Economic hardships in Puerto Rico spur a mass exodus to the U.S. mainland

“The government gives money to the people who don’t work, to those doing drugs, living on welfare,” she said. “I’m not willing to do that anymore.”
Taken to its logical conclusion, rewarding bad behavior by rewarding non-workers, yet punishing workers, Puerto Rico is driving away its better citizens. To get more of a desired behavior it should be rewarded; likewise, bad and undesired behavior should not be rewarded. This is why certain governments fail and others prosper, in the long run. Such counter-productive policies are self-destructive eventually.

http://www.miamiherald.com/news/nation-world/world/americas/article26622070.html

July 6, 2015
By Nancy San Martin
nsanmartin@MiamiHerald.com

SAN JUAN —
Yessenia Puente is disenchanted with the Isla del Encanto.

She became a widow six years ago. Public schools don’t provide a safe environment for her three children. Her income as a hotel manager barely covers living expenses, much less private school tuition. And every two days, she must contend with no running water at home due to water rationing measures imposed by the government in response to a prolonged drought.
So on the same day that a new 11.5 percent consumer tax took effect last week , a moving truck showed up at Puente’s apartment in the Carolina suburb of San Juan to load up her belongings for shipment to Orlando. The boxes were marked with “#1465” — that is the number of families this one moving company, La Rosa del Monte, has packed for Orlando since January.

“I’ve been thinking about it for a while because I’ve seen how things are deteriorating,” said Puente, 35. “But with everything happening now, I decided it’s time to go. The system doesn’t work here.”

Like Puente, thousands of others are bidding farewell to their lives on the island to begin anew elsewhere in the United States.

In what some experts characterize as the largest out-migration since the 1950s, emigration to the U.S. mainland has accelerated in recent years, with 144,000 fleeing from mid-2010 to 2013, according to a Pew Research Center study using U.S. Census Bureau data. The island’s population now stands at 3.6 million, down from it’s population peak of 4 million residents in 2009.

Several moving companies in San Juan confirmed they are extremely busy these days, packing homes for new clients heading for destinations across the United States, including Miami, Orlando, New York, Boston, Chicago and cities as far as the west coast.

The departures come as Puerto Rico faces an estimated $72 billion debt the governor has said is unpayable. In a recent televised address, Gov. Alejandro García Padilla said that at the rate the debt situation is developing, every man, woman and child on the island would owe creditors $40,000 by 2025.

“It’s hard to quit and start over but I have no choice,” said Puente, who was born in Bayamón. “My kids are worried and ask many questions but they understand. We don’t even have money to go to the movies. The cost of living is too high.

“The government gives money to the people who don’t work, to those doing drugs, living on welfare,” she said. “I’m not willing to do that anymore.”

The new sales tax — now surpassing that of any U.S. state — is just one of many measures underway to help resolve a financial crisis that has been brewing for nearly a decade.

“This is really negative for the consumer,” said Nelson Rodriguez, who runs a family-owned grocery store in San Juan’s Barrio Obrero neighborhood. “For every $100, the government takes $11.50. People are going to have to rethink how to stretch their dollars.”

“All of the businesses are already seeing a drop in sales,” he said. “People can’t afford it.”

Biancheska Velez said the effects of the recession are even more pronounced in small towns in the mountains and countryside, such as her native Cabo Rojo on the southwest coast.

“People are really struggling,” she said. “It breaks your heart.”

Since publicly declaring last week that Puerto Rico was in a financial hole too deep to climb out of on its own, the governor’s team has been meeting with stakeholders, lawmakers, economists, community leaders and others to explore measures to help revive the economy.

While the White House has said a federal bailout is not an option, some U.S. lawmakers have sponsored bills that could eventually allow Puerto Rico to file for bankruptcy.

In the meantime, various ideas are part of the chatter among Puerto Ricans, including the imposition of unpaid furloughs for government employees and a reduction in the $7.25 minimum wage for workers in the private sector, ideas that would be financially detrimental in a place where unemployment is at a staggering 12.4 percent.

“It’s sad, really sad,” said Blanca Valentine, a Puerto Rico native visiting from New Jersey. “How are people supposed to survive?”

The out-migration flow now underway is likely to increase as life continues to harden.

The rotating water restriction that has been in effect for weeks was recently extended. And the 11.5 percent sales tax already in effect precedes another approved 4 percent tax on professional services, which goes into effect Oct. 1.

Power outages might be yet another sacrifice island residents may have to endure.

Even as the government was able to stave off a default on a $415 million debt owed by the electricity company it runs, it is only a short-term breather. The Puerto Rico Electric Power Authority, known as PREPA, is facing about $9 billion in total debt. Bondholders have agreed to extend a debt payment deadline to Sept. 15. But it warned that the agreement will automatically end if a deal to restructure the heavily indebted power company is not reached by Sept. 1.

“I think there’s going to be a lot of strife and dissent,” said Juan Guzman, 51, who also was visiting family on the island. “Here, you have a lot of have nots.”

Experts say the departures exacerbates the problem because it reduces the tax base the government needs to pay off its debt and cover public infrastructure costs such as roads, schools and hospitals. High unemployment also means fewer resources to pay off what is owed.

“We have to fix the fiscal situation in order to grow the economy, but we need to grow the economy in order to fix the fiscal situation,” Sergio Marxuach, policy director at the Center for the New Economy, a Puerto Rico-based think tank, told The Associated Press. “Doing both at the same time is not impossible, but it’s very hard.”

The governor’s team has until Aug. 30 to develop an economic and financial reform plan to help jump-start the island’s economy, which must be approved by the island’s legislature. Until then, sacrifices will continue.

“Everybody should pay taxes because the government depends on that,” said Julio Martinez, 58, as he paid for cans of beans at a neighborhood grocery story. “Now, we’ll have to see how the government spends it. We can certainly feel the burden in our pockets.”

Puente is hopeful her experience in the hotel industry will help get her back on her feet in Orlando.

“I have friends who have left and they are doing much better,” she said. “I’m taking a risk but I decided to take it.

“It’s a real shame because this is a beautiful place, I made a life for myself here. But it’s not worth it. It’s crazy.”

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