Whether discussing debt, downgrades, spending, taxes, regulation, or any number of other topics related to the country’s fiscal standing, Americans’ concerns can be summed up in one demonstrative measure: job growth.
Jobs are what give people the income they need to take care of themselves and their families, the ability to buy goods and services that others produce, and the morale booster that comes with knowing that their lives have meaning and purpose. With an unemployment rate that has dropped nearly two percentage points - from 16.9% to 14.9% - since March of this year, Puerto Rico, a tiny island with a population greater than 22 U.S. states, may just have the formula for substantial job growth.
Pundits, editorialists, and policy makers alike have all made their opinions known about the fiercely controversial and radical conservative fiscal policies that the current Governor of Puerto Rico, Luis Fortuño, and his administration have proposed. Governor Fortuño started by laying off tens of thousands of government employees in order to make the government’s first payroll, formulating policies that ensured the government’s first credit rating upgrade by Moody’s and S&P in three decades, cutting taxes across the board for both small and large businesses, reducing the bureaucratic “red tape” necessary to start a small business, and establishing programs to boost housing sales as well as to decrease energy costs.
Despite the naysayers, protestors, and congressional opponents who doubt the predicted effects, few can argue the current successes of these policies. Since 2008, Puerto Rico’s deficit has dropped by nearly 70%, credit rating upgrades have allowed for increased bond sales and a reduction in interest payments, and new and existing businesses are taking advantage of lower tax rates and a decreased bureaucracy. Notwithstanding these immense improvements that have come as a result of Governor Fortuño’s admittedly conservative philosophies, in order to convince the public that the economy has improved, jobs need to be created.
Puerto Rico may have just provided the political evidence that effectively sways the minds of the public, finalizing the debate surrounding conservative fiscal policy. Since March of this year, Puerto Rico has exhibited the greatest decline in unemployment numbers anywhere in the country, allowing for the creation of more jobs at a faster pace than most of the states. Although Puerto Rico still has the country’s highest employment rate at 14.9% (latest, unrevised June figures), if the trend continues it will be one of the biggest turnarounds in recent economic history.
After only a few months of positive numbers, the magical formula for fiscal recovery has yet to be confirmed. Nonetheless, if the trend continues, even in a more trivial fashion, the employment outlook in Puerto Rico will be far healthier than that of the rest of the country.
Given that unemployment in the U.S. has been stagnant, at best, over the last two years, perhaps policymakers should take another look at a fiscal policy that we know works, and consider the island of Puerto Rico’s model. After all, if our national unemployment was predicted to be as encouraging as on the island, there would be fewer doubts cast upon policymakers’ re-election prospects.
Justin Vélez-Hagan is the National Executive Director of The National Puerto Rican Chamber of Commerce, Publisher of MinorityEconomicReport.com, an international developer of senior living facilities, a member of the U.S. Air Force Reserve, and a member of several national non-profit advisory councils. He can be reached at JustinV@NPRChamber.org.
Justin Vélez-Hagan is the founder of The National Puerto Rican Chamber of Commerce and an economic policy researcher at the University of Maryland. He is also the author of The Common Sense behind Basic Economics. He can be reached at JustinV@NPRChamber.org or @JVelezHagan.