Residential Segregation in Puerto Rico and the Social Making of the Puerto Rican Welfare

            Prior to the 1970s, the Puerto Rican economy had been going through tremendous growth facilitated by the growth of a petrol chemical complex and oil refinery on this island. Between 1959 and 1973, a system quota had restricted oil imports to the U.S and this enabled Puerto Rican based American oil refineries to cheaply import oil from the Middle East and Venezuela. U.S oil companies operating on the island such as Sun oil, CORCO, Phillips and Gulf operated competitively with oil companies in Eastern U.S.A; making Puerto Rico an export platform for petrochemical products and leading to tremendous growth of her economy.

However, in the early 1970s, three major events negatively affected the Puerto Rican economy: the U.S dollar devaluated sharply, oil import quotas ceased in the U.S and oil prices increased. Worse still, the U.S economy was going through a recession and all these factors gave rise to various processes that halted the previously sustained island economy. The decline was so sharp that between 1973 and 1975, GNP fell from 5% to -1.8 5, a decline that ensured that the Puerto Rican economy would never get back to the high levels experienced prior to the 1970s. As a result, the 1970s has been described as a decade that is quite significant both to Puerto Rico and the U.S as it was marked by widespread economic restructuring and fiscal adjustment.[1]

            The result of the 1970s crisis was a sharp increase in the rate of unemployment as unemployment rates rose sharply from 10.7% in 1970 to 18.1% by the year 1975. After 1972, average wages in Puerto Rico stagnated and by 1980s had declined to $ 124 per week. However, the gender gap in wages for both men and women had reached very low ebb since the 1970s ranging at between $ 124-122 respectively. Gender gap in wages was however very narrow. By 1985, the rate of unemployment had skyrocketed to an alarming 21.8 % and would remain in that level until after 1995. This was the beginning of widespread poverty among the Puerto Ricans for which they have taken a large blame.[2]

            Poverty among the Puerto Ricans has been ironically referred to as the ‘welfare queen’ and has largely been blamed on bad motherhood. Although presented as a harmless symbol, Puerto Rican poverty is highly responsible for the massive movement of residents from this island to the U.S in search of better living standards. Poverty is quite high in Puerto Rico and its residents have widely been blamed for widespread rates poverty on the island whereby they are represented as hypersexual and bad mothers; notwithstanding that other factors could also be responsible for such rampant poverty. Such responsibility for poverty is what has been blamed for the rise of welfare in the Puerto Rican economy but other factors such as the structural issues of racism as well as labor should also carry a major part of this blame.[3]

            Several other factors such as race and labor have also played a part in the spread of poverty in Puerto Rico; Puerto Rico’s history is characterized by a mixture of races among the inhabitants which include Spanish, Tano and African cultures. But the nationalist ideology of blending or mestizaje has highly been questioned in relation to the blending of cultures because Spanish invasion led to the near demise of some other cultures such as the Taino and the influence by Africans is also usually overlooked. This failure of racial blending can be blamed for socioeconomic disparities among Puerto Ricans with blacks especially going through the bulk of the suffering.

The Puerto Rican social system is very different from that of the U.S whereby Puerto Ricans living on the U.S mainland appear to suffer more segregation mainly due to black history. On the Puerto Rican Island, roughly 96.3 % of inhabitants are Puerto Ricans and racial segregation is somehow similar to that observed in the U.S. There is evidence that blacks are isolated in communities where housing is poor and race has been linked with neighborhood location and socioeconomic status. Puerto Ricans however highly migrate between the island and the U.S in search of employment and they are therefore very familiar with the issue of race. Segregation by race is mainly evident in the large metropolitan areas whereby those racially undermined normally live in the less developed areas.[4]

            Beginning from the 1970s, Puerto Rican residents have largely benefitted from federal transfer payment approximating 25.6% during the decade. Since then, there has been a sustained flow of these funds to the Puerto Rican economy that has led to a creation of various myths that the Island’s economy as well as her population are highly dependant on federal funds; that these expenditures as one-sided ; and about the benefits of such expenditures. One of such myths is that all Puerto Rican residents live on federal transfers causing a heavy burden to the U.S taxpayer. The myth has its origin on the fact that after the 1970s, poor Puerto Rican families (about 500,000 living on the island) live on food subsidies such as nutritional assistance payments and food stamps among other programs.

These subsidies although being widely viewed as oppressing the U.S tax payer have greatly helped to reduce the gap between the rich and poor which would otherwise be very high. But an analysis of trends in federal disbursements carried out towards the end of the 20^th century revealed that though federal reimbursements grew during the 1070s, the situation remained stable through the 1980s. The analysis also revealed that federal subsidies largely benefited U.S corporations based in Puerto Rico; that Puerto Ricans receive most of their benefits from funds earned through services rendered to the U.S government or social security; veteran benefits; and federal employees’ pensions. Any changes in federal expenditures in Puerto Rico arise from changing U.S priorities on the island rather than the priorities of local agencies. Even after most U.S corporation pulled out of Puerto Rico, the federal government has continued to have some special interest in the island.[5]

            In Puerto Rico, segregation also takes place through socio-economic status although segregation by income is generally higher than segregation by race. But such segregation is still sizeable when compared to the same social issue in the U.S. In the major metropolitan areas, education is also a determinant factor of segregation whereby school graduates are separated from college graduates especially in terms of training and employment opportunities. This makes occupation another major factor that contributes to segregation although this form of segregation is quite moderate.

