In recent news, the headlines tout a record-low 6.1% unemployment rate in Puerto Rico, celebrating apparent economic progress. However, digging deeper into the numbers reveals a more complex story that goes beyond the surface-level statistics. The reality is that a significant portion of the population remains outside the official scope of these figures, painting a less optimistic picture of the island’s workforce.
Commonly heard phrases like “I just cannot find people to do the job” resonate with employers across Puerto Rico. This sentiment underscores the notion that the official unemployment rate doesn’t capture the full scope of the labor market. Unemployment statistics typically account for individuals who are jobless, actively seeking work, and available for employment within the previous four weeks. However, this approach overlooks various segments of the population.
The unemployment rate is calculated by dividing the number of unemployed individuals by the total labor force. In Puerto Rico, the labor force in 2021 was estimated in 1,057,000 a decrease of 20,000 people compared to the previus year (PR Departmen tof Labor Economic Analysis Report 2020-2021) The Bureau of Labor Statistics estimated a civilian labor force of approximately 1,117,000 as of July 2023 (of which 21% or so are government employees), with an unemployment count of 73,700, resulting in a 6.2% unemployment rate. Historically the labor force has been in decline. From 2011 to 2021 it fell by 188,00 persons. The island’s population is 3,221,789 and theseasonally adjusted number of employed people (including self-employed individuals – about 173,000- and agricultural employment) reached a total of 965,000 in FY 2021. This means that less than 70% of the island residents are not working. Whats the rest doing?
Additional insights from the Social Security Office of Retirement and Disability Policy reveal over 141,000 disabled workers and 489,415 retired individuals in Puerto Rico. Moreover, data from the US Census indicates that there are 518,000 citizens under the age of 18 on the island. Nutritional Assistance in the form of Tarjeta de la Familia provides assistance to 1.4 million residents as of 2011 amounting to 1.90 billion dollars. These numbers may not align perfectly, but they reveal that the available workforce on the island is largely utilized, leaving only around 6% unable to secure employment.
Taking a broader perspective, the World Bank’s 2022 data on labor force participation rates reveals that Puerto Rico’s rate stands at 41%, a decrease from 48% in 2005. This rate is calculated by dividing the number of people aged 16 and older who are employed or actively seeking employment by the total non-institutionalized, civilian working-age population. Applying this formula, we estimate the labor force participation rate at 41% in Puerto Rico, equivalent to approximately 1,320,699. This rate highlights a stark discrepancy between the number of individuals participating in the workforce and the proportion that is employed or seeking employment. Although increased in recent years between 2017-2019, it hovered around 40%.
This disparity between Puerto Rico’s labor force participation rate and the global average is disconcerting. Across most of the world, labor force participation rates exceed 70%, with countries like India, Turkey, and South Africa ranking lower but still above 60%. This discrepancy raises questions about the underlying factors influencing Puerto Rico’s labor market and the need for a more comprehensive understanding of the island’s economic dynamics.
In conclusion, if the prevailing sentiment is that there aren’t enough workers to fill job openings, it’s likely because there simply isn’t a large enough pool of able and willing individuals on the island. A considerable chuck of jobs are occupied by government workers. While a low unemployment rate may appear positive for those actively job-seeking and employed, it does not reflect the reality for a significant portion of the population. A deeper analysis reveals a more complex and nuanced landscape that underscores the importance of considering the broader labor force participation rate in assessing the health of Puerto Rico’s workforce.
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