The island has had to weather a hurricane, a political crisis and earthquakes, but those crises did not lead to the widespread unemployment caused by the response to the coronavirus pandemic.
San Juan, P.R. — With hundreds of thousands of people suddenly out of jobs in Puerto Rico, Luciano Soto, a tour guide who has not worked in nearly four months, wanted to be first in line at the Puerto Rico Convention Center, now outfitted as an unemployment office. He showed up at 8 p.m. one night a few weeks ago, with a lunchbox full of snacks, prepared to spend the night, so that he could find out why the unemployment benefits he had applied for months earlier had never arrived. By 5 a.m., more than 400 others were also at the convention center, and many furious people were turned away. Mr. Soto finally got his money last week, after finding three of his checks at the post office: The government had mailed them to the wrong address.
“This is going to go on for a while,” said Mr. Soto, 57, who is worried that the cruise industry he depends on will not quickly recover. “Would you take a cruise right now, even if someone gave it to you for free?”
As the coronavirus pandemic sweeps the globe, shutting businesses, killing the vulnerable and crippling economies, Puerto Rico has taken one of the country’s hardest economic hits. Gov. Wanda Vázquez was the first governor in the nation to order businesses to close and people to stay home. Experts say that her quick action helped stave off an even worse medical crisis on the island. But the pandemic has nonetheless plunged Puerto Rico into its fifth dire emergency in three years, one that the government has struggled to manage.
Thanks largely to hurricane reconstruction, Puerto Rico’s economy had been inching toward recovery after a devastating 2017 storm and the bankruptcy of the island’s government the same year. A civic uprising paralyzed the island last summer and led to the ouster of Governor Vázquez’s predecessor. Then a series of earthquakes shook the south side of the island in January, damaging homes and buildings, sending thousands to live on the street, and closing schools across the island.
As of last week, despite guidance from the Centers for Disease Control and Prevention that everyone should be washing their hands frequently during the coronavirus pandemic, the governor announced that because of a severe drought, parts of the island would have running water only every other day for the foreseeable future. So far, the island has had 8,714 confirmed and likely cases of the virus, and 157 deaths.
Experts say this latest economic crisis has been even more difficult than the one that followed Hurricane Maria. For one thing, aid has not come pouring in from around the world, as it did after disasters of the natural kind. And with Covid-19 creating serious problems in Florida and other parts of the United States, unemployed Puerto Ricans, who fled to the mainland in droves after Hurricane Maria, have nowhere to turn.
As a result, on an island that already had the highest poverty rate in the United States, at least 300,000 Puerto Ricans have filed unemployment claims linked to the pandemic — out of a civilian labor force of 1.05 million — and many others are ineligible for aid because they are part of the island’s large informal economy. Puerto Rico in mid-June had the highest insured unemployment rate in the country, at 23 percent, according to the U.S. Department of Labor.
Thousands of people were left waiting for their checks as Puerto Rico’s understaffed bureaucracy struggled to keep up with the flood of claims. A postal worker’s video went viral when he showed unemployment checks stuck in mail purgatory because they had been addressed to “Same”: Many applicants had written their home addresses on the form and then, when asked for their mailing address, wrote “same as above.”
The island’s labor secretary, Briseida Torres, resigned in June, when public fury was mounting over the long lines and delayed payouts, including associated delays in receiving federal stimulus checks. Since then, claims have started being paid, but workers without jobs have remained deeply unsettled. “I lost my job on June 1,” said Marelys Figueroa, 27, who was a marketing and recruitment officer at a university. “I was working from home, and I got an email. It said I was unemployed, effective immediately. My income was the strongest of my household, and I have a 4-year-old child.” The food bank, Comedores Sociales, said that it received 8,000 requests for help in the first two months of the pandemic. Paola Aponte Cotto, a worker there, said she spends 20 hours a week on the phone, fielding requests.
“We’ve received calls from people crying,” Ms. Aponte said. “The callers who are most shocked are the ones who lost their jobs.” Puerto Rico’s new labor secretary, Carlos Rivera Santiago, acknowledged that there were delays in getting unemployment checks to those who needed them, but said the government had opened more offices and improved online services to address the backlog. After weeks of chaotic scenes like the one Mr. Soto experienced, the government implemented a more orderly indoor process, with socially distanced seats where weary applicants wait for their appointments.
More than 300,000 people are now getting benefits, Mr. Rivera Santiago said, while total claims in two available assistance programs have reached 500,000. “It’s a challenge, and one Puerto Rico is going to confront,” he said. “We have to reinvent ourselves, change the way we work. Remote work has become the order of the day, and that was not very usual in Puerto Rico.”
He stressed that the key to recovery will be injecting money into the economy. Puerto Rico is expected to receive $13 billion in Covid-related federal funds, according to the Financial Oversight and Management Board, the agency that has managed Puerto Rico’s finances since it defaulted on $72 billion in debt. The board has estimated that Puerto Rico’s economy will contract by 4 percent.
In March, Governor Vázquez announced a $787 million stimulus package, which included $160 million in grants to small businesses and the self-employed. The government also set aside some special Covid-related federal grants to help heavily affected sectors like hospitals and tourism. About $350 million in federal funds went to the private sector to help pay employees at businesses that were disrupted, according to a Puerto Rico government report.
José Caraballo-Cueto, an associate professor at the University of Puerto Rico, said the rollout of the stimulus was problematic, because it gave priority to things like hazard pay for front-line workers, who were still employed. Puerto Rico’s official unemployment rate has not been reported since February, but Mr. Caraballo-Cueto estimates that it is now close to 40 percent. It is unclear how many people have returned to work since the governor authorized businesses to reopen in mid-June. “The claims were the biggest we ever saw, since the beginning of recording unemployment in the 1980s,” Mr. Caraballo-Cueto said. “And the government pretended to process all of those new claims with the same number of employees they always had.”
Maria Enchautegui, an economist at the Youth Development Institute of Puerto Rico, a policy and research organization, said the greatest challenge was the technical capacity of the island’s Labor Department, which was too limited to deal with the crush of applications. If the promised aid does not quickly arrive, she said, the poverty rate among workers in businesses affected by the recent lockdowns could climb to 77 percent. “The effect on poverty could be quite bad,” Ms. Enchautegui said. Many Puerto Ricans have informal off-the-books jobs that do not qualify them for unemployment benefits, making the situation on the island even more complicated, said Amanda M. Rivera, the institute’s executive director.
The poverty rate did not climb after Hurricane Maria in 2017, she said, despite experts’ predictions, because so many people left the island. “After the hurricane, there was a valve, a place people could go where things were normal,” Ms. Rivera said. “Now that people don’t have that valve, that’s a real concern.” Roberto Rivera, 55, a driver for a guided tour company, slept in his car one night a few weeks ago, his crutches by his side, so he would be the first in line for a short-lived drive-through service center established by the Labor Department to receive disaster unemployment assistance applications.
The scene resembled gasoline lines that formed during Hurricane Maria, but were much longer, as thousands of people traveled overnight from different parts of Puerto Rico to arrive at the convention center before sunrise, driving on dark highways where the streetlights have not been turned on since government austerity cuts three years ago. “I arrived here at 11 p.m. — I need the money, I have to pay rent, buy food,” Mr. Rivera said. “I submitted everything a month ago, and I haven’t received anything. I’ve been surviving with the little I have left.”