Puerto Rico’s social situation is a bit more complex than the traditional bourgeois versus proletariat class conflict. Puerto Rico has a large underemployed class, heavily dependent on government social programs and handouts and commonly referred in a derogatory fashion, mantenidos or cuponeros. More than half of Puerto Rican families in 2007, for example, received food stamps. Similarly, 1.7 million Puerto Ricans depend on the government’s free health care program, tailored for low-income citizens. In addition, participation in the labor force hovers at about 39%. Public assistance recipients are often the subject of extensive criticism from other sectors, with many citizens blaming them with the fault as to why Puerto Rico is in crisis.
“In the last 20 years we have developed generations accustomed to dependency, and not hard work,” stated Ramón Luis Rivera Cruz, Mayor of Bayamón.
Ramón Cantero Frau, a former president of the Government Development Bank, referred to the mantenidos as “a class of lazy, thieving, mooches created by the welfare state; encouraged by each incoming government.”
Many honest, hard-working citizens are guilty of criticizing this group, comparing their own worsening economic condition to what they believe to be better off, non-working, non-productive recipients of government assistance. Stories of the “ay bendito” mentality, widespread tax evasion and high-profile corruption busts make it easy to label welfare recipients as opportunistic and fraudulent. Twitter and Facebook posts on the matter are riddled with working-class citizens, students and public sector employees ranting on about the burden that the mantenidos represent for the rest of the island.
Nevertheless, one must analyze the bigger picture as well as the various different manifestations of public assistance to see that almost all Puerto Ricans in one way or another are mantenidos.
Public university students, for example, are charged tuition rates way below the market rate, with the state heavily subsidizing their post-secondary education on all levels. Considering the high number of public university graduates that leave Puerto Rico for higher-paying stateside employers, one could argue that benefiting states such as Florida and Texas are mantenidos. On the other hand, Puerto Ricans drive on roads and enjoy public infrastructure funded by federal dollars that the state government could never possibly finance itself. Likewise, almost 230,000 public employees and over 120,000 public sector retirees largely receive more retirement benefits than they pay through their contributions, with the bill being picked up by taxpayers. Puerto Ricans also enjoy generous state-provided car insurance, also charged way under its market value. Finally, the Commonwealth government closes each fiscal year with a deficit, meaning that all Puerto Ricans in one way or another receive more services than their tax contributions actually pay for.
The privileged classes and “big interests” seem to receive lucrative benefits as well. Factories and hotels operate with subsidized utilities; government agencies subsidize the hiring of employees in private firms; and countless industries and businesses receive generous incentives, preferential treatment and tax exemptions. At the current moment, for example, the Commonwealth legislature is considering $17 million for infrastructure improvements for the development of a private shopping mall called the Sambil de Guaynabo. Said project is also receiving $700,000 from the city government as well as 63 acres in government land. In 2010, the Department of Labor subsidized Walmart hiring with a $3.3 million grant. Walmart also received a 75% local business tax cut for its Barceloneta store, as well as $421,552 in salary subsidies, 5 years of business tax waivers and 10 years of local property tax exemption for its Santurce store. This is despite it owing almost $857,000 in property back taxes in 2009 and almost $1 million in sales tax. Ironically, Walmart actively encourages its employees to apply for public welfare, which in practice is yet another subsidy for the company’s low wages.
When it comes down to it, citizen and consumer actions are primarily fueled by economic incentives. Puerto Rico’s private market, in turn, has not been very successful in creating the ideal conditions for a motivated and productive workforce. The reality of the matter is that even full-time employed workers often live in poverty. One study carried out by the Center for a New Economy concluded that a single mother with two children would earn a net income of only $37 if she were to trade in public assistance program for a minimum wage job. Considering the scaled income-based formulas for public assistance programs, obtaining work while on welfare can actually result in recipients that are materially poorer than when solely receiving assistance. Not to mention, turning off the faucet on public assistance programs would flood the market with primarily low-skilled and cheap labor, further worsening dire labor conditions. Sure, in theory the market would “level out,” but the dangerous social crisis that would ensue in the meantime is undeniable.
Citizens critical of el mantengo cannot lose focus that the bulk of the island’s assistance programs are directed towards families with children. For example, almost 40 % of the island’s youth under 18 lived in households that receive public assistance. Without programs that assure adequate access to food, child malnutrition can lead to a series of even deeper social problems such as mental health deficiencies, among others; in turn creating a generation of citizens even more dependent on the state. One could try to argue that the inability of a parent to feed their children is a question of parental negligence, but a rehaul of social services and the placement of possibly hundreds of thousands of children under state custody would shadow the costs of the current welfare system.
Without a doubt, the system is poorly designed. Initially intended to redistribute wealth, social assistance programs when combined with generous benefits for public employees, budget deficits and countless incentives packages and subsidies for industry and commerce are now placing much of the burden on other sectors of the population. When money destined to nutrition for the poor, for example, ends up in the pockets of fast food franchises, multinational supermarket chains and imported foreign food, the ensuing exportation and concentration of wealth defeats much of the purpose of public assistance.
There are quite a number of short-term reforms that could maximize the collective benefit of public assistance, as well as continue to provide a safety net for the most vulnerable. Reforms to the local food stamp program, for example, to grant preferences to locally produced good could assist towards the creation of local jobs as opposed to capital flight. Preferences or quotas for healthy, nutritional foods such as fruits and vegetables would assure that the program maximizes the nutritional aspects of the program. A “fat tax” that increases the cost of unhealthy foods while using its revenues to subsidize first necessity and high-nutrient foods will increase the consumption of healthier foods. Finally, relocating a portion of funding from food purchasing programs to expanding public school-provided meals. Similarly, shifting funding from rent subsidy programs to expand public childcare or in-home assistance for the elderly would also assure funding reaches those who need it.
These proposals attempt to maximize the benefit of such programs while simultaneously maintaining the purchasing power of recipients and increase bigger-picture socioeconomic benefits. Though there are a myriad of federal regulatory hurdles that would have to be cleared for some of these suggested reforms, special exemptions and increased flexibility for federally-funded programs have already been negotiated in the past. For example, in 1981 the U.S. Congress allowed Puerto Rico to break off from the Federal Food Stamp program, channeling said funds into the locally-administered Nutritional Assistance Program (PAN). The PAN program allowed for increased local flexibility while at the same time reducing federal expenditures. There is no legal or administrative impediment for Puerto Rico to seek further reforms in other program areas, especially during a time where the U.S. Congress is eager to decrease costs and maximize efficiency.
It is time that critics stop looking public assistance recipients as the only mantenidos. The public dollars spent on public assistance should not be perceived as a waste, but one of many public safety nets that shield the population from the deficiencies of the private job market and staves off even higher public costs for future generations. Most importantly, when coupled with a few reforms, these expenditures have the potential to be a monolithic motor for social and economic development.
Luis Gallardo is a municipal legislator from Puerto Rico. He has an MPA from Valdosta State University and a JD from the University of Puerto Rico. You can connect with him at @LuisGallardoPR.