The PROMESA oversight board has written to Puerto Rico Family Department Secretary Glorimar Andújar Matos calling for a work requirement to be tied to the Puerto Rico Nutrition Assistance Program (NAP). The certified commonwealth fiscal plan includes such a requirement.
The letter was preceded by publication of an opinion piece in the Washington Post by José Carrión and Andrew Biggs, both members of the Board. The column mentions the NAP work requirement but focuses more broadly on the problem of low labor force participation in Puerto Rico.
“Puerto Rico’s 40 percent labor force participation rate falls short not only of every mainland state and every other Caribbean island, which average in the low 60 percent range, but also of 97 percent of the more than 200 countries and territories surveyed by the World Bank,” the authors point out. “If Puerto Rico boosted labor force participation even to West Virginia’s mainland-low 54 percent, the economy would increase by nearly 11 percent, tax revenue would rise, and the 44 percent poverty rate would plummet. But if labor force participation remains low, Puerto Rico will be forever poor.”
The article goes on to say that labor requirements — Christmas bonuses, generous sick leave and vacation, and job protections — and a culture of patronage discourage employers from creating jobs. It calls for an Earned Income Tax Credit and for NAP work requirements.
The work requirement demands that recipients of food benefits must work (or search or train for work) 80 hours each month. The requirement kicks in after three months of benefits and applies to people ages 18 to 59. The Board wants this to begin in 2020.
The Family Department has an alternate plan. They would give NAP recipients nine months of leeway in 2020 and would change that to three months in 2023.
Work requirements in the States
Work requirements for federal benefits are common in the States, but can be controversial. Arkansas was the first State to add a work requirement for Medicaid in 2018, and 16,932 people have lost their benefits so far. In many cases, these individuals were in fact working but were unable to keep up with required electronic reporting. Lack of internet access, technical skills, or an understanding of the reporting requirements is thought to be the major hurdle for many people. It’s estimated that about a third of this population does not have internet at home; people in rural areas may not have access to electricity or to internet service. A report in June disclosed that only 455 people (1.7% of the Medicaid population) had been successful in reporting their work activities. While full-time workers and full-time students do not have to report, Arkansas has faced criticism for their implementation of the plan. Last week, they began allowing reporting by phone. Those who have lost their health care may reapply in January.
States that have a work requirement for their food stamp programs are required to provide job training for recipients — and many don’t have the resources to do so. Economists suggest that the volatility of low-wage jobs also makes it hard for food stamp recipients to meet the 80 hours per month standard. A few months with short hours can cause people to lose the food resources they rely on to get them through the difficult times. Those who live in rural areas may not be able to find enough workplaces to fill 20 hours of job search time each week, and they may not have access to training programs.
Will it go better in Puerto Rico?
Puerto Rico’s plan is likely to face the same kinds of problems States have discovered. With more rural areas than most States and fewer jobs, Puerto Rico may be unable to create conditions in which NAP participants will be able to succeed.
The Fiscal Plan forecasts an increase in economic growth by 2021 resulting from the work requirement and the EITC. It is not clear that work requirements actually contribute to the growth of economies. Metrics for the Arkansas plan, for example, include improved self-esteem among participants, but there is no suggestion that it will lead to economic growth.
The Board’s letter emphasizes the importance of increasing employment, saying, “Low rates of formal employment are a long-term structural problem that can only be addressed with significant changes to public policy.”
Puerto Rico government response
Christian Sobrino, the governor’s representative to the PROMESA board, responded to the letter with a number of concerns, including the time needed to create training programs and the lack of job opportunities.
“Since NAP is a social safety net program, intended to provide food for its participants, many states consider it inappropriate to cut off individuals from the program when the participants are making efforts to find employment,” he pointed out. “This would be the case in Puerto Rico where job opportunities are limited.”
He also expressed concern that cutting food assistance would cause even more residents to leave Puerto Rico for the States. The dwindling population of working age people on the Island is generally recognized as a serious obstacle to economic growth.
Sobrino also pointed out that NAP, compared with SNAP in the States, provides “significantly lower benefits, has a much lower poverty threshold for eligibility, and leaves many families in need without the food security that they would have living in the states.”