Segregation by residence is quite low although certain racial groups tend to aggregate in certain areas. Those with better opportunities in education and employment normally concentrate in highly developed residential areas although some low resident areas have received modern housing in response to high urban population growth. All these forms of segregation are however not uniform in all the major metropolitan centers and the cause and degree of segregation will vary between regions. In Arecibo and Aquadilla for example, segregation by race supercedes that by occupation or education and vice versa for other metropolis like San Juan –Bayamon, Ponce, Mayajuez and Caguas. Segregation in Puerto Rico is however moderate because most people identify that they all belong to one racial group and racial integration can somehow be considered largely successful in Puerto Rico. But areas that are home to most blacks like Loiza and some areas heavily occupied by Dominicans experience widespread poverty.[6]

Among Puerto Ricans, class has remained more important than race in measuring social as well as economic well-being. Segregation by amount of income earned has been relatively low especially in smaller metropolitan areas such as San Juan-Bayamon and Ponce. In such areas, evidence of class segregation is quite high and those residents earning less than $10,000 are segregated from the highest earners at $ 50,000 or more. Households also experience segregation in terms of income; with those earning between $15,000 to $24,899, being segregated from those at the $ 50,000 mark. But although segregation by income remains higher than racial segregation, it is still low especially in comparison to cases of income segregation in the U.S. Segregation by income is also high in Caguas and Ponce. About ¹/₃ of all households fall in the <$10,000 bracket and ganging from such an approach, the gap between the rich and the poor would be great without reimbursements; leading to worse segregation.[7]

            Poverty in Puerto Rico has attracted U.S attention for a long time. As far back as the 1970s, the Puerto Rican economic crisis attracted two striking events in the U.S federal government’s policy response to the crisis that was taking place, First, the U.S Congress increased Puerto Rica’s allocation in the food stamps program,; and second, section 936 of the Internal Revenue Code (IRC) was enacted both of which events occurred in 1976. At that time, the Puerto Rican poor constituted the poorest section of poor American citizens and the food stamps program was only intended to provide equity to these Puerto Rican poor but was not intended to restructure the economy. But section 936 of the IRC stated otherwise and through it, U.S corporations operating in Puerto Rico and other U.S possessions such as Guam and the Maria Islands were supposed to reinvest a large proportion of their profit into them so as to stimulate economic and financial expansion.

But these “936” corporations as they became popularly known would repatriate substantial profits to the U.S free of federal taxes after clearing with the possession government. Through section 936, U.S corporations doing business in Puerto Rico were not only allowed to repatriate money back to the U.S but the Puerto Rican government was also allowed to get some revenue from these companies. This repatriated income was free of federal taxes as a way of encouraging investment as well as re-investment on the island. Through the food programs and section 936 however, both corporate and individual welfare became two means by which the Puerto Rican economy would be stabilized. After 1975 however, federal spending in food subsidies to Puerto Rico increased dramatically, almost doubling from $ 388 million in 1975 to $ 754.8 million in 1996; an indication that stabilization of the economy was hard to come by.[8]

Conclusion

            By examining federal reimbursement in the Puerto Rican economy, a general perception develops that views the island as totally dependant on these federal transfers. Total federal reimbursements to Puerto Rico transferred in 1970 calculated in current prices for example amounted to $720.9 million and by 2000 had grown to $ 10,833.1. Federal funds act as a social safety net and macroeconomic cushion in Puerto Rican economy. U.S corporations are the major beneficiaries of federal reimbursements although repatriation of global profits to the U.S transnational corporations helps to sustain socioeconomic stability. These transfers can therefore be described as “corporate welfare” in disguise. Tax economies used on the island towards the end of the 20^th century helped to subsidize Puerto Rico; Puerto Ricans; as well as the U.S corporations based on the island. In whatever way these reimbursements are transferred however, there is a general perception that the Puerto Rican economy continues to depend highly on federal transfers.[9]

BIBLIOGRAPHY

Briggs, Laura. “Lavida, Moynihan, and other Libels: Migration, Social science and the   making of the Puerto Rican Welfare Queen.” CENTRO Journal Volume 219     Number 1 SPRING 2002.

Denton, Nancy A. and Jacqueline Villarrubia.  ‘Residential Segregation on the Island: The         Role of Race and Class in Puerto Rican Neighborhoods.” Sociological Forum,          Vol.22, N0.1, March 2007 (©2007) DOI:10.111/j.1573-7861.2006.00004.x.

Pantojas-Garcia, Emilio. “Federal Funds” and the Puerto Rican economy: MYTHS AND           REALITIES.” CENTRAL. Journal Volume XIX Number 2 Fall 2007.

                [1] [1] Emilio Pantojas-Garcia, “Federal Funds” and the Puerto Rican economy: MYTHS AND REALITIES, (CENTRAL Journal Volume XIX Number 2 Fall 2007), 208-209.

                [2] Ibid 210-211.

                [3] Laura Briggs, Lavida, Moynihan, and other Libels: Migration, Social science and the making of the Puerto Rican Welfare Queen, (CENTRO Journal Volume 219 Number 1 SPRING 2002), 75.

                [4] Nancy A. Denton and Jacqueline Villarrubia, Residential Segregation on the Island: The Role of Race and Class in Puerto Rican Neighborhoods, (Sociological Forum, Vol.22, N0.1, March 2007 (©2007) DOI:10.111/j.1573-7861.2006.00004.x), 53-55, 64

                [5] Emilio 208-215

                [6] Nancy and Jacqueline 65-75

[7] Ibid 65, 68.

                [8] Emilio 210-212.

                [9] Ibid 211-213, 215