Public Sector Employment and the Middle Class in Puerto Rico

Current discussions on the impact of expected employment reductions in Puerto Rico’s government have emphasized aggregate macro-economic effects such as the potential contraction in aggregate consumption, and the risk of increased default levels in household debt.  However, there has been hardly any focus on the specific social sectors that would bear the brunt of the impact of such dismissals. 

CPR for a Flatlining Economy

Recently released economic data for Puerto Rico present a significantly deteriorating economic picture.  The Puerto Rico Labor Department reported that the unemployment rate for the month of July was 16.5%, the highest level in 16 years.  If we take into account the unemployed who are not looking for jobs, the so-called discouraged workers, and those who are underemployed, who desire to work full time but can only find part-time work, the island’s unemployment rate would probably approximate 25%.