By Sin Comillas staff May 17, 2021 https://sincomillas.com/las-13-recomendaciones-para-evitar-la-perdida-de-poblacion/
Increasing the minimum wage to $8.75; eliminating restrictions imposed by social programs; promoting microfinance; supporting entrepreneurship or supporting women to facilitate their access to the labor market are some of the recommendations presented in the study "The Execution of Public Policy: Measures to Stabilize the Population", conducted by Estudios Técnicos, Inc. for the Foundation of the College of Certified Public Accountants (Fundación del Colegio de Contadores Públicos Autorizados (Fundación CCPA).
The 2020 Census results confirm that in 10 years Puerto Rico's population has decreased by more than 500,000 people. Emigration, together with the reduction in the birth rate, has caused the population to shrink and change its age composition.
The study presents the following recommendations:
1. Law 80
The Fiscal Control Board proposed the elimination of Act 80 and convert Puerto Rico into an "at will employment" jurisdiction. This measure is based on the fact that only one state, besides Puerto Rico, is not an "at will employment" jurisdiction. Implementing this measure could impact out-migration if it achieves two conditions: an increase in the demand for labor due to the effect of lower costs and that this increase in demand leads to an increase in the wage level.
Minimum wage
It is recommended that the minimum wage be increased to $8.75 per hour. This measure should be accompanied by other measures aimed at increasing labor productivity.
3. Technical and Vocational Education Program
The proposal is to follow the model of other jurisdictions and separate the Program from the Department of Education, provide it with autonomy and a Board of Directors composed mostly of private sector representatives.
4. Work and social assistance programs
Puerto Rico is one of the few jurisdictions in the United States where there is no work requirement in federal programs such as SNAP (Supplemental Nutritional Assistance Program). In the United States, the federal government requires that everyone - with some exceptions - who receives food assistance must register for work, and penalties are imposed if they are offered work and do not accept it. In Puerto Rico, since SNAP funds are received as a block grant, this requirement does not exist.
5. Earned Income Tax Credit
At the federal level it has been in place for years and in Puerto Rico it was implemented, but with such low payments ($400) and such inefficient management that it had no effect. The 2020 Budget allocates $200 million to the EITC. Evidence suggests that it is effective as a mechanism to stimulate labor participation in conjunction with the previous measure.
6. Eliminate restrictions imposed by social programs on the income that people can generate by becoming employed or starting a business.
This limit is one of the reasons why the informal economy is so large in Puerto Rico, about 28% of the formal economy. The legislation that could be suggested would allow the generation of income that would be equivalent to twice what a person would generate if he or she worked full time and received the minimum wage.
7. Lifetime Training Programs
These programs are aimed more at keeping people in the labor force, but they can be an incentive to participation to the extent that they include people who, because of their skills, do not find work and join the ranks of the "discouraged". The problem here would be to create the "outreach" mechanism and design a program with flexibility so as to facilitate access to training programs. As life expectancy increases and uncertainty with pension plans also increases, it is to be expected that people will remain in the workforce longer. For that reason, lifelong learning assumes even greater importance.
8. Microfinance and support for entrepreneurship
These programs exist in Puerto Rico, but are limited in scope. The experience with the two microfinance programs was not positive in part because of a lack of knowledge about the labor market and markets in general. There were some successes, but little impact. It would be necessary to organize training programs for people who are out of the labor force prior to providing them with financial assistance and to provide them with support once the enterprise is established. Such training may be a condition for receiving certain assistance. In some jurisdictions a "voucher" is provided to the person that can be used to participate in training programs. In Puerto Rico there are several programs dedicated to stimulate entrepreneurship (Guayacán, Piloto 51, for example), but they are not directed to people outside the labor force who typically require additional support and training in financial and managerial issues.
9. Social support for women to facilitate their access to the labor market.
This measure is mentioned in the literature as one of the most effective in increasing labor participation. Among the measures are subsidies to child care and elder care centers. A variation is to offer what are known as "Conditional Cash Transfer Programs," in which access to cash is provided if certain conditions are met, for example, that the person enters the labor force and uses the cash to pay for care.
10. Matching of jobs and people
One problem in Puerto Rico is the lack of awareness of employment opportunities, which makes it difficult for people to respond to employment needs. Communication channels are not the most appropriate for reaching people outside the labor force. Although Internet penetration in Puerto Rico has increased significantly, there is still a high percentage of low-income and elderly people who do not use the Internet and social networks. The alternative is to use communication mechanisms that directly reach the populations to be impacted. What is suggested is the creation of a labor market information system whose main responsibility would be to communicate employment opportunities to people who are unemployed or out of the labor force.
11. Flexible schedules
One obstacle to labor participation is the fact that work schedules conflict with, for example, the needs of women with childcare responsibilities. Flexible schedules could make it feasible for many people to enter the labor force and increase family income. The same could be achieved by encouraging part-time work, which in Spain has had positive results in improving labor participation. The Labor Transformation and Work Flexibility Act of 2017 (known as the "Labor Reform") allows for the extension of flextime to exempt staff and sets the conditions for flextime arrangements. What is suggested is to amend such Act not only to allow flextime arrangements but to encourage them and to establish more precisely the conditions that should prevail once such schedules are agreed upon. By allowing better access to employment opportunities, the measure could be an important factor in stabilizing the population.
12. Integration of employers and the education system
If one of the problems is the rupture between what the educational system produces and the needs of business, the suggestion is that the business sector be more directly involved in educational policies and programs. The creation of a business advisory board with the responsibility of providing direction to the public education system is something that would facilitate the desired integration between labor market needs and the education system.
13. Public policy to optimize Human Capital
It would make it possible to integrate education, training and support programs for people to access the labor market, to make the labor market more flexible and, in short, to have what has been called "Active Labor Market Programs" (ALMP). This policy does not exist, nor has it ever existed. In the 1950s and 1960s, as mentioned above, there was a Committee on Human Resources in Puerto Rico whose mission was precisely to provide the basis for such a policy. The Committee's work influenced the work done at the OECD on the labor market issue. A similar mechanism should be established, possibly a governing entity in charge of executing the Human Capital Policy, with broad participation of the private sector, following, for example, the model of Fundación Chile.