Unemployment claims soar as Puerto Rico’s economy reels from a ‘Category 5’ hit

Richard Davila, the owner of Martinizing Dry Cleaning in Humacao, next to the ironing press machine at his still-shuttered shop. He can’t afford a $40,000 generator he needs to power his business and he’s stuck with $20,000 in unpaid work.
Richard Davila, the owner of Martinizing Dry Cleaning in Humacao, next to the ironing press machine at his still-shuttered shop. He can’t afford a $40,000 generator he needs to power his business and he’s stuck with $20,000 in unpaid work.

Waiting in line at the unemployment office, Pedro Ferrao listed all the things he had lost in the hurricane.

“My kitchen, my carpet, my bed, my couch, my clothes. My personal stuff. My shoes. Everything,” he said.

But the most devastating loss has been his job at a San Juan grocery store, which closed after Hurricane Maria wiped out Puerto Rico’s power grid. Without his regular income, Ferrao has been unable to buy enough food and water for his family or find formula for his infant daughter, who was born ten days after the storm.

“I don’t have food in my house, nothing,” he said. “Please, I need help.”

Like thousands of Puerto Ricans who have suddenly found themselves without work, Ferrao’s only options are to leave the island or apply for a meager unemployment check — at most $133 a week.

Since the Department of Labor reopened its offices on Oct. 6, at least 10,000 people have applied for unemployment benefits. That number is expected to keep growing. In just one week, from Oct. 19 to Oct. 26, the total number of new unemployment claims doubled from 5,000 to 10,000.

008 Maria Unemployment DS
Pedro Ferrao waiting at the Department of Labor building in San Juan during the aftermath of Hurricane Maria in Puerto Rico. Ferrao lost his job at a Freshmart grocery store after the storm. David Santiago

Even more Puerto Ricans have left the island. In Florida alone, more than 73,000 people have arrived from Puerto Rico through the Miami and Orlando airports and Port Everglades.

With hundreds of the island’s businesses expected to shutter permanently — and countless others to remain closed until electricity is restored — it’s unclear if, or when, Puerto Ricans will be able to return to work.

“We knew that one of the effects that hurricanes have in any jurisdiction is a potential effect on jobs,” said Carlos Saavedra Gutiérrez, Puerto Rico’s Secretary of Labor. “But Maria is a whole other ballgame. This doesn’t compare with anything.”

Long lines, small checks

In the first few days after the Department of Labor reopened, the line to apply for unemployment benefits in San Juan was so long that the office had to relocate and set up tents outside for the overflow. Officials saw between 800 and 1,000 people a day, said Carmen Morales Rivera, director of the unemployment insurance department. That doesn’t include the people who sought help from a dozen regional offices scattered throughout the island.

By the end of October, five weeks after the storm, the lines in San Juan had shortened. On Thursday morning, there were roughly 30 people waiting to apply for unemployment benefits or pick up their checks.

Julio Vallejo González had spent the weeks following the storm trying to repair his home while he waited for the restaurant where he worked as a line cook to reopen. On Oct. 26, when the restaurant still hadn’t managed to get a generator, Vallejo González filled out an application for unemployment benefits. His family — an elderly grandmother, an autistic uncle, his now unemployed partner and two children — had been surviving on his grandmother’s monthly $490 Social Security check.

Others had already filed unemployment claims, but were picking up the checks in person because of the disruptions in postal service.

009 Maria Unemployment DS
Rebecca Asad Alvarez, an employee at the Department of Labor in San Juan, helps Julio Vallejo Gonzalez apply for unemployment benefits. David Santiago

Analia Ríos had been one of the lucky few who was able to return to work after the hurricane. The dermatology clinic where she worked as a nurse had a generator. But a week after the storm, the diesel ran out and the clinic struggled to find more fuel. They decided to close.

Now, Rios was collecting $229 unemployment checks every two weeks. But it wasn’t enough, she said, and she was burning through her savings.

“I can’t get help from the government, I can’t get food stamps, I can’t get anything,” she said.

Saavedra Gutiérrez acknowledged that unemployment benefits aren’t a substitute for a regular salary. “Even though it’s help that’s available, it’s still an economic crisis for people that lost their livelihoods,” he said. Unemployment benefits are “designed as sort of a stop-gap measure” until the recipient “hopefully” finds another job, he added.

With 70 percent of the island still in the dark, however, finding another job is proving nearly impossible.

