s Economic Activity Index has declined for 19 straight months amid an ongoing recession dating back to 2006. Against that backdrop, the commonwealth government is grappling with $73 billion in debt and a cash crunch that was marked by a $488 million tax shortfall in fiscal 2014
“A stronger economy would help Puerto Rico return to a state of fiscal health,” the Fed report said.
CARIBBEAN BUSINESS has been sounding the alarm on Puerto Rico’s population loss and the problems in presents for decades.
The Fed report shows that the driving forces behind the decline are falling birthrates and a large net out-migration of the island’s citizens. (By 2012, about a third of the PuertoRican-born population lived on the U.S.mainland.)
The population growth rate turned negative in 2005, and by 2013, the annual pace of decline totaled a fullpercentage point—a very significant loss in demographic terms. Overall, PuertoRico’s population fell to about 3.6million in 2013, a loss of 212,000 residents, or 5.5percent, over nine years. The Puerto Rican population in the states, meanwhile, has risne above 5 million.
Alongside the many economic challenges currently facing Puerto Rico is a significant demographic challenge: the island’s population has shrunk by more than 5 percent over the course of a decade. Population loss of this magnitude is not uncommon for regions of the U.S. mainland — indeed, New York, West Virginia, and Wyoming have all seen declines that rival Puerto Rico’s recent experience.
“But the gravity of the problem becomes more apparent when Puerto Rico, a commonwealth, is compared with countries around the globe: According to estimates for 2014, Puerto Rico ranks asurprising seventh in population loss,” the report found.
A smaller population translates into a shrinking tax base, which in turn strains government finances. In addition, Puerto Rico is losing a disproportionate share of its younger citizens, a trend that has accelerated the aging of its population. This demographic shift adds to the burden of supporting the island’s elderly population, who tend to be poorer and more intensive users of the health care system, and puts stress on already fragile pension systems.
“Together, these pressures can create a cycle of economic decay and further population losses that can be difficult to break,” the report found.
To counter its population loss, Puerto Rico must not only adopt measures to shore up its economy and expand job opportunities, but also enact fiscal reforms and improve the island’s amenities.
“Together, these efforts could create economic opportunities for workers and make the island more attractive to residents and businesses, thereby helping to counter the island’s population decline,” the Fed report found.
Is Puerto Rico’s population decline reversible?
While the answer to such a question is speculative, the experience of other U.S.regions can help clarify whether such an outcome is achievable, according to the Fed, noting that 17 different states have experienced a post-World War II population loss lasting at least five years.
For regions in the U.S. mainland that have seen their populations fall, these episodes are usually closely tied to an economic decline and a loss of jobs. In many cases, this dynamic can be traced to the decline of a key local industry that offered the region an economic advantage.
In a different report on Puerto Rico’s economy and fiscal situation issued in July, the New York Fed recommended that the island reduce its dependence on a “shrinking” pharmaceutical industry.
“While the pharmaceuticals industry is still an important employer on the island, the sector does not appear positioned to be a strong driver of future growth,” the Fed said in the 30-page report issued Thursday.
As reported by CARIBBEAN BUSINESS online last week, Puerto Rico plant closings rose sharply in fiscal 2014 (ended June 30)and far outpaced openings as Puerto Rico’s economy, particularly its important manufacturing industry, continues to face a range of challenges. Puerto Rico’s vital manufacturing industry plunged to its lowest level in more than four years in June, contracting for a third straight month after two months of expansion.
The new Fed acknowledges that stemming the out-flow of islanders to the mainland will be tough, noting that the experience of some U.S. regions indicates the reversing population loss when it is tied to the decline of a key industry is “quite difficult.”
“Fortunately, Puerto Rico has a tremendous set of assets to leverage to improve its economy,” the Fed said.
The report pointed to prodigious value in the island’s climate and a Caribbean location that makes it “ideal” for tourism. Other strengths include a high level of human capital and close ties with the U.S. mainland. Enhancing the island’s attractiveness as a place to live and work, and especially reducing crime, may also serve to slow the exodus of its people, according to the Fed.
“Still, the island has big problems to fix, and implementing solutions will take time, resources, and patience,” the Fed concluded.
“It’s pretty much like a Caribbean island because it’s sunny, it’s fresh, it’s beautiful,” she explains. “So we feel like it’s home.”
While the move was hard on her daughter, Bonet says it was crucial — both for her future and her eventual grandchildren.
“That’s one of the reasons also I moved,” Bonet says. “It’s not just thinking about me. What kind of life can I give my grandchildren in the future if Puerto Rico, instead of going up, is going down?”
Current Issues in Economics and Finance
Second District Highlights
The Causes and Consequences of Puerto Rico’s Declining Population
2014 Volume 20 Number 4
JEL classification: J10, J24, R10
Authors: Jaison R. Abel and Richard Deitz
Puerto Rico’s population has been falling for nearly a decade, and the pace of decline has accelerated in recent years. Although a slowdown in the island’s birthrate has contributed to this decline, a surge in the out-migration of its citizens has been a more important factor. The exodus—which includes a large share of younger people—has hastened population aging, but it has not necessarily led to a “brain drain.” To counter its population loss, Puerto Rico must not only adopt measures to shore up its economy and expand job opportunities, but also enact fiscal reforms and improve the island’s amenities.
Available only in PDF.
Full article pdf In English 8 pages / 326 kb http://www.newyorkfed.org/research/current_issues/ci20-4.pdf
Full article pdf In Spanish 8 pages / 294 kb http://www.newyorkfed.org/research/current_issues/ci20-4_spanish.pdf
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