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Painting a Clear Picture of Puerto Rico’s Unemployment Crisis

By: Frank Worley-Lopez - Mar 11, 2014, 9:49 am

EspañolIf a picture is worth 1,000 words, the right statistic can be a novel. None explain this theory better than the latest employment-population ratio figure for Puerto Rico. Caribbean Business reports the rate slipped to 35.2 percent, compared to a national average of 58.6 percent. What that means, is that only about one in three working-age individuals in Puerto Rico is actually in the workforce. Of the US states, the worst rate is in West Virginia at 50.1 percent.

That number tells the horrifying story of the reality of Puerto Rico’s economy and prospects for the future. Despite apparently good news from the Government Development Bank and PR Treasury Department about increased revenues, one must still question whether the US Commonwealth is really turning the tide or simply enjoying a blip on a much larger radar screen of disillusionment.

This statistic is often more insightful regarding an economy than the official unemployment rate, which is based on participation. Puerto Rico’s unemployment rate is just over 14 percent, which is extremely high for a US jurisdiction. However, that rate can be lowered fairly easily through creative accounting. When people retire or give up looking for work, they are no longer included in the labor force and so the unemployment rate can appear to drop.

The employment to population figure, however, is a hard statistic. Total number of people of working age vs. those actually employed. No hiding numbers there. Just running some basic math drills; of the islands total population of 3.6 million people about 700,000 are children and about 550,000 are over the age of 65. That leaves roughly 800,000 people in the workforce and 1.4 million people unemployed.

Yet, those numbers are not the same as the numbers laid out by the US Bureau of Labor Statistics unemployment figures. According to them, the island’s unemployment rate in December 2013 was about 15.5 percent, with roughly 1 million people employed and just one 185,000 unemployed.

Are you starting to see the disconnect? Even if we were to believe that a million people are employed on the island, that would still leave 1.2 million unemployed, assuming an employment to population ratio of 50 percent — but you can’t get there from here. The same U.S. government agency is reporting two completely different statistics that no one seems interested in comparing.

The unemployment figures from BLS indicate a workforce of just shy of 1.2 million people. In other words, another 1.2 million people of working age simply do not count. If you include those numbers as hard statistics you get the real picture: an unemployment rate above 60 percent.

If only governments would adopt hard statistics as a matter of constitutional law, it would make it harder for politicians to bend numbers to paint a prettier picture.