Tuesday, May 24, 2022

Puerto Rican Migration Decreases Pressure on Labor Market

By on March 18, 2016

SAN JUAN- The number of people working and/or actively seeking employment in Puerto Rico, as of January 2016, was 1.138 million, for a labor-force participation rate of 40.5%, according to the Puerto Rico Labor Department’s newly released Working Group Survey. The last time Puerto Rico’s labor force had such numbers was in the summer of 1990.

For the same survey, the Labor Department reported the island’s unemployment rate for January was 11.9%, a slight decrease from the 12.2% registered in December 2015.

“We have been experiencing a recession for the past 10 years, and now the labor market seems to be adjusting. Nevertheless, the fact that the unemployment rate is going down doesn’t mean labor participation is increasing,” explained Mario Marazzi, director of the Puerto Rico Statistics Institute.

For Marazzi, it is high time to start using the term “escape valve” to describe the effect of outmigration on the island’s economy and define the “adjustment of the labor market.”

“People are leaving the island in sufficient numbers to reduce the pressure on the labor market…. Migration lowers that pressure,” Marazzi argued.

The Working Group Survey defines the term “working group” (i.e. labor force) as people 16 years of age and older who are employed and/or are actively seeking to be employed. This figure—1.138 million for January—is seasonally adjusted.

When compared to the Total Employment table in the survey, which refers to the total number of people employed—1.003 million for January—there is a difference of 135,000 fewer people employed. This is exactly the number of unemployed people included in the corresponding table.

The last time Puerto Rico had one million or fewer people employed, was in February 1993.

If one were to use the Total Employment numbers to determine the labor-force participation rate in Puerto Rico, following the same calculations as those used by the Labor Department, the real labor-force participation rate would be significantly lower than the 40.5% announced by the Labor Department earlier this week.

In its summary, the Labor Department highlights the fact that there are 5,000 fewer people unemployed than in the month before, but the agency fails to mention that a similar decline is experienced every year due to the Christmas season, when there is a surge of temporary jobs, particularly in retail.

It also seems that while the government has reduced its payroll significantly through attrition, the fact is that for the second year in a row, the number of people employed by the government significantly increased between July and December of both 2014 and 2015. For example, in 2015, the number of government employees increased from 173,000 in July to 189,000 in December.

The Labor Department’s figures also coincide with those reported by the U.S. Census Bureau regarding the number of people who have moved from Puerto Rico to the U.S. mainland since 2010, roughly 300,000.

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