Things are looking rough for Puerto Rico’s economy these days. While rumors of the Caribbean island finally joining the Union as the 51st state persist, the U.S. government announced that it would not be providing any kind of federal bailout for the troubled territory. That came on the heels of news that the S&P had lowered Puerto Rico’s bond rating to a junk status. How did Puerto Rico get to this point? Which industries are to blame for the decline? We took a big-picture look at EMSI data on Puerto Rico to see what the story was.
Highest- and Lowest-Ranked Industries in Puerto Rico Source: EMSI Covered Employment - 2013.4
Description 2009 Jobs 2013 Jobs Change % Change 2013 Avg. Earnings Per Job
Educational Services 27,193 36,888 9,695 36% $22,885
Administrative and Support and Waste Management and Remediation Services 64,939 70,615 5,676 9% $17,691
Accommodation and Food Services 66,747 72,409 5,662 8% $14,060
Health Care and Social Assistance 78,094 80,884 2,790 4% $23,929
Agriculture, Forestry, Fishing and Hunting 10,545 11,450 905 9% $9,805
Other Services (except Public Administration) 16,208 14,535 (1,673) (10%) $19,116
Wholesale Trade 32,864 31,031 (1,833) (6%) $40,482
Construction 40,766 33,613 (7,153) (18%) $21,288
Manufacturing 91,513 75,135 (16,378) (18%) $39,741
Government 276,949 249,011 (27,938) (10%) $31,708
Total 954,556 920,633 (33,923) (4%) $27,206
Of the 20 high-level NAICS industry sectors, only seven showed positive growth from 2009 to 2013, and only four added more than a thousand jobs. The leader, educational services, added almost 10,000 jobs (not insignificant in an economy of just under a million workers), but those jobs only paid an average of $22,000 a year. That’s not nearly as low a wage as it would be in the U.S., where the cost of living is much, much higher, but it’s still low. And the other leaders included food services and health care jobs, which also pay low wages.
As an aside, it’s also impossible not to notice how much less money workers earn in Puerto Rico. The overall average earnings for Puerto Rico’s industries was only $27,000, while average earnings for the U.S. was over $51,000 in 2013. For another comparison, management of companies paid an average salary of $47,000 in Puerto Rico (the highest of all industries), while in the U.S. the same industry classification paid an average salary of over $120,000.
On the flip side, seven industry sectors lost over 1,000 jobs, and two lost more than 10,000. Wholesale trade, construction, manufacturing, and government — usually key parts of the backbone of a developed economy — were instead the fastest-declining. The 16,000 jobs that Puerto Rico’s manufacturing sector has lost are the equivalent of six million jobs in the U.S. manufacturing sector, a catastrophic loss that puts Detroit’s decline in context.
Highest- and Lowest-Ranked Occupations in Puerto Rico
Source: EMSI Covered Employment - 2013.4
Description 2009 Jobs 2013 Jobs Change % Change Median Hourly Earnings
Food Preparation and Serving Related Occupations 64,668 68,872 4,204 7% $8.78
Building and Grounds Cleaning and Maintenance Occupations 28,265 29,163 898 3% $8.68
Farming, Fishing, and Forestry Occupations 8,596 9,148 552 6% $10.48
Healthcare Support Occupations 19,850 20,112 262 1% $9.86
Business and Financial Operations Occupations 50,783 47,871 (2,912) (6%) $16.17
Protective Service Occupations 52,804 49,619 (3,185) (6%) $11.01
Construction and Extraction Occupations 34,342 29,147 (5,195) (15%) $9.31
Office and Administrative Support Occupations 155,012 149,140 (5,872) (4%) $9.95
Production Occupations 56,823 50,233 (6,590) (12%) $9.72
Total (All Occupations) 916,222 882,971 (33,251) (4%) $12.70
The numbers are unsurprisingly similar when we look at Puerto Rico’s economy from the perspective of occupations. Of the 24 top-level SOC classifications, only four added jobs in the last four years, and only one (food preparation and serving, earning $8.78 an hour) added more than 1,000. Meanwhile 10 occupations lost over 1,000 jobs; construction and extraction occupations took perhaps the hardest hit, losing 15% of its workforce.
Overall, since 2009, Puerto Rico has lost 4% of its workforce, shedding well over 33,000 jobs, mostly in pivotal sectors. The data doesn’t point to a single cause for this worrying decline. What it makes clear, however, is that Puerto Rico’s economy is in a great deal of trouble. It remains to be seen whether homegrown development or foreign investment will materialize and help the island pull out of its slump.