Uncertain economy cuts closer to home
Easthampton shops' clients 'tired, scared'
Thursday, October 30, 20081
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EDITOR'S NOTE: The Gazette's new "Money Talks" series listens in as people in a range of Valley locations assess the weak economy.
EASTHAMPTON - A recession is when your neighbor loses his job, the saying goes. A depression is when you lose yours.
If that's true, listening to Valley residents express concern for their neighbors suggests we're in a recession now.
This month, I ventured into an Easthampton barber shop and a salon wanting to meet people in their own communities and see how they view the Valley's economic prospects.
Between cuts and colors, I found people frustrated by the nation's faltering economy, but confident in their ability to get by. I met people who are avoiding personal financial disaster by relying on a strong work ethic, cautious budgeting and a dedication to their community's survival.
"With some things I'm more conservative. We're not eating prime rib, but we're not eating hot dogs either, you know," said Keith Lenkowski, 50, owner of The Razor's Edge, a barber shop on the corner of Union and School streets in Easthampton.
It wasn't a busy morning for Lenkowski when I stopped by. His customers, many of whom have been coming for years, arrive in waves - early mornings before shifts start at Tubed Products Inc. or National Nonwovens, midday when kids get out of school - and whenever, it seems, Lenkowski wants to tuck into a hot lunch.
"I talk to a lot of people," Lenkowski said, sitting on a green vinyl chair and watching downtown Easthampton through a window of the shop's wood-paneled anteroom. "A lot are crying because they lost their jobs or they've got a new job with less salary. I'm not sure what's going on. Most people I talk to, Republican or Democrat, unemployed or employed, both parties, it doesn't matter. People are tired and scared."
Somewhere in the back, a radio announcer hawks new cars at low, low prices. Sun reflecting off the morning's frosted windows catches in creases in stacks of magazines and newspapers.
A recent University of Massachusetts report lists slow job growth as one reason the state economy, which is faring slightly better than the national economy, is headed for a recession, if not already in one.
The national unemployment rate in September stood at 6.1 percent. That month, Massachusetts had a 5.3 percent unemployment rate, which translates into 181,000 Bay State residents without jobs.
Retirement fund battered
A phone's tinny ring puts Lenkowski in motion. He takes a call from a longtime customer, Bob Misner, a 60-year-old Easthampton cattle trader. Five minutes later, Misner is sitting in Lenkowski's barber chair with a muted maroon and gold smock draped over him.
Like many people in the Valley, Misner is doing all right financially, not as well as a year or two ago, but all right. He still goes out to eat, just not as often as before.
He still tries to help his five kids and 15 grandkids with their bills or buy them new clothes, but not as much as he could have before the stock market slumped and Misner lost thousands upon thousands of dollars from his 401k.
Since the start of 2007 through the end of September, workers in Hampshire and Franklin counties lost an estimated $1.6 billion from retirement savings accounts due to Wall Street's collapse, a Gazette analysis shows. The average Valley worker with a retirement plan lost $30,190 from savings over that time period.
The Valley's loss is part of an estimated $2 trillion decline in pension assets over the past year and a half, as calculated by the U.S. Congressional Budget Office. The wreckage in portfolios has only gotten worse since the office ran its study.
"I don't know about your 401k, but mine's a wreck," Misner said through the roar of the hair dryer Lenkowski used to blow clippings from his customer's neck.
Misner had planned to retire in a year, but is rethinking that. Since his retirement nest egg took a hit, Misner will continue to work, buying and trading beef through his Florida business, until the stock market stabilizes. Maybe in another year or two, he figures.
"It's kind of sad at that age to stub my toe," Misner said. "I don't mind a mistake in the market. It'll correct itself anyway, but it's not a good thing to do. I'll continue with my business for another year or two. I guess I'm pretty secure, though."
Misner is also hoping for the price of beef to rise before he retires. Hamburger is king right now, Misner said, and not as many people are buying steak. People are trying to get their protein from peanut butter and pasta.
"People are shopping more thinking about the money transaction, how much they're going to pay for food rather than the price per pound," Misner said.
Food foremost
Given the talk in the shop, it is clear food prices are on people's minds in the Valley. Ask about the economy and one of the first things out of peoples' mouths is how much food prices have gone up - and the squeeze they feel in the checkout line.
In general, the cost of a trip to the grocery store has grown by 22 percent over the last five years, according to United States Department of Agriculture. In 2004, an average family of four with children age 6 and older, with a moderate grocery allowance, spent $183 per week on groceries. Last September, the same family spent $224, or $41 more per week. This family is spending $164 more per month on food in 2008 than it did in 2004.
