At the depth of the recession, unemployment reached 10.1% in the United States. Today, its sits at 5.5%, and job additions have surged at an average rate of over 250,000 a month. Puerto Rico has an unemployment rate of 12.6%, another sign of how poorly off the territory’s economy is.
Puerto Rico’s civilian labor force is small, only 1.42 million, according to Bureau of Labor Statistics data, about the same as Nevada’s. Size does not relieve the pain on the territory’s economy, where the jobs situation may remain poor for years.
All the recent news about Puerto Rico has centered on its debt problems. Puerto Rico’s governor, Alejandro Garcia Padilla, says the territory does not have any chance of making upcoming payments on its approximately $73 billion in debt.
The population of Puerto Rico has dropped over the past several years. According to the U.S. Census, it is at 3,548,397 and falling, and presumably the contraction undermines the tax base. If so, the territory has less and less tax revenue to call on to meet its debt, another reason it has economic trouble that will advance into the future.
Ironically, Puerto Rico has one of the most competitive economies in the world. It is number 30 among the World Economic Forum’s measure of 148 countries, just below Ireland and China. Whatever benefit that gives its economy has not had enough leverage to mitigate its debt problem, presumably because the size of the debt is so overwhelming. However, the rank does not reflect that 41% of people in Puerto Rico live below the poverty line. That means the economy may not be as efficient as its competitiveness makes it seem. It is another factor in the inability of the country to grow its tax base. As a matter of fact, one of the island’s top financial experts, Sergio Marxuach, wrote:
The indicators of a weak economy are many, and the economy in Puerto Rico is extremely weak, as evidenced by the unemployment rate (13.5%), high levels of poverty (41.7%), high levels of bankruptcy and population loss. To this was added seven years in contraction, which makes Detroit really has “an advantage over Puerto Rico. “With all the bad that is Detroit, he is a bit stronger than it has indicators Puerto Rico,” [Google translation]
One more thing the two have in common is likely to be bankruptcy, or, in the case of Puerto Rico, insolvency.