Parade participants wave Puerto Rican flags on Fifth Avenue in Manhattan during the annual Puerto Rico Day Parade.
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Young adults in Puerto Rico are on fragile financial groundreveals a study.
About 47% of people surveyed in the United States are financially fragile, meaning they don’t have confidence in their ability to absorb a $2,000 economic shock, according to a study. a September report from the Financial Industry Regulatory Authority Investor Education Foundation.
“This is the first time a study of this nature has been done in Puerto Rico,” said Harold Toro, co-author of the report. He is also research director and chair of economic development research at the Center for a New Economy, an economy-focused think tank based on the island.
“It highlights things that people feel and experience, but that are hard to find numbers for,” Toro said.
More than half, or 59%, of adults ages 18 to 29 on the island are financially fragile, compared to 47% of those ages 30 to 54 and 41% of those ages 55 or older, according to FINRA. The organization surveyed 1,001 adults living in Puerto Rico in 2021.
“Puerto Rico’s financial fragility and financial capabilities in general … are quite dire when we compare them to those of the mainland United States,” said Olivia Valdés, co-author of the report and senior fellow at the FINRA Investor Education Foundation.
Financial fragility, particularly among young adults, is much higher in Puerto Rico than on the mainland United States. More than half, or 59 percent, of 18- to 29-year-olds are struggling financially in Puerto Rico, compared to 38 percent of the same age group. in the United States, according to FINRA data.
About 30% of all U.S. residents were considered financially fragile in 2021, according to FINRA’s latest U.S. Financial Capability Report. reportwhich surveyed 27,118 U.S. adults in 2021. The Puerto Rico survey was separate, but conducted at the same time.
The younger generation has been experiencing financial difficulties for more than two decades.
Vicente Feliciano
founder and president of Advantage Business Consulting, a market analysis and business consulting firm in San Juan, Puerto Rico
Many young adults leave Puerto Rico to try to improve their financial situation, seeking education or employment in the United States or other countries. For the young adults who remain, the generation faces a economy currently recovering, a electrical network hanging by a thread and exorbitant costs for basic needs like accommodation.
Understanding why young Puerto Ricans are financially fragile could help efforts to retain young residents and bring working professionals back to the island, experts say.
But “living in Puerto Rico can’t just be about survival, it also has to be a place where you can thrive,” said Fernando Tormos Aponte, an assistant professor of sociology at the University of Pittsburgh.
Young Puerto Ricans are “going through a tougher time”
Certainly, a certain degree of financial stress is typical of people just starting out. Generally speaking, financial situation improves with age.
But financial fragility is greater among young adults in Puerto Rico than in the United States.
“People who are younger seem to have a tougher time,” Toro said.
Adults ages 18 to 29 in Puerto Rico are less likely than adults ages 30 and older to report having emergency and retirement savings, FINRA found.
Less than a quarter, 22 percent, of 18- to 34-year-olds in Puerto Rico have a retirement account. Among this age group in the Americas, 43% do so, according to FINRA’s broader analysis.
Young adults in Puerto Rico are also more likely than older residents to have student loan and medical debt.
Younger generations only know a Puerto Rico in crisis
Puerto Rico’s economy “is doing pretty well,” said Vicente Feliciano, founder and president of Advantage Business Consulting, a market analysis and business consulting firm based in San Juan, Puerto Rico.
The job market has improved and wages are growing at a faster rate than inflation, thanks to the increase in the minimum wage, Feliciano said. While the federal minimum wage in the United States is $7.25, it is $10.50 in Puerto Rico.
Private sector employment was at a 15-year high since mid-2022, according to at the Federal Reserve Bank of New York.
Yet the median household income on the island was barely $25,621 in 2023, less than a third of $80,610 median household income in the Americas, according to census data.
Even though recent years have been better, for adults under 40 in Puerto Rico, “most of their working lives were overshadowed by the depression that Puerto Rico went through from 2006 to 2015,” Feliciano said.
“The younger generation has been struggling financially for more than two decades,” he said. “They’ve seen a lot of their friends leave the country. They’re frustrated. They’re accusing the traditional (political) parties of something that may not be their fault, but it’s real.”
“We want people to come back.”
Alejandro Talavera Correa moved to Washington, DC in 2019 for a job in finance. The role and pay were too good to pass up, he said: “People have to leave to get a competitive salary.”
But a few years later, he found himself returning to Puerto Rico.
Talavera Correa, now 28, found an opportunity to return to Puerto Rico through El Comeback, an online job site designed to include job postings that meet market salary standards or offer social benefits to potential candidates.
“We want people to come back,” said Ana Laura Miranda, project manager of El Comeback. “We have to be realistic. We have to invest in employees and if we don’t have the salaries, we have to create benefits.”
According to Miranda, the audience that primarily uses the platform is in their 20s or 30s. They range from single adults to families with children.
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The initiative is still in its early stages and has attracted and retained 51 applicants, Miranda said.
Applicants are often looking to be close to family or recapture the sense of belonging or warmth that comes with being in Puerto Rico, Miranda said. But young workers returning to Puerto Rico could face new financial challenges.
“There will always be some drop in pay,” because six-figure salaries are not as common on the island as in the United States. And “Puerto Rico is not cheap,” Miranda said. “The cost of living…it’s real. We can’t ignore that.”
The island, like the mainland United States, has a real estate market that is unaffordable for many residents, and having a car is essential for getting around because public transportation services can be unreliable.
Talavera Correa was lucky enough to purchase a condo during the pandemic, when mortgage rates were low.
“If you don’t have that kind of money, you’re basically forced to rent or live with your parents,” Talavera Correa said.
Yet like most Puerto Ricans on the island, he still struggles with regular power outages and electricity problems. They send him to his mother, where the service is more reliable thanks to its solar panels.
“Power outages and electricity issues are pretty recurring,” said Feliciano of Advantage Business Consulting. “Electricity is a major difference between the United States and Puerto Rico and it hits the younger generation harder than the wealthier, older generation.”
Despite the challenges, Talavera Correa is happy with his decision.
“It’s basically the quality of life you can have here in Puerto Rico. You have the beaches, everything outdoors and the opportunity to have a happy life,” he said.
“But if that comes with economic constraints, or just general living conditions regarding electricity, water… that disappoints a lot of people (who) come back.”
