Puerto Rico’s funny labor data
Les recomendamos el artículo: “Puerto Rico Employment Trends–Not Quite as Bleak as They Appear”: http://t.co/bfKbul5IqA
— La Fortaleza (@fortalezapr) February 14, 2014
The Federal Reserve Bank of New York made a big splash by pre-announcing that the Bureau of Labor Statistics would revise the employment data for Puerto Rico upwards. Here are the revisions that the NY Fed says that the BLS will make:
Oddly the BLS website shows different employment figures for Puerto Rico than what the NY Fed references. The BLS shows Puerto Rico employment as 1.04 million in June 2012 (an unemployment rate of 14.1 percent) versus approximately 1.01 million in June 2013 (an unemployment rate of 13.2 percent). The decrease in the BLS unemployment rate is due to a large shrinkage in the labor force of 40,322 year over year.
The NY Fed employment figures actually match quite closely to the data that the Puerto Rico Government Development Bank publishes in its monthly Economic Activity Index (page 1). So it’s difficult to know exactly the source of the data that will be revised. Notably the two sets of data vary by approximately 100,000, which is substantially larger than the NY Fed’s claim of an adjustment of 34,000.
Setting aside the small adjustments that the New York Fed claims will be made to the Puerto Rico employment data and the large variation in datasets, it’s astonishing that no mention was made of Puerto Rico’s underground economy. This untaxed and unaccounted for part of the economy has long been a problem for the Commonwealth. Puerto Rico’s government sponsored a study in 2010 by Estudios Técnicos to assess the size of the underground economy. It found that over 20 percent of economic activity was conducted away from the formal economy:
These estimates are larger than the estimated 18-19 percent of underground economic activity in the United States. With a quarter of economic activity happening away from formal structures, estimating small employment revisions seems rather dubious. The GDB also publishes data for gasoline consumption and electricity generation. This data suggests that labor revisions will not be as positive the NY Fed suggests. Stay tuned.