Puerto Rico’s Exodus Is Speeding the Island’s Economic Collapseby Jonathan Levin
and Rebecca Spalding
Exodus from island means economic resurgence will be tougher
Commonwealth lost 2% of population in each of past three years
How Did Puerto Rico Go Bankrupt?
The choice is heartbreaking: stay to help other families, or leave to help your own.
That’s the calculation thousands in Puerto Rico are making. The bankruptcy of the U.S. commonwealth, the culmination of years of decline, has accelerated an exodus that’s adding to the island’s economic misery.
“I had to choose for my family,’’ said Aledie Amariah Navas Nazario, 39, a pediatric pulmonologist who left behind young asthma patients when she, her husband and two small daughters moved to Orlando, Florida.
The population drop is astonishing. The island has lost 2 percent of its people in each of the past three years. A comparable departure from the 50 states would mean 18 million people moving out since 2013. About 400,000 fewer Puerto Ricans live on an island of 3.4 million today compared with a decade ago, when its economy began contracting.
The departures have trapped Puerto Rico in a downward spiral. A grinding recession, with joblessness at 11.5 percent, and $74 billion mountain of debt that pushed the island to insolvency has made collecting taxes key to an economic rebound. At the same time, more Puerto Ricans from all walks of life are moving away to better their lives, meaning government revenue is dwindling.
Reasons for leaving were compelling enough for Navas Nazario, who treated asthma on an island where it’s more prevalent than anywhere else in the U.S. Puerto Rico’s economy had taken yet another leg down, and she was worried about her future income because of uncertainty about health insurance.
“I’m sad about not being able to take care of those kids anymore,’’ said Navas Nazario, who keeps in touch with former patients on Facebook. “You have to make a hard decision to leave relationships with friends and family just to get out, just because you need a better life.’’
Puerto Rico’s bond debt has grown 87 percent since 2006. A simple way for individual islanders to avoid having to pay it is to move to the mainland.
The government doesn’t seem to have come to grips with the outflow. Puerto Rico’s turnaround plan — a path to sustainability approved by a U.S. oversight board — assumes the population will shrink just 0.2 percent each year for the next decade. It uses that number as the basis for its projections of tax receipts and economic growth.
“Most people believe that those forecasts in the fiscal plan are really, really optimistic and probably would have to be revised at some point,’’ said Sergio Marxuach, public policy director at the Center for the New Economy in San Juan.
The exodus isn’t confined to professionals. Among the throngs leaving are construction workers and taxi drivers. Research by the Federal Reserve Bank of New York found that college graduates make up roughly the same proportion of emigres as they do in the island’s general population, suggesting that the departures have touched every corner of the commonwealth.
“If people continue to leave the island at the pace that has been set in recent years, the economic potential of Puerto Rico will only continue to deteriorate,’’ authors including Jaison Abel and Giacomo De Giorgi wrote for the New York Fed.
The earnings disparity between Puerto Rico and the mainland can be wide. Just ask John Starkey, principal of the Lafayette International Community High School in upstate Buffalo, New York, a destination since at least the 1960s for Puerto Ricans, also called Boricuas.
The Puerto Rican government has closed schools to save money, so Starkey traveled to the island in April to recruit teachers, many of whom have advanced degrees. On the mainland, educators find they can double or triple their earnings, he said, even if it means trading a balmy Caribbean island for the frigid shores of Lake Erie.
“Many of the candidates wanted to stay on the island to help their community,’’ Starkey said. “Our pitch was: come up to Buffalo and you’ll be able to better provide for your family, but you’ll also be able to help your community here.’’
Puerto Rico has been a U.S. possession since American troops invaded in the Spanish-American War, and Puerto Ricans have been U.S. citizens since 1917. That means there’s little to prevent them from seeking better prospects on the mainland, something they’ve always done, just not to this extent.
While migration is the main driver in population fluctuation, a declining fertility rate isn’t helping either. The natural population increase — excess births over deaths — fell to 3,000 last year from 20,000 a decade ago, as families facing poorer economic prospects and the threat of the Zika virus put off having kids. At the same time, younger generations of child-bearing age are more likely to take off for the mainland.
To be sure, Puerto Rico’s population has been in decline for 12 years, and other episodes of decline have run their course in similar periods. Examples include the commodities-driven boom-and-bust cycles that shrank the populations of Wyoming and West Virginia in the 1980s and the flight out of New York City during the high-crime 1970s. Eventually, waning populations seem to bottom out when everyone who wanted to leave, and could leave, has left.
But none of those examples are directly analogous to Puerto Rico, where residents carry U.S. passports but live in social and economic conditions in some ways more akin to those in Latin America.
For Navas Nazario, the choice eventually became obvious.
“People say, ‘You didn’t fight. You quit,’” she said. “That’s not the situation when you’re raising small kids. You have to choose for them.’’