‘Hanging on by a thread’

Before Puerto Ricans can go back to work, businesses have to reopen. And for that to happen, they need electricity.

“Without a doubt, the majority of small businesses have had to close,” said Gov. Ricardo Rosselló, speaking last week outside a newly reopened elementary school. “We’re looking for mechanisms to help small and medium-sized businesses survive during this crisis. But the reality is that there’s going to be no greater help than getting electricity back in Puerto Rico.”

That is proving much easier said than done. Nearly six weeks after Hurricane Maria, Puerto Rico’s power company announced that it was canceling a $300 million contract with Whitefish Energy Holdings, a small Montana company hired to restore electricity to the island. The contract has drawn scrutiny in part because it was awarded to a company from Interior Secretary Ryan Zinke’s hometown that had just two full-time employees.

Although Puerto Rican officials announced Monday that the governors of Florida and New York have pledged crews to help restore electricity, Rosselló’s goal of restoring 95 percent of the island’s power by mid-December is looking more and more challenging.

006 Maria Unemployment DS
Carlos Saavedra Gutierrez, secretary of Labor in Puerto Rico, talks about unemployment at the emergency operations center in San Juan. David Santiago

And restoring power alone won’t put everyone back in business, said Alicia Lamboy, the president of Puerto Rico’s Chamber of Commerce.

“That everything’s going to normalize when the electricity comes, I don’t think that’s going to be exactly what happens,” she said. “I hope I’m wrong, but being realistic I think it’s going to take a long time.”

In addition to the lack of power, some companies have struggled to find supplies since the hurricane. Others have limited their hours of operation because of the high costs of running generators.

“There are some businesses that are hanging on by a thread,” Lamboy said. The Chamber of Commerce is trying to help its members survive, but even contacting the businesses to find out what they need has been a struggle. By mid-October, the chamber had only managed to reach 220 of its roughly 1,000 members.

Local and federal agencies are also attempting to keep the island’s businesses afloat. There are low-interest disaster loans available to help cover the costs of repairing storm damage, and small business owners who don’t qualify for regular unemployment benefits can apply for Disaster Unemployment Assistance from the Federal Emergency Management Agency.

But while businesses decide on their next steps, thousands of Puerto Rican employees remain in limbo.

Closed until further notice

It would be enough to devastate even the healthiest of economies. In Puerto Rico, where unemployment was at 10.1 percent before the storm, compared to 4.4 percent in the U.S. as a whole, the economy is now feeling a “Category 5 effect,” Secretary of Labor Saavedra Gutiérrez said.

“Puerto Rico had a very high unemployment rate, but we’d made progress,” he said, noting that unemployment had fallen from 12.2 percent when Rosselló first took office in January to 9.8 percent in July — the first time it had dipped below 10 percent in at least a decade. “That’s one of the sad things about Hurricane Maria and the crisis that we face,” he added.

It’s unclear what the unemployment rate is now. Puerto Rico’s government doesn’t yet have an official figure, but if the unemployment lines are any indication, it has likely shot up since the hurricane.

005 Maria Unemployment DS
A view of the Cardiovascular Laboratory building in Humacao, one of the many businesses that remain closed because of the power outages caused by Hurricane Maria. David Santiago

In the town of Humacao, 35 miles southeast of San Juan, small businesses were doing their best to hold onto employees.

A car stereo store, Carolina Music II, hadn’t fired anyone yet. “We’re trying not to for as long as we can,” said Carmen Rodríguez, who owns the store with her husband.

Sales had gone down 60 percent since Maria hit and some of the store’s suppliers had stopped delivering to Humacao. With crime on the rise in the neighborhood, Rodriguez had been locking up early every day. “They’re looting a lot,” she said.

At nearby Martinizing Dry Cleaning, owners Richard Dávila and Adriana Colón had been unable to afford the $40,000 generator they needed to reopen. The building’s roof had been damaged and the store had about $20,000 in unpaid dry cleaning orders clients hadn’t picked up since the storm. Dávila and Colón hadn’t laid off their four employees, but they also didn’t have any work for them. Two employees had already decided to leave for the U.S. mainland.

When electricity returns, “they know they can count on us,” Dávila said.

But he wasn’t optimistic about getting power any time soon. There were rumors about when local power lines would be repaired, but no official information. “They say it’s going to be this week, the next week, the one after that,” he said.