How US wage laws helped sink Puerto Rico’s economy

[Peter1469]

More pressing to the US than Greece is Puerto Rico. (http://nypost.com/2015/07/11/how-us-wage-laws-helped-sink-puerto-ricos-economy/) It's economy is going bust too. And the federal government will likely bail them out, er, I mean the tax payers. What happened?


Then, with the best of intentions, lawmakers ordered Puerto Rico to equalize its rate with the federal figure; this was phased in by 1983, and the Puerto Rican minimum wage has moved in lock-step with the federal minimum ever since.


The results were sharply disruptive, according to a 1992 National Bureau of Economic Research analysis. They included “substantially reduced employment on the island” and mass migration of suddenly unemployable lower-skilled workers to the US mainland.

***


A 2012 World Bank study found that the minimum wage, relative to the value added per worker, is nearly twice as high in Puerto Rico as it is in the Bahamas and Jamaica.


In short, the minimum wage is a major reason for what a newly published report by two former and one current International Monetary Fund economists calls “the single most telling statistic in Puerto Rico”:

Only 40 percent of the adult population on the island is employed or looking for a job — versus a US labor force participation rate of 63 percent.

[Newpublius]

The federal minimum wage relative to the average wage prices out a greater percentage of the labor force. In Puerto Rico, the minimum wage has 'real bite'

[Mini Me]

More pressing to the US than Greece is Puerto Rico. (http://nypost.com/2015/07/11/how-us-wage-laws-helped-sink-puerto-ricos-economy/) It's economy is going bust too. And the federal government will likely bail them out, er, I mean the tax payers. What happened?

So PR is supposed to compete with Jamaica and Haiti for slave wages? PR is a tax free haven for US corporations and has become a welfare state.

[exotix]

No biggie ... there's $23 Trillion in an unobtrusive-looking building offshore in the Cayman's ...



The Ugland House in George Town on Grand Cayman Island is the registered office for thousands of global companies.

https://cdn.americanprogress.org/wp-content/uploads/2014/01/AP2988706145-620.jpg

[Peter1469]

So PR is supposed to compete with Jamaica and Haiti for slave wages? PR is a tax free haven for US corporations and has become a welfare state.

And broke with extremely high unemployment.

[waltky]

Puerto Rico gonna get itself outta hock...
http://www.politicalwrinkles.com/images/smilies/thumbsup.gif
Puerto Rico announces huge, historic debt restructuring
May 3,`17 -- Puerto Rico's governor on Wednesday announced a historic restructuring of a portion of the U.S. territory's $70 billion debt through courts after negotiations with bondholders failed. The announcement marks the biggest bankruptcy-type process ever for the U.S. municipal bond market.


Gov. Ricardo Rossello said that a federal control board overseeing the island's finances agreed with his request late Tuesday to put certain debts before a court. "We're going to protect our people," he said hours after the U.S. territory was hit with multiple lawsuits from creditors seeking to recuperate the millions of dollars they invested in bonds issued by Puerto Rico's government, which has declared several defaults amid a 10-year recession. Rossello said one of the lawsuits sought to claim all revenues generated by the island's Treasury Department for bondholders. "I'm not going to allow that to happen," he said.

A federal district court judge will now be in charge of determining how Puerto Rico's debt will be restructured. Bondholders cannot challenge Rossello's decision until 120 days from now. Meanwhile, the process to restructure the debt in court will continue, said Elias Sanchez, the governor's representative to the board.

He noted that unlike a regular bankruptcy on the U.S. mainland, a judge cannot unilaterally seize any of Puerto Rico's assets without prior authorization from the federal control board. It is too early to say what kind of impact a debt restructuring in court will have on the island of 3.4 million people, economist Jose Joaquin Villamil told The Associated Press.

"(It) presents a very big risk for both parties," he said, referring to the government and to bondholders. "We don't know what a federal district court judge is going to decide." However, he warned that the process will further spook the type of investors that Puerto Rico's economy needs as it prepares to implement several austerity measures.

http://hosted.ap.org/dynamic/stories/C/CB_PUERTO_RICO_DEBT?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2017-05-03-11-46-23

[Peter1469]

A special type of bankruptcy. And the US sent them some bailout money recently....
Puerto Rico gonna get itself outta hock...
http://www.politicalwrinkles.com/images/smilies/thumbsup.gif
Puerto Rico announces huge, historic debt restructuring
May 3,`17 -- Puerto Rico's governor on Wednesday announced a historic restructuring of a portion of the U.S. territory's $70 billion debt through courts after negotiations with bondholders failed. The announcement marks the biggest bankruptcy-type process ever for the U.S. municipal bond market.