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Puerto Rico and Federal Spending

Poorer states like Alabama, Louisiana, New Mexico, Oklahoma, and Arkansas often hear the tongue-in-cheek saying, “Thank God for Mississippi!” The poorest state in the nation with more than 21% of its residents living in poverty, Mississippi tends to fall at the bottom of rankings of states in the U.S. not just for per capita income but also for things like educational accomplishments, safe neighborhoods, and livability (the BBC ranked Mississippi the least “livable” of all the 50 states this year). Only 62% of Mississippi’s high school students graduate, and the state ranked 50th on both child wellbeing and  health measurements.

Mississippi, according to the saying, keeps other poor states from coming last.

Discussions of the possible effects of welcoming Puerto Rico as the 51st state often turn to the question of what it would be like to add another poor state to the union. Opponents of statehood suggest that Puerto Rico would simply cost too much, becoming a burden for the rest of the states.

According to the U.S. Census, 45% of Puerto Rico’s residents live in poverty. Only 67% of high school students graduate in four years.  The homicide rate is more than five times the national average (higher than Mississippi’s).

Mississippi could clearly start saying, “Thank God for Puerto Rico!”

But is coming at the bottom of state rankings equivalent to costing taxpayers more money? The answer to this question is a resounding no. Alaska, the 8th wealthiest state in 2010, had the highest per capita spending that year at $17,762. Virginia, the 7th richest state, was next at $17,008. Nevada, at $7,321, had the lowest per capita spending of any state (though still higher than Puerto Rico); Nevada is the 31st wealthiest state.

Federal spending per capita for Puerto Rico was $5,668.

(Figures are from the National Analysis of Federal Funding and the U.S. Census.)

The lessons of history also should give us pause when we consider the idea of Puerto Rico as a financial drain on the rest of the United States. Alaska and Hawaii, the newest states, were both in poverty when they joined the Union and are now in the top 20 economically — Alaska is ranked 8th and Hawaii is ranked 17th. Puerto Rico, with potential for oil production, a tourism industry offering tremendous growth opportunities, the capacity for a significant place in the film industry, and a pro-business attitude may follow the lead of these two newer states.

There are many reasons that Mississippi falls to the bottom on state rankings. Its economic position when it joined the union in 1817 isn’t one of them.

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