For those who stay, rich welfare benefits provide a disincentive to work. A household of three can receive $1,743 per month in food stamps, Medicaid, utility subsidies and welfare compared to minimum-wage take-home pay of $1,159.
So the generous safety net makes it more profitable to not work.
Employers are required to provide 15 days of vacation and 12 sick days annually and a $600 Christmas bonus. Government employees make up a quarter of the island’s workforce.
In addition, the employer mandates raise the cost of employing people so there employers are leaving the island as well.
Nice
ReplyDeleteThe unemployment rate in Puerto Rico is running at nearly 12%. More than double the rate of the U.S. coming in just over 5% for the average for 2015. (tradingeconomics.com, 2015) Why is this the reason because incentives are not in place to drive workers. With being able to receive $1,743 monthly for a family of three and minimum wage only bringing in $1159. It is actually giving people incentives to continue not to join the labor force and further milk the benefits. Puerto Rico needs a way to better align the incentives to encourage people to return to work. Possibly increasing minimum wages and decreasing the amount of welfare support to swing the pendulum in the other direction, however because of high demand of employer benefit requirements for employees businesses are leaving to markets where they can be more profitable.
ReplyDeletePuerto Rico Unemployment Rate | 1976-2015 | Data | Chart | Calendar. (n.d.). Retrieved October 18, 2015, from http://www.tradingeconomics.com/puerto-rico/unemployment-rate
Unemployment and welfare benefits give very little incentives to people to make them want to rejoin the workforce. There are people who are trying and honestly need the help, but in my experience there are many just milking the system. At my previous job at a bank, some customers would come in every month and say here's my beer money. Unemployment must start doing a better job of paying benefits only to those trying to get a job, and not approve of every case that comes to the state. I've seen many people who should not be eligible for unemployment get it with ease. New York requires people on unemployment to apply to at least three places per week in order to keep receiving benefits. Unfortunately the downside of this is people apply and once they are in the interview they will say they are only there so they can fulfill unemployment's requirements, wasting the employer's time. I'm not sure there is a way to completely have a perfect system, but if improvements continue to be made where rules get a bit more strict and we keep working toward having the people who truly need the benefits receive them, it's a step in the right direction.
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