Puerto Rico’s Terrible Economy Is Causing a Population Exodus

Patrick Gillespie, CNN, June 15, 2015

Puerto Rico is on the brink of default–and a massive population drain.

Its economy has been spiraling for years now, and Puerto Ricans of all social classes have had it. They are moving to the mainland United States in rising numbers in search of jobs.

“We’re in unprecedented territory because this is, in recent memory, the biggest out-migration that Puerto Rico has experienced,” says Mark Lopez, director of Hispanic research at Pew.

It’s gotten to the point where the migration is beginning to rival the record numbers of Puerto Ricans who arrived in New York in the 1950s–the “West Side Story” era. There are now more Puerto Ricans in Florida than in Puerto Rico, according to Pew.

A debt debacle: In total, the Puerto Rican government is $73 billion in debt, and there’s a solid chance it could default this summer. A big payment for its energy provider is looming in July.

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Every time someone leaves Puerto Rico, it only exacerbates the situation. It shrinks the island’s tax base, which the government needs to pay for itself and its debts. In recent years, the government just issued even more debt to pay off its current debt.

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Moody’s downgraded most of Puerto Rico’s debt even further into junk status in May.

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{snip} Consider this: between 1980 and 2000, the average annual migration of Puerto Ricans to the mainland United States was 12,000 people. From 2010 to 2013–when the economy started tanking–that figure jumped to 48,000 people per year.

Energy problems: More people might try to leave after July 1st.

That’s when the government-run electricity provider, PREPA, has to make a $400 million debt payment it almost certainly can’t pay. Moody’s has rated PREPA’s bonds in the lowest category possible.

PREPA has about $9 billion in total debt. By comparison, when Detroit went into bankruptcy, it shed $7 billion. By law, Puerto Rico isn’t allowed to declare Chapter 9 bankruptcy the way that Detroit did.

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