A little farther down Union Street is Élan Hair Salon, Cheryl Campbell's beauty parlor. With her senior discount, Campbell's salon was bustling with senior ladies getting perms in the cream-colored shop, with its hand-painted ivy and peach-colored flower borders.
The cost of groceries has doubled, said a small, 84-year-old woman who declined to give her name. She said she gets by, but it is hard and she feels helpless. It bothers her that the nation is trying to borrow its way out of the financial crisis.
In August, (the most recent information available) foreign countries held $2.7 trillion in U.S. Treasury securities, with Japan and China owning more than $540 billion each. In August 2007, foreign countries owned 22 percent fewer securities, worth $2.2 trillion, according to the U.S. Department of the Treasury.
Unlike the nation, Campbell, the shop owner, is trying not to borrow.
In her green smock, with her brown hair twisted into a perky half-pompadour, Campbell talked about her son's college ambitions.
"I'm fine now, but talk to me next year," said Campbell, mindful of her son's future, " I'll be broke."
A junior in Easthampton High School, Campbell's 17-year-old son takes advanced academic classes and plays football and baseball. He wants to attend school in Boston, but Campbell, a 40-year-old single mother, worries she won't have enough money to send him to a $40,000-a-year private college. Campbell told her son to have a backup plan, maybe Westfield State College, a school charging $12,595 in tuition and fees this year for students living off campus.
"He's such a smart kid, he works so hard. We're hoping for a scholarship," said Campbell, who added with a halting laugh, "I don't make $40,000 a year."
As often happens in conversations about the economy, the topic soon turned to the cost of oil. Campbell turned her heat on and set it at 60 last week. After oil, I found that people were talking most about the presidential election and Question 1, a ballot measure that would repeal the state income tax and in the doing lop 40 percent out of the commonwealth's operating budget.
Back at the Razor's Edge, Chuck Perry, a 64-year-old Southampton man and retired state trooper, said he'll vote to boot incumbents out of office. No fan of "pork" spending, those earmarked expenditures for community and business projects, Perry's words were laden with disgust for politicians.
"People need to wake up and smell the roses, but there won't be any roses because no one will be around to plant them," Perry said.
"My pension's not going up - it may take a reduction," said Perry, noting the $1 billion in cuts Gov. Deval Patrick made this month. "The governor's gotten the commonwealth in this spot. They'll take care of themselves, just look what they did with the bailout ... look at all that pork attached to that. They just add it on to the bill and you know who pays for that? You and I pay for that."
"How far will it go down?" asked Lenkowski, the barber, as he pushed an electric trimmer up the back of Perry's head.
"Where's the bottom line?" Perry asked in return.
Young merchant adjusts
On another visit to Lenkowski's shop I found him talking business with his stepdaughter's boyfriend and fellow Easthampton entrepreneur Chris Hartman.
Hartman, 32, runs Hartman's Mojo Music Shop, a Union Street guitar store that offers music lessons. He moved back in with his parents last year to help his sick mother, but added that paying a minimal rent is a nice perk.
Hartman hasn't had to temper his spending much, although he is putting in more hours at his shop. "The more I work the less I spend," he said with a smile.
Hartman shops for deals at the grocery store and goes out to dinner with his girlfriend less often. But all in all, he said he's doing OK in this economy.
"I start each day thankful," Hartman said. "I haven't seen a huge change in my business. It's going pretty well, but you can see I'm looking for some wood to knock on," he added rapping his knuckles against Lenkowski's radiator.
Hartman is the kind of person that members of the boomer generation say they are most worried about - that is, their own young adult children trying to build their lives and livelihoods. Lenkowski has four children, including stepchildren. Two of his children cut hair for a living, another sells diamond-tipped construction equipment and his 17-year-old lives at home with him.
"I don't think the economy scares them right now, they make decent money," said Lenkowski, who after a pause added, "I can't make enough money to support kids through this life."
Emily Opatkiewicz, a 94-year-old Easthampton woman who retired as the dietitian at the former Northampton State Hospital 29 years ago, is not worried about her son, John, the city's high school athletic director. She can't. She's relying on him.
"If it wasn't for my son, I'd have a crisis," she said, while waiting for her appointment at Élan. Opatkiewicz's son assists in her daily life. He does all the shopping, drives her to her appointments, cleans and cooks. "I don't like to complain because I'm more fortunate than most," she added.
Opatkiewicz, like others interviewed for this story, said she isn't worried about herself. She'll be fine, even though she is concerned about her Social Security benefits. "What if they cut it off?" she asked.
Opatkiewicz is more concerned about her community.
"Everyone is worried. It's so hard," she said. "There are so many layoffs, so many people losing their jobs, half of them have no heat. It's scary out there."
