The Promise of the Puerto Rican Economy and Geographic Discrimination

The Federal Reserve Bank’s recent report on the competitiveness of Puerto Rico’s economy included a recommendation to reduce barriers to job creation and labor force participation by improving incentives to work.

Download the full report.

Caribbean Business saw optimism in the bank’s analysis, reporting that “the New York Fed noted that on several measures Puerto Rico has features that make it a strong — and potentially a highly competitive—economy.”

The positive points made in the report include the increasing literacy and educational attainment of the Puerto Rican population, the fact that many of its resident are bilingual, its open economy, the central location of the island between the U.S. and Latin America, and its close ties to the U.S. mainland. These points have made Puerto Rico an important asset to the United States.

The report also contained some criticisms, especially on the subjects of unemployment and labor market opportunities. For example, the report raises the idea that reducing the minimum wage in Puerto Rico might be a good idea.  It recommends as a possible first step to consider a young-worker subminimum wage that targets workers under the age of 25.  At the same time, the report also suggests that TANF (public assistance), NAP (food stamps), and SSDI (disability benefits) may tempt Puerto Ricans not to work.

These critiques are interesting because Puerto Rico is generally treated less generously under social programs than any state in the United States.  In fact, Resident Commissioner Pedro Pierluisi discussed the need for parity for Puerto Rico in these programs in a recent speechListen to the speech.  He has introduced legislation to create more equitable treatment for Puerto Ricans under TANF, NAP and SSI programs as well as portions of Medicare.  He has also proposed legislation to include all U.S. territories in the National Breast and Cervical Cancer Early Detection Program.

“Puerto Rico is treated unfairly under Federal programs designed to help our nation’s most vulnerable residents,” said Pierluisi in his speech. “When you look at the status and the well-being of all the American citizens living in the territories, you realize that what they face is geographic discrimination.”

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