The mayor assures that the University of Arizona's analysis uses data from years prior to his administration, but the report reveals weaknesses that transcend the capital city.
The mayor of San Juan, Miguel Romero, became mayor of the capital city in 2021. (Nahira Montcourt)
Following the publication of a report by the Center for the Study of Economic Liberty at Arizona State University that ranked San Juan as the worst city in the United States for doing business, the mayor of the capital, Miguel Romero Lugo, said that the results of the analysis are based on data prior to his arrival at City Hall.
"The information in this study is based on data corresponding to calendar years 2019 and 2020, prior to my assuming the reins of the capital city," Romero Lugo established in written statements sent to El Nuevo Día.
Romero Lugo referred to the years when the mayor of San Juan was Carmen Yulín Cruz.
According to the analysis, San Juan ranked last, when measuring the degree of ease of doing business in 83 U.S. cities. The results were released by the Institute for Economic Liberty (ILE) this week.
For research purposes, ease of doing business refers to how a jurisdiction's regulatory framework and public policy are conducive to business creation and operation.
"Nevertheless, this is a very important issue for me, because this administration has stood out for its commitment to promote economic development in the capital city and to continue supporting small and medium-sized businesses as well as new entrepreneurs, who are the engine of our economy. It has always been in our best interest to facilitate the processes so that new businesses can continue to emerge in San Juan," added the municipal executive.
Romero Lugo also defended that, as a result of his economic development initiatives, the number of commercial establishments in San Juan increased by 12.5% after assuming the mayor's office. Specifically, while in December 2020, there were 10,938 businesses in the capital, the number rose to 12,309 in March of this year, according to the municipal executive.
"On the other hand, the number of jobs rose from 230,000 in December 2020 to 250,000 in March of this year, an increase of 20,000 jobs or 8.7%. We will continue working to have the position this city deserves," Romero Lugo added.
Researchers at Arizona State University's Center for the Study of Economic Liberty scored and ranked cities on 93 variables and 30 indicators in six categories: starting a business, hiring workers, getting electricity, paying taxes, using land and space, and resolving insolvency.
The "weaknesses" of San Juan
On a scale of 0 to 100, San Juan ranks last with a score of 40.55. When breaking down the capital city's scores, however, most of the variables are not necessarily under the control of the city council.
In San Juan, starting a business takes the same number of steps as in the top-scoring cities: two. The cost of starting a business is equivalent to 1.25% of per capita income, estimated at about $20,027.
Changing the zoning of a plot of land, another of the criteria under evaluation, requires three authorizations versus two in the most competitive cities.
In the eyes of analysts, the variables that seem to sink San Juan are others. In the capital city, for example, the cost of electricity during the time period analyzed was calculated at 21 cents per kilowatt hour (kvh) or three times more than in the most competitive cities and the average of each interruption of electric service reached in those years around 778 minutes, almost 13 hours, or almost eight and a half times more than in the city with the best marks.
In Puerto Rico, the annual minimum wage -according to the report- is equivalent to 75% of per capita income. That is, about $15,020 or $7.82 per hour.
Instead of cities recognized in the United States for their business activity, the list of U.S. cities where it is easiest to do business, according to the report, is led by Salt Lake City, Utah, with a score of 84.86, followed by Boise, Idaho (83.87).
It is followed by Raleigh, North Carolina (83.22); Atlanta, Georgia (82.37) and Charlotte (81.87), also in North Carolina.
The "strengths" of leading cities
According to the researchers' analysis, in Salt Lake City, the cost of starting a business there was only 0.18% of the per capita income of its inhabitants, which by 2022, was about $39,126. In that city, it takes only two procedures to start a business and two business days to complete the paperwork.
The annual minimum wage in Salt Lake City is about $15,063 (about $7.84 per hour) or 38.5% of per capita income. Workers do not go through probationary periods, but neither do they have paid vacation or sick days. Pregnant women do not have paid maternity leave.
In Boise, Idaho - the second easiest U.S. city to do business in - workers also do not have paid sick, vacation or maternity benefits. The cost of electricity in both cities hovers around seven and eight cents a kilowatt hour, while the average outage lasts about 92 minutes and 130 minutes, respectively.
Although both cities levy federal, state and property taxes on individuals and businesses, procedures such as reclassifying the use of a lot of land or property only require two authorizations.
In a recent article in The Salt Lake Tribune, it was mentioned that some of the characteristics that make the city a good place to do business are its educated workforce and programs to encourage the creation of new businesses.
Meanwhile, a blog by First Utah Bank notes that Salt Lake City's "unique combination of affordable living, high quality of life, well-educated workforce and business-friendly environment makes it a prime location to start a business."
It also adds that the cost of living in Salt Lake City is 28.59% lower than in New York City, while the city's median home price is "considerably lower" than in many other U.S. cities.
In Boise, Idaho, the Boise Valley Economic Partnership (BVEP) notes that the Midwestern city has become home to a growing number of Fortune 500 multinationals. In Boise, at least one in three residents between the ages of 24 and 65 holds at least an associate's degree at the college level.
According to the organization, the cost of living, slightly below the U.S. average, the high standards of living enjoyed by the population, an ecosystem of 14 institutions of higher education, an infrastructure of transportation systems and roads that allow travel around the city in an average of 22 minutes, have been an incentive for companies from various sectors to establish themselves there and for others such as HP and Micron to set up corporate headquarters.
According to the University of Arizona analysis, Boise's per capita income was estimated at about $37,191 and its annual minimum wage hovered around $14,876, or 40% of per capita income. That would imply about $1,239 per month, or about $7.74 per hour.
Examining the scores for Atlanta, Raleigh and Charlotte, the other three cities in the University of Arizona's quintet of the best cities to do business in the U.S., they also show that the cost of starting a business as a percent of per capita income is around 0.20%; electricity costs are below 10 cents kvh. Workers in these cities also do not have paid vacation, sick or maternity leave.
This article was originally published in Spanish in El Nuevo Dia.
