Here’s why Puerto Rican youth are struggling economically

The economic foundations of young Puerto Ricans are unstable, the study found.

About 47% of respondents in the U.S. territory are financially vulnerable, meaning they lack confidence in their ability to absorb a $2,000 economic shock, according to a September report from the financial industry regulator Investor Education Foundation. I am doing it.

“This is the first time a study of this nature has been conducted in Puerto Rico,” said report co-author Harold Toro. He is also Research Director and Chair of Economic Development Research at the Center for New Economics, an island-based economy-focused think tank.

“It highlights what people feel and experience but it’s hard to find numbers,” Toro said.

More than half, or 59%, of adults ages 18 to 29 on the island are financially vulnerable, compared to 47% of adults ages 30 to 54 and 41% of those 55 and older, according to FINRA research. are. The organization surveyed 1,001 adults living in Puerto Rico in 2021.

“Puerto Rico’s broader financial vulnerabilities and capabilities…are quite dire compared to the mainland United States,” said report co-author Olivia Valdez, a senior fellow at the FINRA Investor Education Foundation.

Economic vulnerability is much higher in Puerto Rico than in the mainland United States, especially among young people More than half (59%) of 18- to 29-year-olds are economically disadvantaged in Puerto Rico, compared to 38% of the same age group. According to FINRA data, in the United States.

Approximately 30% of all U.S. residents are considered financially vulnerable in 2021, according to FINRA’s latest U.S. Financial Capacity Report, which surveyed 27,118 U.S. adults in 2021. The Puerto Rico study was conducted separately but simultaneously.

Many young people leave Puerto Rico to improve their economic situation and seek education and employment in the United States and other countries. For those who remain, this generation will have to deal with an economy in recovery, an unstable power grid, and rising costs for basic needs such as housing.

Understanding why Puerto Rico’s youth are economically vulnerable could inform efforts to retain young residents and bring working professionals back to the island, experts say.

But “living in Puerto Rico isn’t just a place where you can survive, it has to be a place where you can thrive,” says Fernando Tormos Aponte, an assistant professor of sociology at the University of Pittsburgh.

Indeed, it is common for beginners to have some financial burden. Generally speaking, your financial situation improves as you get older.

However, economic vulnerability is more pronounced among Puerto Rican youth compared to the U.S.

“Young people… seem to be having a more difficult time,” Toro said.

Puerto Rican adults ages 18 to 29 are less likely to report having emergency or retirement savings than adults ages 30 and older, according to a FINRA study.

Less than a quarter (22%) of Puerto Ricans between the ages of 18 and 34 have some type of retirement account. Among those in that age group in the continental United States, 43% do so, according to FINRA’s extensive analysis.

Young Puerto Ricans are more likely than older residents to have student loan and medical debt.

Puerto Rico’s economy is “very strong,” said Vicente Feliciano, founder and president of Advantage Business Consulting, a market analysis and business consulting firm in San Juan, Puerto Rico.

Feliciano said the job market is improving thanks to the minimum wage hike, and salaries are growing faster than inflation. The federal minimum wage in the United States is $7.25, while in Puerto Rico it is $10.50.

Private sector employment hit a 15-year high since mid-2022, according to the New York Fed.

Still, the island’s median household income will be just $25,621 in 2023, less than a third of the mainland U.S. median household income of $80,610, according to census data. .

Although conditions have improved in recent years, for Puerto Rican adults under 40, “most of their professional lives have been overshadowed by the recession Puerto Rico experienced from 2006 to 2015.” ” Feliciano said.

“Young people have been experiencing economic strain for more than 20 years,” he said. “They have seen many of their friends leave the country. ) is blaming.

Alejandro Talavera Correa moved to Washington, DC in 2019 to pursue a career in finance. The role and salary were too good to let go, he said, and “people have to leave to get a competitive salary.”

However, within a few years, he found himself back in Puerto Rico.

Talavera Correa, now 28, returned to Puerto Rico through El Comeback, an online job site tailored to post job openings that meet market salary standards and offer benefits to prospective applicants. I found an opportunity.

“We want people to come back,” said El Comeback project manager Ana Laura Miranda. “You have to be realistic. You have to invest in your employees. If you don’t have a paycheck, you have to create benefits.”

Miranda said the platform’s primary audience is in their late 20s to mid-to-late 30s. They range from single adults to families with children.

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Miranda said the effort is still in its early stages and has so far attracted and retained 51 candidates.

Miranda said candidates often want to be closer to family or return to the sense of belonging and warmth that comes with being in Puerto Rico. But young workers returning to Puerto Rico may face new economic challenges.

“Puerto Rico is not cheap,” Miranda said, adding that six-figure salaries are not as common on the island as they are in the United States, so “there’s always some reduction in pay.” “The cost of living…it’s a reality. You can’t afford to overlook that.”

The island, like the mainland United States, has a housing market that is unaffordable for many residents, and public transportation service can be spotty, making a car essential for getting around.

Talavera Correa was lucky enough to buy a condo during the pandemic when mortgage rates were low.

“If you don’t have that kind of money, you basically end up renting or living with your parents,” Talavera Correa said.

But like most Puerto Ricans on the island, he continues to suffer from regular power outages and power problems. They send him to his mother’s house, where the service is more reliable thanks to solar panels.

“Outages and power issues are happening quite frequently,” said Feliciano of Advantage Business Consulting. “Electricity is a big difference between the U.S. and Puerto Rico, with younger generations being hit harder than older, more affluent generations.”

Despite the challenges, Talavera Correa is happy with his decision.

“That’s essentially the quality of life that you have here in Puerto Rico. You have the beaches, you have everything outdoors, you have the opportunity to live a happy life,” he said.

“But if that comes with financial constraints and the overall living situation in terms of electricity and water… it’s going to disappoint a lot of people who are coming back.”