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This talk examines processes and mechanisms of racial identity and racial threat in relation to the Puerto Rican diaspora. The “ethnic competition model” (Bonacich 1972; Cunningham and Phillips 2007; Medrano 1994, Olzak 1989, 1992; Van Dyke and Soule 2002) provides a theoretical explanation for the struggles over political and economic resources between ethnic groups. Previous research on ethnic competition has found that threats emerge in highly competitive markets where different ethnic groups overlap, or are perceived to overlap in a specific sector of the labor market in which workers are thought to compete for job within a zero-sum relationship (Cunningham and Phillips 2007; Medrano 1994, Olzak 1989, 1992; Van Dyke and Soule 2002). As a consequence, ethnic competition theory provides a powerful explanation for how variation in ethnic mobilization relates to intergroup struggles over scarce resources. However, the tendency to capture such relationships at the aggregate level, through macro-level proxies of intergroup competition, offers little insight into the processes through which ethnic grievances mobilize into contentious action. This talk seeks to understand the relationship between identity formation and racial threat (perceived or real) their mechanisms and processes, the role of power, racial interests (material or ideological), and inequality. To answer these research questions I conducted 40 unstructured interviews and a 2-year participant. I argue that this is a process of differentiation from other Latinos and other racial groups to establish a Puerto Rican distinctiveness. Discussions of racial difference serve as a stepping-stone towards boundary making, which enables ethnic and racial competition.