Poverty in Puerto Rico
Poverty in Puerto Rico is caused by a variety of problems. At the core of the issue, there is an ongoing financial crisis, with the country’s debt ballooning to more than $70 billion. This crippling debt has left Puerto Rico in poverty and continues to affect children and families on the island. According to the United States Census Bureau, in 2015, 46.1 percent of people were living below the poverty line.

Puerto Rico’s financial situation has led to budget cuts which have only worsened conditions for the poor. In order to pay off the debt, Puerto Rico has:

  • Delayed tax refunds and payments to suppliers
  • Cut budgets on health care and public transportation services
  • Closed schools
  • Increased sales taxes

Implications of Poverty in Puerto Rico

According to the Bureau of Labor Statistics, the unemployment rate is at 12.2 percent — more than double the national average in the United States. With people out of work, it has become difficult to pay rent, buy food, and pay for transportation, heightening poverty in Puerto Rico.

In addition, the Zika virus also had a severe impact on the economy. In 2016, when this virus first became a threat, thousands of workers that were fighting the epidemic were let go from their jobs.

Furthermore, due to the lack of jobs and poverty in Puerto Rico, the island has suffered a drastic decline in population. Many are leaving the island for the mainland in hopes of acquiring economic stability. According to the Pew Research Center, “More recent Puerto Rican arrivals from the island are also less well off than earlier migrants, with lower household incomes and a greater likelihood of living in poverty.”

Poverty in Puerto Rico and the PROMESA Law

In order to help the island, President Obama signed PROMESA into law. This bill was set in place to provide stability, better services, and prosperity for the people of Puerto Rico. The Puerto Rico Oversight, Management and Economic Stability Act allows the island’s government to enter a bankruptcy-like reform process and stop legal action in case of default. It creates a financial control board, which will have the authority over political life and laws. The Puerto Rican government submitted a fiscal plan that was approved by the financial control board, with conditions. Starting in 2020, the government must decrease pension spending by 10 percent, remove Christmas bonuses, and execute employee furloughs as soon as July 1 to prevent a short-term cash crunch.

The PROMESA Law also:

  • Reduces the minimum wage to $4.25 for people 24 and under
  • Institutes an austerity program where bondholders are paid first
  • Does not allow the government to interfere

Puerto Rico faces an existential financial deficit. However, the debt and poverty in Puerto Rico didn’t happen overnight and rectifying the situation will take time.

Solansh Moya

Photo: Flickr


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