Day+13+Bureau+of+Economic+Research

BUREAU OF ECONOMIC RESEARCH VISIT

Today we went to the Bureau of Economic Research and spoke with the CEO, Mr. Perceival E. Clouden. When we got there the women of the office had made us a wonderful Carribean lunch with chicken, tilapia, salad, macaroni and cheese, cake, and fruit. The food was delicious - one great part of the lunch was the macaroni and cheese (Some people even asked for the recipe)! They used an all-purpose carribean seasoning in a lot of their dishes.

After lunch Mr. Clouden talked to us about the processes that occur for a business to begin on the island. Officials there spoke to us about a lot of topics, and we asked them many questions. As a group we have learned a lot about the U.S.V.I. after being here for two weeks, so what Mr. Clouden discussed was familar and easier for us to understand.

He explained what the Economic Development Commission was, and explained how it helps to bring businesses into the U.S.V.I. economy. In the U.S.V.I. they give a 90% tax break on all gross reciepts for many incoming companies. This may seem like a detrimental number, but the other 10% of taxes equals millions of dollars of revenue. And this revenue is only coming to the U.S.V.I. because of the tax break that is offered. These tax breaks are reminiscent of the tax breaks that we have in Michigan for the film industry.

Another topic that we questioned Mr. Clouden on was public school funding. The U.S.V.I. has a $300 million budget for education - more than any other carribean nation. Despite this many people we have talked to say they send their kids to private schools if at all possible because the public schools bad. Mr. Clouden blamed the issue on the difference in teachers in public and private schools, not on the funding.

We also talked to him about minimum wage compared with cost of living in the U.S.V.I., which is higher due to limited land and the need to import goods. They recently did a study based on a standard bread basket of food and determined a U.S.V.I. person needs a minimum of $10 an hour to survive. However, the minimum wage here us the same as in the states – $7.25 an hour. Legally U.S.V.I. can make a law to increase the minimum wage, but as of now they haven’t done so.



The good news is the tourism industry is on the rise now that people are beginning to come out of the recession. The U.S.V.I. gets around 1.9 million cruise ship visitors per year, and 700,000 travelers by air. People who travel by air are here longer, and generally spend much more money in the U.S.V.I. economy. Because of this, they have been working to bring more money out of cruise ship goers, since they do come and go in a single day, and also to convince them that they should return to the U.S.V.I. as their next vacation destination.

According to officials the U.S. Virgin Islands are having a problem with “brain drain.” Many students are finding that the opportunities on the islands are limited. The University of the Virgin Islands is limited in the kind of classes that it can offer, and officials claim that there is a “salary problem” that has made going to go work on the mainland more attractive. The consequences from this are quite evident, as officials have actually created a local program aimed at recapturing some of the academic talent that has fled to the mainland for more lucrative job offers. Though the islands have experienced a loss in academic talent, many immigrants from other islands have continued to pour in.

This has become problematic in recent years. Many “down islanders”, people immigrating from islands further south on the island chain connected to the U.S. Virgin Islands, have immigrated to the U.S. Virgin Islands in droves and this is beginning to put a strain on the local housing market. Housing is already scarce and prohibitively expensive and public housing is not as plentiful as it needs to be. In all, and ironically enough, the U.S. Virgin Islands are overcrowded, but are simultaneously losing a significant chunk of their academically talented population.

The talk at the V.I. Economic Development Authority was very interesting. The discussions pertaining to local tax breaks, the minimum wage, “brain drain”, and overcrowding were especially enlightening. The U.S. Virgin Islands are a very unique part of America. Much of the economic activity here centers around tourism, which often only brings minimum wage jobs. Though this place is a virtual year round paradise, the cost of living here is very high and, though the U.S.V.I. has the power to raise the minimum wage, it seems unlikely to do so anytime soon. In all, the economic situation in the U.S.V.I is decent, but could use improvements. The fragility of the economy is alarming and this is made worse by a multilateral and very complicated dependence on mainland U.S. economic conditions.