A (sadly) average Joe
People like Joe Vecchio aren't hard to find in this economic recovery""
Chances are, if you've lived in Atlanta the last few years, you know someone like jobless Joe Vecchio.
Georgia has seen its unemployment rate jump from a low 2.9 percent of the late-1990s dot-com boom to 5.3 percent last month. That's still ahead of the 6.4 percent national average. The problem is that despite tax cuts at the federal level and modest improvements in a number of leading economic indicators, no one's quite sure when the economy will start to add jobs. And once it starts adding jobs, how much improvement should we really expect? Is sub-5 percent territory realistic?
For Vecchio and his wife, Catherine, they're only interested in the creation of one job.
As Georgia Labor Commissioner Michael Thurmond says, "When the guy on the other side of town loses his job, it's an economic slow down. When your neighbor loses his job, it's a recession. When you lose your job, it's a depression."
The Vecchios are in depression territory. He has now been out of work a full year and without unemployment benefits for six months. His wife also recently lost her job, and now is having health problems. The pair lost their Alpharetta apartment a few weeks ago, Catherine's two teenage boys have been shipped to an aunt, and the Vecchios now reside in makeshift living arrangements in Midtown.
To find something to do with himself, Vecchio began volunteering for the Howard Dean presidential campaign in Georgia. Through the campaign, he met Phyllis Huster, who's letting Vecchio share her apartment for a few weeks while she helps him track down a job.
At first glance, Vecchio, a stocky man with bushy black hair and mustache, seems like someone imminently employable. He's a six-year Air Force vet, gregarious and well-spoken. Problem is, Vecchio's Air Force specialty — making precision measurements on electronic equipment — is of little use in the civilian world, unless you're a defense contractor. So he's kicked around from job to job over the years — a civilian job with the Navy in Italy, cell phone salesman, assistant manager of a photo processing lab — and endured short periods of unemployment, but nothing like this.
"It's been tough," Vecchio understates. "Two days before we had to move, we had no idea where we were going to be."
Last Friday, he signed up with another temp service and put in applications for an assistant manager's position at a Domino's Pizza and another one at a video store.
"The first couple of months, I sent out hundreds of resumes, and I got maybe three or four interviews," says Vecchio, who has never made more than $23,500 annually. "It was ridiculous. I was on ... nine different temp services."
Thurmond says he doesn't expect the job market to improve much.
"What we expect in the near-term is rising unemployment." If he had a magic wand, Thurmond says he would pour more resources into tax breaks and hiring incentives for small-business growth.
Meanwhile, he says the figures the public reads won't tell them the stories of people like Vecchio.
"Some studies show that there are as many as 2 million discouraged workers in America, and that is, people who have looked and can't find work and stopped seeking it," Thurmond says. "Then, in America, there are 9.4 million people officially unemployed, but then there are 4.6 million who are working part time but would prefer to work full time if they could find the job. There is a story beneath the statistics that is significant, particularly in this recession."
It seems like a dream that just a few years ago economists were worried that an unemployment rate below 5 percent would trigger inflation — the idea being that the rate would be so low that bidding wars for workers would break out among employers, who would then pass the increased costs onto consumers.
"People like myself who teach, something like 5 percent is what we would call full employment or a natural rate of employment," says Jeffrey A. Rosensweig, finance professor and associate dean of the Goizueta Business School at Emory University.
In the late 1990s, the national unemployment rate dipped to just 3.9. "Now that we look back, that era was ... like an episode from the Twilight Zone. On the other hand, I'm very distressed that the current unemployment rate is 6.4 percent. I think it's way too much suffering, and it means that there's a lousy job market out there."
But will the Bush tax cuts be enough to encourage people to buy more, get businesses making capital investments and hiring more workers? It depends, of course, on whom you ask, and so many factors complicate the answer.
For example, there's the extra burden that the tax cuts have placed on the states, something Georgia knows about first hand. Budget deficits at the state level are "taking at least half a percentage point out of the growth rate of the national economy," the Center on Budget and Policy Priorities reported recently.
And while half a percentage point in growth might not seem like a big deal, to people like the Vecchios, it could be the difference between having a job and remaining unemployed.
As New York Times columnist and Princeton economist Paul Krugman pointed out in an Aug. 15 opinion piece: "Just to stabilize the labor market in its present dismal state would probably take growth of at least 3.5 percent." Last quarter, it grew at just 2.4 percent.
Emory University economics Professor Stefan Krause predicts the tax cuts will make a difference — probably just in time for the presidential elections in 2004. Jobs are usually the last things to recover from a recession, and he believes a natural rate of unemployment could be somewhere between 4 percent and 4.5 percent. The main factor, he believes, is a matter of raising consumer and investor confidence, which will get people buying and encourage businesses to make investments in equipment and manpower.
Vecchio, of course, is worrying about the power of one man. His last job paid $9 per hour, plus commissions, which weren't much, so the lead he has on a job as a property manager is especially promising — a place to live is included.
"It's a miracle we managed to hang on as long as we did thanks to charities and help from friends," Vecchio says. "I don't know how people are getting by these days."