Territories lag behind national economy

by | Jun 21, 2018 | Economy | Comments

Nationally, the United States economy has been growing steadily ever since the end of the recession. One such indicator of this national trend is unemployment, which has recently been dropping. Politicians such as President Trump have been quick to praise this achievement, particularly when it comes to the minority rates. Some have been quick to fact check him, while others agree with his claims. Nevertheless, the overall unemployment rate has been decreasing for the United States. The Bureau of Labor Statistics reports that in April, unemployment fell to 3.9%. The last time it reached below 4.0% was in December of 2000. And yet, the territories lag behind the national economy.

Overall, the number of jobless has been going down, but with a country so large, there is bound to be disparity. Indeed there is, and it’s quite drastic. Territories have been under adverse conditions for well over a decade, and yet no one is talking about them.

As of April 2018, the unemployment rate for Puerto Rico alone stood at 9.9% While that may come as a shock to some, it used to be 17% as recently as 2010. In other areas such as Guam, estimates by the CIA show 30%. While just knowing this figure is important, perhaps a more important question is why?

The last time the United States approached a level such as Puerto Rico’s, there was much unrest and the federal government rolled out a $787 billion stimulus package to help soften the blow that everyday citizens felt. No such attention has been given to Puerto Rico’s inhabitants or any other territories.

It is important to remember that although territories are indeed part of the United States, their industries and primary occupations vary drastically. In 2017, Puerto Rico had a roughly 50/50 split between the industry and service sectors of its economy, with agriculture making up the rest. Industry, although in some cases higher paying, can be far more unstable, and when wages become uncompetitive. A tax bill signed by Bill Clinton in 1996 removed incentives for companies to invest in US overseas territories and as a result, many companies left to the United States mainland. Other territories are more agrarian based, which is subject to the weather, and often is lower paying.

Overseas territories also experience what is known as brain drain, where talented individuals leave to search for better opportunities abroad. Territories such as Puerto Rico have been in migration mode for well over the past decade, and events such as Hurricane Maria have only exacerbated this trend. With the exception of Guam, all US territories have a lower population now than in the year 2000.

The United States has experienced lower unemployment overall, but its overseas territories have yet to see those same results. It is clear that this issue is chronic and is worthy of national attention, after all there are roughly 4 million Americans total scattered across the Pacific and Atlantic. If these territories formed a state, it would be the 28th largest.

An unemployment statistic such as 3.9% may sound great, but it is hardly worth celebrating when millions are still in jeopardy.