Monday, November 28, 2022

Those Were the Days

By on March 24, 2016

In the days of old, when the governor was bold and jobs were created by the tens of thousands, Puerto Rico produced Old Colony, a soft drink that had a huge consumer base on the island—uvita, the grape flavor, was canned “By the People, For the People.” That was but one product canned in a local factory that employed several hundred people. The economy grew at a steady clip averaging more than 4% growth annually—Puerto Rico developed a reputation as one of the world’s top manufacturing locations.

Sadly, in 2016, Puerto Rico has become an “Old Colony.” The U.S. Census Bureau reported 20.4% of Puerto Rico’s population was 60 years of age or older in 2010, and 14.5% were 65 years or older. By 2014, those 60 and older were estimated to be 812,000, or 28.4% of the population, representing an 8% increase in just four years.

This is a worrisome trend that has been exacerbated by the flight of thousands of young professionals and families leaving Puerto Rico every year, with no end in sight. Populations that age at a disproportionate rate put a huge strain on societies in the way of pensions and decreased productivity.

Puerto Rico is in a free fall of apocalyptic proportions that started in 2006 and shows no signs of abating. Dating back to the epicenter of this historic decline, Puerto Rico has seen more than 325,000 jobs lost and more than 12,000 businesses close. The lack of jobs has forced more than 300,000 residents to leave the island over the past decade. Many of those who have left are college graduates and professionals with families who either cannot find work or are not paid competitive salaries. Take the case of schoolteachers and nurses who are heading for the States in droves because they are being offered compensation packages that are often double the pay here.

This edition’s cover story, the third installment in a series on Puerto Rico’s Lost Decade, takes a look at Puerto Rico’s aging population—more than an anthropological account on a graying population, the report has telling—if not harrowing—indicators that should concern us all. For instance, a 2014 survey conducted by AARP, formerly the American Association of Retired Persons, estimates that 40% of senior citizens in Puerto Rico were living below the poverty level. That is four times higher than the poverty rate for seniors in the United States.

The AARP study reports that some 537,000 senior citizens in Puerto Rico are out of the labor force and living on a fixed income provided by Social Security benefits, pensions and the federal Nutritional Assistance Program.

At the same time, there is particular pressure put on pension plans, which happen to be unfunded in Puerto Rico, and there is huge weight on health plans, which face a crisis tracing to a steep drop off in federal funding levels scheduled to hit in 2018. Then, there is a decline in productivity by a gray population that pays fewer taxes. The combination is toxic to economic growth—it should be of particular concern to whoever wins the race for La Fortaleza in November.

Yes, debt restructuring and financial control are important to fix this discombobulated economy. But this newspaper has yet to see one credible plan that would lead to job creation. This is an essential element in bringing back professionals and their families, as well as capital that can put Puerto Rico on a path to economic growth.

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