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Puerto Rico: A Bellwether for Public-Sector Unions?

Kari Lydersen

Gutting collective bargaining rights, weakening environmental and other regulations, and laying off scores of public employees have been popular prescriptions for state budget crises this year in Wisconsin and other states. In a documentary broadcast last week as part of its Fault Lines series, Al Jazeera makes the case that the commonwealth of Puerto Rico is several years ahead of the American heartland in using such strategies.

Conservative Puerto Rico governor Luis Fortuno, who announced last week that he will run for re-election, has been praised by Republican mainland politicians and pundits for pioneering these tactics including layoffs of tens of thousands of public employees. During protests against Fortuno in New York this spring, Fox News’ Latin American affiliate also made the comparison to Wisconsin Gov. Scott Walker.

If Puerto Rico is any indication, the strategy of slashing public sector jobs and taking on public unions does not bode well for the economic and social well-being of mainland states, the Al Jazeera documentary argues.

Unemployment in Puerto Rico is at 16 percent, the average family income is about half that of Mississippi’s (despite a relatively high cost of living), drug abuse is rampant, crime is high and many islanders are fleeing to the mainland in search of jobs. The island’s economy is expected to be the slowest-growing in the United states this year, according to Al Jazeera.

The ministry of education is among the public agencies that have suffered serious cuts, including tuition hikes that have sparked student protests and violent clashes with police, with police behavior under investigation.

Events in Puerto Rico typically unfold under the radar screen of most Americans, hence many people are probably unaware that the island has been facing a severe recession for at least five years and also has been a battleground over the budget cuts, tuition hikes, environmental issues including a controversial gas pipeline and other things.

Al Jazeera’s website says:

The students’ fight is representative of a larger debate in Puerto Rico, and in the US, about how to solve a severe budget crisis — and at what cost. Fortuno, a hawkish fiscal conservative, laid off 20,000 government workers in 2009, and suspended all labour negotiations, just like governors on the U.S. mainland are doing today.

But two years later Puerto Rico’s labour unions are still scrambling to reorganise a largely unemployed population — nearly 17 percent.

The documentary narrator adds that Fortuno’s cutting thousands of jobs and passing the island’s largest tax relief in the island’s history are policies that made him a poster boy for conservatives in the mainland U.S.”

Fortuno has argued that cutting public-sector jobs has already paid off for the island’s economy. In June, he told PBS:

When I came in just two years ago, I was facing the worst state budget deficit in the country. It was 44 percent of revenues. We have been able, in two years, to close that gap significantly, actually to less than 11 percent.

Actually, just two years ago, our budget deficit, proportionally speaking, made us the last — dead last amongst all states and territories. Today, we’re 20th. That means there are 31 states that are worse off. And our credit rating has improved.

That means also that we have been able to lower taxes for individuals and corporations as well. And that is – actually, we’re starting to reap the benefits of that. Just two years ago, the unemployment was above 17 percent. Today, it’s around 16 percent.

In June, President Obama met with Fortuno, presumably to indirectly rally support for the 2012 elections from Puerto Ricans living on the mainland. (Residents in Puerto Rico can’t vote in federal elections other than primaries). Job creation was top on the list of topics the two reportedly discussed. Fortuno’s critics countered that slashing public jobs and giving tax breaks and regulatory passes to huge companies that channel the bulk of their revenue off the island without creating significant numbers of jobs is not the way to help Puerto Ricans.

In the documentary, economics professor Argeo Quinones calls Puerto Rico’s fiscal crisis a self-inflicted crisis” and added I don’t see the light at the end of the tunnel right now.”

Kari Lydersen is a Chicago-based reporter, author and journalism instructor, leading the Social Justice & Investigative specialization in the graduate program at Northwestern University. She is the author of Mayor 1%: Rahm Emanuel and the Rise of Chicago’s 99%.
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