200,000 new jobs are good but…
Published on September 28, 2009
…they are not sufficient to keep up with population growth. According to data from the Puerto Rico Planning Board, Puerto Rico’s civilian population 16 years and older increased from 2,788,000 in July 1999 to 3,068,000 in July 2009, a net increase of 280,000 persons, equivalent to an average of 28,000 persons per year.
The administration’s announced intention to create 200,000 net new jobs over the next eight years, equivalent to an average net increase of 25,000 jobs per year, is commendable but insufficient to keep up with population growth and clearly inadequate to make a significant dent in Puerto Rico’s unemployment rate.
A more aggressive goal would be to seek to raise Puerto Rico’s labor force participation rate to parity with that of the mainland United States. According to Barry Bosworth, co-editor of the 2006 CNE/Brookings report on the economy of Puerto Rico, that goal could be achieved in 15 years if total employment increased in Puerto Rico at a yearly rate of 3%. The table below sets forth the employment goals for the next eight years under those premises.
As set forth in the table above, if employment in Puerto Rico grew at an annual rate of 3% a year over the next eight years, a total of 295,048 net new jobs would be created, equivalent to an annual average of 36,881 net new jobs.
Admittedly, the goal is ambitious but Puerto Rico’s previous experience, especially between 1950 and 1975, suggests it is feasible. However, to reach that objective requires a dynamic, growing economy, with significant new investment; and for that happen we need deep structural reforms to Puerto Rico’s economic model. There is simply no other way around it.