Summary

One of the expected effects of Próspera (and ZEDEs in general) is more employment opportunities for Honduran natives at higher wages than the rest of the country. However getting access to these is not frictionless.

Getting physical residency in Próspera costs $260 USD for Hondurans. Even at this subsidized rate it is rather expensive for an entry-level Honduran worker. Minimum wage in Honduras is about $60 USD/week and unemployment is about 10% even pre-COVID, so few people will have that kind of cash on hand and be willing to spend it upfront.

An employer giving a job offer might be willing to pay that much and pay a slightly lower wage to compensate, but that creates the risk that the new employee will find work elsewhere ASAP. Trying to make a contract that forbids this job switching is possible but can be a pain to enforce.

A company could make a business of loans meant to cover this entry cost, recouping it from a cut of future paychecks later. It could charge a decent interest and if enforcing it is cheap enough it would be relatively low risk.

Why do this in Próspera?

The (likely) existence of a salary differential between two jurisdictions and a fixed cost to go from the lower-paying to the higher-paying one is what creates this opportunity in the first place. This business model already exists in other situations where this happens.

Open questions

Does PES already do this for the people they hire?

Their workforce is largely skilled workers that can do remote work, so their payback period would be much shorter. Still, it’d be worth seeing how they tackle this.

How does this interplay with background checks?

It’s unclear how much of the amount goes to cover the cost of running Próspera’s background checks, and whether the full amount is still owed in the case of a rejection.

How does the lender get its money back cheaply and reliably?

We don’t know yet how employers will do payroll and this affects the viability of knowing how much income the employee made collecting the fraction that is due to the lender.