Puerto Rico’s economy, crime to blame for middle class exodus

Squeezed by high taxes and jobless rates, workers seek better quality of life on US mainland

A young shoe shiner at the Santurce market, July 17, 2015.
Christopher Gregory for Al Jazeera America

SAN JUAN, Puerto Rico — Rob Rex, a 32-year-old graphic designer, is among the more than 1,000 Puerto Ricans leaving the island each week, according the American Community Survey. Most of them are heading to the mainland, and many go to central Florida, particularly Orlando.

“The reality of leaving Puerto Rico in three weeks has set in. As has some depression,” said Rex in a July 8 Facebook post. Rex, whose last name has been changed because of security considerations at the aerospace company where he works, landed in Tampa on Tuesday.

“I was one of the people that was very critical a few years back of those who left, saying, ‘You’re a traitor,’” he said before leaving, speaking on the phone from his home in Aguadilla on the island’s northwest coast. “And now I’m the one being called a sellout — ‘You’re abandoning Puerto Rico.’ I tell them, ‘I’m not abandoning Puerto Rico, Puerto Rico abandoned me.’”

The island’s economy has shrunk for nearly a decade. According to a former staffer at the International Monetary Fund, that’s a remarkable feat for “an economy suffering neither civil strife nor overt financial crisis.”

Unemployment is high — 12.6 percent in June (compared with 5.3 percent on the U.S. mainland) and that’s down from a high of nearly 17 percent in 2010, according to figures from the Bureau of Labor Statistics. Economists say a more telling statistic is that only 40 percent of adults are employed or looking for work, with the rest economically idle or working in the informal economy.

With jobs so scarce, it’s little surprise that the island is bleeding residents — about 50,000 per year, according to an August 2014 report from the Pew Research Center using American Community Survey data.

“Puerto Ricans have left the financially troubled island for the U.S. mainland this decade in their largest numbers since the Great Migration after World War II, citing job-related reasons above all others,” the report states.

The report adds that Puerto Rico is experiencing the first sustained population decline in its history as a U.S. territory, while the number of Puerto Ricans in the 50 states continues to grow briskly. Puerto Ricans account for 9 percent of the U.S. Hispanic population, second only to Mexican-Americans, who represent 65 percent.

In 2006, for the first time, there were more Puerto Ricans living on the U.S. mainland than on the island. The margin has grown since. As of 2012, there were approximately 4.9 million Puerto Ricans stateside and 3.5 million on the island.

According to CIA World Factbook estimates for 2014, Puerto Rico ranked seventh, just ahead of Ukraine, for population loss. (Syria is No. 1.)

Rex said he thinks outmigration will only increase in the coming years, and he’s trying to beat what he sees as an imminent flood.

“I think it’s a trickle compared to what’s going to happen,” he said.

Rex said he resisted the mainland for as long as he could. He moved from San Juan, the capital, to Aguadilla a few years ago, accepting a job with an aerospace company in order to stay in Puerto Rico. He said his job paid well and he received annual raises. But they didn’t keep up with the rising cost of living.

“When I first started, I had money left over at the end of month, and now I’m just barely breaking even,” he said.

By January, he decided to leave. After interviewing for positions in Miami, Atlanta and California, he accepted a job in Tampa. But he felt wistful about his looming departure.

“I’m scared for Puerto Rico. I feel really sad for whoever stays behind because they’re going to shoulder the burden,” he said.

‘I never thought I would leave Puerto Rico. I thought I’m here to stay. [Now] I’m ready to leave.’

Carmen Vega

director, Children’s Museum of Puerto Rico

Compounding the island’s population loss is a low birthrate. The Census Bureau projects Puerto Rico's population to continue declining through at least 2050, at which point an estimated 3 million people will call Puerto Rico home.

It’s an alarming but not unheard-of decline. According to a November 2014 report from the Federal Reserve Bank of New York, “The Causes and Consequences of Puerto Rico’s Declining Population,” Arkansas (in the early 1950s) and Wyoming (in the late ’80s) saw population losses more than double Puerto Rico’s. New York City lost more than 10 percent of its population in the 1970s.

“New York City’s large debt burden, outsized spending obligations and shrinking tax base nearly forced a declaration of bankruptcy in 1975. The city was also viewed by many as unsafe and undesirable,” the report states. “Similarly, Puerto Rico now faces significant fiscal distress and a serious crime problem. The island’s fiscal problems follow years of public sector deficits; borrowing costs have surged, and the island nearly lost access to debt financing in capital markets in early 2014.”

The Capitol, home to the Puerto Rican Senate and Legislature, is just outside Old San Juan, the tourist center and a major port for Caribbean cruise ships.
Christopher Gregory for Al Jazeera America

The comparisons are little comfort for Carmen Vega, 63, a small-business owner in San Juan. She was born in New York but has spent the last 32 years in Puerto Rico, where she founded and runs the Children’s Museum of Puerto Rico and Fairy Cakes organic bakery.  

“I wanted to raise my kids here, and I did, and they’re adults now, and they left. I never thought I would leave Puerto Rico. I thought I’m here to stay. [Now] I’m ready to leave,” she said, sitting in her office in the museum, where she’s trying to phase out her role.

Vega says the cost of living has gotten too high — whether it’s food, water, electricity or the sales tax, which jumped from 7 to 11.5 percent in July. Puerto Rico’s median household annual income is $19,000, about a third of the U.S. median. Meanwhile, the cost of living is about 13 percent higher than the U.S. average, according to the Council for Community and Economic Research. And according to U.S. census data, Puerto Rico has a higher measure of income inequality than any U.S. state, surpassing even the District of Columbia’s in 2013.

As more residents leave the island, the shrinking tax base puts a greater squeeze on those left to shoulder the brunt of increased taxes and decreased government spending.

“The middle class — me — I have expenses, but I don’t get any breaks,” Vega said.

“Crime is horrible,” she said. “And it’s unfortunate because Puerto Rico can be a paradise. It’s a small island with amazing resources. But we’ve managed to just sink it.”

Puerto Rico has, however, see a dramatic drop in homicides (a majority of which are tied to drug trafficking), from a high of 1,136 murders in 2011 to 681 murders in 2014.

In April, Vega plans to move to either San Francisco or New York, where her two children live.

“It’s so — I don’t know how to put it,” she said, shrouding her loss of words with a heavy sigh. “It’s a terrible feeling. Not only do you feel there’s no way out at this point … I’m leaving because I need quality of life.”

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