Puerto Rico has one of the most dynamic economies in the Caribbean. The country’s status as an unincorporated territory of the United States means that people working here enjoy similar benefits to US employees, but they also face many challenges which people working elsewhere in the region need not worry about. Below we will give you a short introduction to working in Puerto Rico, including a brief economic history, a summary of the current situation, and some practical information.
Up until the second half of the 20th century, Puerto Rico’s economy was mainly driven by agriculture. Most people working in the agricultural sector were involved in the sugar cane production for the American market, which dominated the whole country. However, constant urban expansion claimed more and more flat land, while at the same time prices for sugar cane remained low.
As working in the country’s sugar cane production was no longer profitable, coffee became the most important crop. Since it can be grown in the island’s mountainous regions and is protected by minimum prices, coffee production is still a viable source of income for a number of people in Puerto Rico today.
In the late 1940s, the government launched an ambitious industrialization program: “Operation Bootstrap” was to shift the economic focus from agricultural production to manufacturing. The idea was to manufacture goods from imported raw materials which would then be exported to the US. The program was backed by significant tax incentives in order to encourage investment and participation of US companies.
Today, manufacturing still accounts for over 46% of the GDP (2014 figures). However, the emphasis has shifted from labor-intensive to more capital-intensive industries. Thus, most people working in Puerto Rico’s manufacturing industries are involved in the production of pharmaceuticals, chemicals, machinery, and electronics. The manufacturing of clothes and foods together employs just less than 30% of laborers in the manufacturing sector. Altogether, people in Puerto Rico’s manufacturing industries make up less than 10% of the total workforce.
At less than 1%, agriculture today holds an insignificant share of the country’s GDP and less than 2% of the workforce is employed in the agricultural sector. Still, coffee remains an important source of income for those working in Puerto Rico’s plantations. Other important crops include vegetables and fruits (bananas, plantains, pineapples), but also livestock, dairy products, and poultry. Most farmers in Puerto Rico produce for the US market.
Puerto Rico is classified as a high-income country with a median household income similar to that of Latvia or Poland. The country’s GDP of some 103 billion USD in 2014 compared favorably to that of other Caribbean nations.
Nevertheless, working in Puerto Rico entails a lot of challenges, both for expats and for locals. As an expat, you’ll have to get past the strict US immigration laws. For more information on visas and work permits, please refer to our guide on moving to the USA.
On top of that, most of the incentives for foreign companies and employees working in Puerto Rico have recently been revoked. Tax exemptions for US companies have been replaced with more modest tax credits linked to wages paid to employees in Puerto Rico, rather than to profits. In combination with US minimum wage regulations, which also apply to employees in Puerto Rico, this could result in many foreign companies looking to establish themselves in countries with cheaper labor. This, in turn, might significantly reduce opportunities for expats.
Another challenge faced by consumers as well as businesses is economic discrimination. Many US and multinational companies simply do not offer the same services and products to people in Puerto Rico as to the rest of the United States. The ordering of supplies over the Internet from a company on the mainland is often simply not an option for a small business. This limited access to products or discounts can be a serious obstacle to doing business and working in Puerto Rico.
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