10.6.2001
War on Terrorism
In Rhode Island - Tourism, service workers feeling economy's pinch

Their numbers don't yet appear on unemployment lists, but many employees are getting fewer hours and smaller paychecks.

By Lynn Arditi
Journal Staff Writer

Kenny Gengo, a driver for Corporate Limousine in North Providence, didn't make it into the unemployment survey released yesterday.

Neither did the 40-plus room attendants, lobby cleaners, bellhops and kitchen staff at the Crowne Plaza Hotel at the Crossings, in Warwick.

But what has happened to those workers since Sept. 11 may say a lot more about the condition of the labor market than anything you'll find in the unemployment numbers.

Nationwide, the Department of Labor reports the unemployment rate last month didn't budge from 4.9 percent, where it was prior to the terrorist attacks.

That might give some people comfort, but economists say it shouldn't. The unemployment rate is like a rear-view mirror: it only reflects what's behind you.

"The unemployment rate can mask what's really going on in the labor market," says Jared Bernstein, a labor economist at the Economic Policy Institute, in Washington, D.C.

The damage done to the labor market, both before and after Sept. 11, isn't showing up yet in the unemployment numbers.

To get a better view of what lies ahead, talk to people like Gengo, the taxi driver.

One morning this week, Gengo was cruising around Providence in cab No. 2, a 1999 Crown Victoria, in search of fares. He slowed down at the Amtrak station. Five other taxis were waiting in line. Empty.

Gengo, whose shift started at 3 a.m., had already been working seven hours and had made just $96 in fares, plus $13 in tips. It was 10:30 a.m., the start of the three-hour stretch the drivers call The Black Hole. That's when they cruise up to the Amtrak station or one of the downtown hotels and wait. And wait. And wait.

These days, The Black Hole seems to be getting bigger. Ever since Sept. 11, airport travel is way down. Hotel rooms are going empty. And guys like Gengo are seeing their paychecks dwindle.

No more "sweet runs" to Logan International Airport, in Boston, where the meter runs up to $105, Gengo says. "This has put a major crunch on all of us. Hell, people aren't making the money they used to."

Gengo gets paid on commission. That means 40 percent to 50 percent of his fares, plus tips. If he doesn't have riders, he doesn't get paid.

"I was used to making between $600 and $800 a week," Gengo says. "Now I'm lucky if I can bring home $550 or $500."

Normally at this time of year, Gengo says, he would be buying Christmas presents on layaway. On his list: two VCRs and two TVs for his kids, and a $169 commercial-style electric mixer for his wife. But with fares down, Gengo has put off buying gifts.

Gengo's situation illustrates the vicious downward spiral that economists say is likely to push the country into a recession. Workers' paychecks shrink, they spend less, and that, in turn, slows the economy.

A recession is generally defined as two consecutive quarters of negative economic output, or gross domestic product. So far, the nation's GDP has been growing, but barely.

Consumer spending, which accounts for two-thirds of the GDP, has been the last leg propping up a weak economy. In August, the latest month for which data are available, consumer spending was rising at less than half the rate it was in 1999, according to The Conference Board in New York.

Mounting corporate layoffs and a falling stock market had begun to shake consumer confidence even before Sept. 11. Then came the attacks.

"I have little doubt that GDP will contract in the third quarter," says Bernstein, the labor economist. "That in tandem with the pervasiveness of job losses should erase any doubt that the labor market is in recession."

Nationwide, more than 200,000 workers in the airline and travel industry have now been laid off since the attacks — numbers that won't show up in the unemployment rolls until next month.

How many of those layoffs will be in Rhode Island isn't known yet. But the impact will be significant. The travel and tourism industry alone accounts for roughly 1 out of every 13 jobs in the state.

Another sign of trouble ahead: workers' hours are down.

Buried in the employment numbers released yesterday was this unsettling statistic: the number of people who wanted full-time work but couldn't find it last month jumped by 860,000. That's the biggest monthly increase in more than 10 years, says Walter J. Marshall, regional economist at the Department of Labor.

At the Crowne Plaza Hotel at the Crossings, in Warwick, more than 40 workers have had their hours cut due to falling hotel occupancy rates in the weeks after Sept. 11, says Rudi Heater, the hotel's general manager.

Those workers, who include room attendants earning $8 to $9 an hour, have seen their hours drop an average of about 30 percent, Heater says.

"If someone was working a 40-hour work week," Heater says, "now perhaps they're in the 25- to 35-hour range."

While workers are having trouble finding full-time jobs, the Labor Department said yesterday that American businesses last month shed 199,000 jobs, the biggest monthly loss since February 1991.

This makes job-hunting doubly tough for unemployed workers like Steven Schwartz.

Schwartz, 39, who grew up in Providence, was earning "six figures" as a director of interactive marketing at a dot.com company in California. Last May, the firm went belly up.

Unable to find work on the West Coast, he and his wife and two daughters, ages 4 and 17 months, moved back to Rhode Island in July. They've been living in a rental in Greenville.

"Right now, it's day to day," Schwartz says. "I get up in the morning and I'm on the phone . . . You have to stay positive because what else can you do?"

Schwartz says he feels among the lucky ones. He has saved enough money to buy a $277-a-month catastrophic-care health-insurance plan for his family so they're covered in an emergency. His wife, Gail, recently completed her Ph.D. in psychology and is looking for work.

And Schwartz has a good support network. He and some other unemployed friends recently began meeting for brunch.

But the pressure to find work is growing. His unemployment benefits run out at the end of next month.

"The problem right now is there's nothing out there," Schwartz says. "A lot of good conversations. A lot of good people making contacts. But no jobs."

 




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