1 – Puerto Rico's Fragile Labor Market

On a previous note ABEXUS Analytics highlighted the fact that almost 2/3s of Puerto Rico’s labor force is not currently employed. Such a number was derived from continued unemployment claims, plus the working age population who is not participating in the labor market. Such sum could be highly questioned since both measures are fundamentally different. However, sometimes being unorthodox provides a fresh perspective! See our previous graph on post COVID unemployment. (please press over the graph to see how the sunburst changes, it took a lot of coding!)

We thought we landed the 3 Carabelas in the New World with such fact! But “fortunately” one of our team members put all that hype to the floor when he noted that we left out almost 400,000 jobs from such simple sum. That is, Puerto Rico’s job market is not only limited by unemployment claims and labor force participation, it should consider all the jobs that were “saved” by the U.S. federal government’s Paycheck Protection Program (PPP). If such program was not enacted, it is fair to say that a great portion of such workers would have ended up in unemployment claims (most probably PUA). When we add all of those jobs, the number follows Elon’s Musk latest SpaceX Dragon trajectory.

The following pie chart presents total salaried employment divided between those jobs that were preserved by the PPP, those that received no aid, and continued unemployment claims for mid-June. This essentially presents an economy in which almost 60% is either unemployed or could have been unemployed if not for the PPP. Therefore, COVID-19 put at risk over 600,000 jobs, of which the rescue packages saved 385,000 and are providing unemployment for the remaining 221,000.

Jobs Protected by the SBA's PPP & Those Covered by Unemployment

2 – Why we Almost Got the Bronze Medal

Yet, the story is not over, everyone likes to see how they rank compared to others. Well we did that and decided to analyze last week’s data dump by the U.S. Small Business Administration (SBA) [Tip: do not try to open the file on Excel, Open Office… it wont tolerate the whole file. Instead, call that shy friend of yours and ask him/her to use Python, R, or any other big-data app. After combining all states, a dataset of almost 5 million observations can be expected]

By using data on the recipients of PPP loans we were able to get a detailed assessment of ALL the businesses and Non-for profit entities that have benefited from the program. The program added almost $1.4 billion to the economy of Puerto Rico, and around $659 billion to the U.S. economy, mainly in the form of salaries and wages. A “fair” comparison required that we control for the size of the labor market in each jurisdiction in order to see that magnitude of the effect at the local level.

As a pertage of total salaried jobs, the PPP jobs that were preserved were located mainly in the mid to mid-west of the United States. In these states the PPP helped preserve anywhere from 38% to 52% of the salaried jobs as reported by the Quarterly Census of Employment & Wages.

This doesn't mean that the program wasn't effective in the states hardest hit by the pandemic. Merely that the level of inter-connectivity in the U.S. economy meant that states with a small number of COVID-19 cases, felt a direct impact of the economic slowdown. (So much for the interstate commerce clause!)

Jobs Protected by the SBA's PPP as a Percent of Salaried Employment

Its no surprise that Puerto Rico ranked #4 in terms of the jurisdiction for which PPP loans saved most jobs, relative to the total number of jobs. One should expect that the PPP program had the strongest effect in the poorest jurisdictions in the U.S. since more businesses depended on such loans to stay afloat.

The above is a perfect example of why ABEXUS believes that data without context is useless or even deceiving. If one limits the analysis to the number of businesses that received such loans, then SMEs would have dominated the program. However, when the data is contextualized one can note that large businesses were the ones that benefited the most in terms of actual dollar amounts and most probably had the resources to tap into those funds before anyone else.

Thank you & stay tuned for further updates!