Yes, it’s true. Like Greece, Illinois, and California, Puerto Rico’s economy is in such shambles that its $73M (USD) debt isn’t payable, according to the Territory’s Governor Alejandro Padilla.
How did this happen?
With 202 members of Congress circulating a proposal to increase the minimum wage to $12/hour by 2020, they should first have taken a close look at what President Obama’s $7.25/hour minimum wage increase has done to the Territory of Puerto Rico.
Stores have closed. Windows are boarded up. More and more able-bodied adults aren’t working. Why? The U.S. federal government has forced Puerto Rican businesses to pay their workers more than the prevailing market rate. As a result, new business aren't interested in coming to the Territory and those businesses that that are currently operating can’t afford to keep or hire new employees.
A former International Monetary Fund official, Anne O. Kruger, along with with Ranjit Teja and Andrew Wolfe have co-authored a report pointing to the U.S. federal minimum wage as the primary reason that only 40% of Puerto Rico’s adult population is legally employed or seeking work.
Back in 1998, liberal Nobel economics laureate Paul Krugman asked: “So what are the effects of increasing minimum wages?” His answer: “Any Econ 101 student can tell you the answer: The higher wage reduces the quantity of labor demand, and hence leads to unemployment.” Krugman then opined:
…the broader political movement of which the demand for a living wage is the leading edge is ultimately doomed to failure: For the amorality of the market economy is part of its essence, and cannot be legislated away.
How come the President and Congress don’t?
Let the discussion begin…
To read the Krueger report, click on the following link: