Recovery Trickles Down Very Slowly

Finances Improve for People Who Already Have Jobs and Money

For Immediate Release:

January 16, 2004

Contact:Jonathan Weisman

The Washington Post

CANTON, Ohio -- Cathy Wyatt is putting the finishing touches on her trendy coffee shop, Carpe Diem, opened just eight weeks ago. She is paying meticulous attention to her upscale clientele, complete with offering hard-boiled eggs marked for the Atkins-conscious crowd.

It may not fit with northeastern Ohio's hardscrabble image, but, she said, industrial Canton's old downtown is in a bit of a renaissance. "It's nothing for people to spend three and six dollars a day on their coffee," Wyatt said.

Just around the corner, however, the Stark County Department of Job and Family Services waiting room is standing room only. In the lobby, escaping the cold snowfall outside, a forlorn Monique Simmons, 21, waited for her ride, baby asleep at her feet.

"I've been looking for a job for two years," she said, recounting her last work at a local telemarketing firm, a job she left and now can't get back. "It's always, 'We'll get back to you.' I just hear a lot of excuses."

The contrast between the pulse Canton's economy is starting to feel on the high end and the stagnation painfully evident in the lower tiers points out a significant national trend: After three years of fits and starts, the economy is revving back to life, but at least so far, its fruits have gone mainly to those who least need them.

"If you have investments already, and if you have a job already, the last 12 to 18 months have been very nice to you," said Gary Burtless, a labor economist at the Brookings Institution. "The stock market has done well. You can refinance your mortgage. You can finance your new cars at very favorable rates, and prices haven't been rising.

"But if you are looking for a new job or had the misfortune of losing a job, for those folks, life is much, much tougher. It's just so damned hard to get employment."

The uneven gains of the economy in the past months have already become political fodder for Democrats seeking to unseat President Bush. Sen. John F. Kerry (D-Mass.) never misses an opportunity to rail against the "Bush-league recovery" for "the people in the corporate boardroom."

Political speeches aside, the widely divergent views on the economy's health expressed by the residents of Canton could speak volumes for Bush's standing in such industrial swing states as Ohio. It is a truism that no Republican has ever gone to the White House without winning the Buckeye State, and Stark County -- short on party loyalties and long on political independence -- has long been a bellwether. In the 2000 election, Bush beat Democrat Al Gore here, 48.9 percent to 47.1 percent, a margin only slightly closer than the statewide tally.

Nationally, the two-tiered economic gains appear to be playing out on a grand scale. Holiday sales at Neiman Marcus department stores were up nearly 13 percent over the holidays compared with the previous year. Tiffany's sales jumped 16 percent, as the affluent rewarded themselves for their upturn. Dana Telsey, chief retail analyst at Bear, Stearns & Co., calls it "self-gifting."

Yet Wal-Mart, which serves a less glamorous clientele, posted gains of only 3.9 percent, barely meeting analysts' expectations.

On Wall Street, bonuses will be up 20 to 30 percent from last year, according to industry experts. Alan G. Hevesi, the New York state comptroller, recently said he expects Wall Street bonuses to total $10.7 billion for 2003, an average of $66,800 per employee.

But for hourly workers elsewhere, average wages last year rose by 26 cents, or 1.7 percent, the Labor Department said last week.

The Dow Jones industrial average rose 25 percent in 2003, a boon to those with investments. At the same time, consumer debt such as credit cards and auto loans hit a record $1.98 trillion in October, $18,700 per household, the Federal Reserve reported this month. The number of past-due credit card accounts rose to an all-time high of 4.09 percent from July through September, according to the American Bankers Association.

The number of personal bankruptcies during the 12 months ending Sept. 30, 2003, rose to 1.66 million, up 7.4 percent from the 1.54 million filings in fiscal year 2002 and another record.

The economy grew at a remarkable 8.3 percent annual rate in the third quarter of 2003, but by October, there were 2.8 unemployed people for every job opening, up from 2.51 a year earlier and 2.25 in 2001, according to the Economic Policy Institute. Unemployment rates for managers and professionals stayed steady last year, at just under 3 percent.

But jobless rates have risen steadily for lower-paid service occupations, from 6.4 percent in 2001 to 6.6 percent in 2002 to 7 percent last year. Unemployment in production and transportation jobs finished the year at 7.2 percent.

Stark County may lack the high-flyers of Wall Street, but like its politics, the local economy is something of a bellwether. The stirrings on its Market Avenue have yet to translate into jobs. The unemployment rate of 5.8 percent in the Canton metropolitan area in November mirrored the national rate, but was up from 5.3 percent a year before, and slightly higher than the 5.7 percent in October. Employer payrolls fell here last year, to 180,900 in November, from 182,900 a year before, according to the Labor Department.

"A lot of people here are moderate income, middle class, and a lot of people are upset," said Canton Community Improvement Administrator Mandwel D. Patterson, who is running for the Ohio legislature this year as a Republican. "The president has to do a better job explaining what he's trying to do."

JoAnn Shade, the co-commanding officer of the Salvation Army here, said her operation is keeping 150 families a day supplied with groceries, up 15 percent over the past two years.

Her husband and co-commander, Lawrence J. Shade, said he had laid-off steelworkers, once earning as much as $30 an hour, ringing bells for him this past holiday season, for $5.15 an hour. Some of those now on assistance were Salvation Army contributors a year ago.

It's not Tiffany's, but the Shades' bell-ringers outside the shopping center that houses the relatively high-end Kohl's coaxed in $2,000 to $3,000 more than they did last Christmas. In all, donations this past season were up $165,000, Shade said, and the Canton Salvation Army's mail appeal was also a success. But the familiar kettles outside Wal-Mart pulled in $6,000 less.

Blue-collar struggles stand to reason. Canton's Hoover Co., the struggling U.S. vacuum-cleaner maker, laid off 500 workers in June. Timken Co., the world's largest industrial bearings maker, hosted President Bush last year as he pitched his third major tax cut in three years. Then Timken announced it would cut about 900 jobs.

A decade ago, about 2,000 people worked at Republic Engineered Products Inc.'s Canton steel mill. Now the company employs 650 in the Canton area, and even those may be at risk. Republic declared bankruptcy in October.

"We used to have a middle class in this country, a blue-collar worker," Larry Shade lamented. "Now, those blue-collar workers are working fast food. There is no middle anymore."

There has been a response from the county's movers and shakers. Chamber of Commerce officials are sprucing up downtown. Loudspeakers in the central square blare catchy pop music. The chamber's "Canton Can" campaign is pushing the city as a tourist attraction, trying to lure tourists from the Pro Football Hall of Fame on the highway into town.

And, of course, city officials talk big of fostering computer businesses, biotechnology, fuel cell development -- what Patterson called "new-market industries."

"There is life out there," he insisted. "We've got more technology companies than we know about."

Whether it's working seems to be anybody's guess.

"Some people think it's terrible around here; other people think it's great," shrugged Heidi Adams, a buoyant Republican businesswoman who bought the old Locker's Restaurant next to City Hall just last week and turned it into her third Samantha's restaurant. "I had a distributor just yesterday tell me things have really turned around."

Across the street from Samantha's Downtown, Carol Prince, a bartender at Bender's Tavern, took Shade's view. She recounted the flood of applications over the holidays from laid-off factory workers looking to wait tables.

"Everybody's closing down," she said with a sigh. "Nobody thinks the Hoover plant's going to be here in five years. Timken's going down the drain."

Larry Shade agreed: "We see the human side of it. You can look at the numbers. You can say things are getting better, but come on, what's going to replace a Republic Steel?"

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