Posted by on June 3, 2017 12:10 am
Tags: , , , , , , , , , , , , , , , , , ,
Categories: Americas Bloomberg L.P. Business Caribbean Center for the New Economy in San Juan Creditors detroit Economy Florida Lafayette International Community High School new economy New Spain New York Fed Puerto Rican government-debt crisis Puerto Rican society Puerto Ricans Puerto Rico recovery Spanish colonization of the Americas Spanish Empire

Puerto Rico’s economic decline and, now bankruptcy, has triggered an astonishing exodus as thousands flee the commonwealth in search of economic opportunity in the Continental US, Bloomberg reported.

The population has been declining rapidly. The island has lost 2 percent of its people in each of the past three years, a comparable departure in 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, Bloomberg reports.

“I had to choose for my family,’’ said Aledie Amariah Navas Nazario, 39, a pediatric pulmonologist, told Bloomberg. She left behind young asthma patients when she, her husband and two small daughters moved to Orlando, Florida.
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.’’

Departures like Navas Nazario’s have trapped the commonwealth’s economy in a downward spiral, Bloomberg reports.

Joblessness at 11.5 percent, and a $74 billion mountain of debt that pushed the island to insolvency have made collecting taxes key to an economic rebound, Bloomberg said. At the same time, more Puerto Ricans from all walks of life are moving away to better their lives, meaning government revenue is dwindling.

The island’s debt has grown 87% since 2006, and one easy way to avoid paying any of the debt is for Puerto Ricans to leave the island. But one telling sign for anyone who owns Puerto Rican debt: The government’s official turnaround plan – a path to sustainability approved by a US oversight board – assumes the population will shrink by just 0.2% each year for the next decade.

The government is using this number as the basis for its projections of tax receipts and economic growth. Expect it to fall far short on both measures.

“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, told Bloomberg.

And professionals aren’t the only ones leaving: The exodus includes blue-collar construction workers and taxi drivers. Research by the New York Fed found that college graduates make up roughly the same proportion of emigres as they do the broader population, suggesting, as Bloomberg reports, that the departures have touched “every corner” of the commonwealth.

The reason for leaving is obvious: The earnings disparity between PR and the mainland can be wide. John Starkey, a principal of the Lafayette International Community High School in upstate Buffalo, New York, told Bloomberg he traveled to the island to recruit teachers after it started shutting down schools to save money. On the mainland, Starkey said, educators find they can double or triple their earnings, 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.’’

The commonwealth applied for Title III protection from its creditors last month in what will be the largest-ever US municipal debt restructuring, further complicating the territory’s efforts to pull itself out of a financial crisis.

The Puerto Rico restructuring would be far larger than Detroit’s record-setting bankruptcy, with little to no details how long a court proceeding would last or what cuts would are imposed on bondholders. The island’s financial recovery plan covers less than a quarter of the debt payments due over the next decade.

The island 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.

Migration to the US mainland is by far the biggest driver of the island’s declining population, but 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, Bloomberg reported. At the same time, younger generations of child-bearing age are more likely to take off for the mainland.

Leave a Reply

Your email address will not be published. Required fields are marked *