Vicious cycle of voter despair: frustration of job-seekers, wariness of employers CAMPAIGN '92

THE BALTIMORE SUN

WASHINGTON -- The presidential candidate who convinces voters that he can bring the Eamonn McGeadys and Bill Griffithses of the nation together will almost certainly win the keys to the White House this election.

Eamonn McGeady is an employer who is relying on his employees' overtime rather than new hiring to meet any increased demand. Bill Griffiths is unemployed and still aggressively job-hunting after six months on the dole.

Mr. McGeady's caution and Mr. Griffiths' frustration are at the crux of the nation's major economic problem: a lack of jobs. Putting America back to work has become the central theme of this year's election and will be the prime challenge for the next president.

There is a vicious economic cycle at work here: The lack of jobs erodes consumer confidence; weak consumer confidence restrains spending; low spending crimps production and hiring, reinforcing the lack of jobs.

"I think you have to have much more stability in the jobs market before we are going to be out of this recession," said Ramon Rasco, a Miami businessman and lawyer.

"You can reduce interest rates down to 1 percent or zero, and if people don't have a job, or are afraid of losing their jobs, they are not going to go out and get a house or a car loan."

The Federal Reserve last month lowered the discount rate to its lowest level in 30 years, but it might have to take further action to spur almost moribund consumer demand.

Mr. McGeady is president of Martin G. Imbach Inc., a heavy equipment and marine construction firm based in Baltimore. He attributes the depressed economy to the growth of the federal, state and local tax burden, and to a lack of business credit from loan-leery banks.

His company, which lost almost 20 percent of its work force during the recession, has successfully bid on a combination of private and state contracts, opening the prospect of new hiring. But he said: "If we have a peak requirement right now, we are far more likely to work overtime than to hire new people."

That does little for the likes of Mr. Griffiths, a 45-year-old veteran of 20 years in the banking industry who is still looking for work after six months, 130 applications and just four interviews.

"It's like a dog running around after its tail," said the Adelphi, Md., resident, who starts every day with a computer search at the Lanham branch of the Maryland Department of Economic and Employment Development's Job Service. "How do we stimulate the economy if there is not enough confidence right now to bring products or services for the public to buy?"

Mr. Griffiths, who is targeting his administrative and managerial skills toward small companies, said: "It's an aggressive campaign. Employers are inundated, with 500 or 600 resumes for one position. I fell into that category in one instance. People are just applying for anything, just to try to get their foot in the door."

This recovery has generated fewer jobs than did any of its recent predecessors. In fact, unemployment in June grew to 7.8 percent, its highest level in eight years, before dropping a tick, to 7.7 percent, in July. More shocking was a shrinkage of 117,000 in the work force. Just to cope with the normal influx of new workers, 100,000-plus jobs must be created each month.

In recent months, there has been a surge of 700,000 job-seekers entering the market, lured out of disillusionment by the hope that economic prospects were finally improving, driven by desperation when the loss of a single high-paying job forces a family to take two low-paying jobs, or simply pushed by the clock from student to income-earner.

Brad Pratt, 22, who graduated from Towson State University in May with a degree in mass communications, is working two jobs: One day a week he is a $10-an-hour storeroom manager at General Motors Corp; the rest of the time, he is a $6-an-hour security officer at Towson Town Center. He wants to be a movie or television producer and writer, but after sending out 500 resumes nationwide, 100 of them in the Baltimore area, he has settled temporarily for "make money" jobs. He takes in about $250 a week.

"Most of my friends are doing manual jobs, as opposed to their career choices," Mr. Pratt said. "It's so bad, you become excited about even getting a job at Burger King, and before, you thought you would be the world's best film producer."

Francis LeMire, director of career placement at Towson State University for the past 22 years, said, "It's probably the tightest and most difficult it's been since I can remember."

Technically, the recession -- defined as two or more quarters of negative economic growth -- ended last year. The economy has shown positive growth since, but the expansion has been too weak to create enough jobs to keep up with the increasing numbers of those wanting work, let alone to reduce the number of unemployed.

"Tell me how we can create new customers, and I will tell you how we can create new jobs," said Ben King, owner of Gaylord's Lamps and Shades in Bethesda, Md.

Mr. King, who has weathered the recession without laying off any of his 12 workers despite a drop in volume last year, said: "There is an excellent opportunity now for anyone who needs good personnel to find good personnel, just as there is an excellent opportunity for people who need space to find space, or an excellent opportunity for people who need equipment to find equipment. But I don't know of anybody who is charging ahead that positively. We are content to hang on."

In Fort Lauderdale, Fla., J. Erik Hvide, president and chief executive officer of Hvide Shipping, said, "We are certainly very cautious of any new hiring still today, because it's obviously a lot more difficult to lay someone off emotionally as well as financially."

Hit by "total disarray" in the U.S. oil industry, Mr. Hvide has laid off 50 percent of his offshore oil supply workers -- 10 percent of his payroll -- in the past 12 months. He is now sending some of his rig-supply ships abroad as the U.S. oil industry looks further afield for its future.

"We have to follow them, and unfortunately you can't compete with American crews in areas where others are using Indians, Filipinos and Pakistanis," he said.

With enduring economic difficulty adding to this year's widespread anti-incumbent sentiment, the presidential candidates have emphasized their commitment to new jobs.

President Bush advocates a fast-track growth package. It includes a capital-gains tax cut to boost investment; a $5,000 tax credit and penalty-free IRA withdrawal for first-time homebuyers to help the housing construction industry; tax write-offs for new equipment and enhanced depreciation schedules to encourage business expansion; and tax breaks and incentives for commercial real estate developers and investors.

Bill Clinton has proposed a $200 billion federal investment over four years in transportation, communication, education and training. This is meant to spur growth, industrial productivity and international competitiveness. The emphasis of his economic program is on growth rather than deficit reduction, and it is designed to produce matching investments from the state, local and private sectors.

Mr. Clinton would pay for his program by cutting spending, including defense; tightening tax loopholes; and increasing taxes foreign corporations.

In his July review of the economy, Allen Sinai, chief economist of the Boston Company Economic Advisers Inc., said Mr. Bush was relying on "proposals of the past." He credited Mr. Clinton with producing "a sensible, if not solid" economic plan.

He added: "The financial markets must take a good look at Governor Clinton. . . . As an odds bet, President Bush is unlikely to win on so bad an economy."

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