Too little, too late?

Ben Teague of the Asheville Area Chamber of Commerce sees a light at the end of the tunnel for unemployed Buncombe County residents. Teague, who’s executive director of the Chamber’s Economic Development Coalition, says his agency has roughly $257 million in “active projects”: local companies may expand, or other companies could locate here. All that potential investment, he reasons, will ultimately mean good news for local workers.

"Jobs are opening up, from what we've seen, from some of the lowest-skilled areas to some of the higher-skilled, engineering-type professions with very high wages," he reports. "For an economy to go round, and to circulate and to act properly, an economy needs all different levels of job skills and functions. Somebody has to take out the trash for the business to operate."

But for former Arvato Digital Services employee David Willis, that potential job growth may be too little, too late. At his peak, Willis earned nearly $16 an hour manufacturing DVDs and CDs for Arvato's Weaverville facility (formerly Sonopress). Willis, who worked for the company for more than eight years, says he was among a select group chosen to go to Germany (Arvato’s home base) to learn their latest DVD-manufacturing techniques. A leading producer and distributor of music, movies, software and video games, Arvato also provides warehousing, financial and customer-care services.

In 2006, however, Willis says his situation began to unravel. New management came in and, seeing an opportunity to boost profits, began replacing many of the plant's full-time employees with temporary workers provided by staffing agencies. Earning far less money, these people did the same jobs Willis and his co-workers had done, and after years of steady employment, Willis says he suddenly found himself scrambling. (The company says it doesn’t talk to the press concerning personnel decisions.)

After being laid off by Arvato that fall, Willis managed to land a lower-paying job with another Weaverville manufacturer, Thermo Fisher Scientific, assembling cold-storage units for medical and research laboratories. But when a torn rotator cuff in his left arm made it impossible for him to continue moving the heavy units, Willis says he quickly found himself out of work again.

Since then, he’s worked a string of jobs through local staffing agencies, making between $8 and $9 per hour — and falling ever further behind on his mortgage. Now 47 years old, unemployed and suffering from degenerative disk disease brought on by years of manual labor, Willis turned to Pisgah Legal Services for help in staving off foreclosure on his home. The Asheville-based nonprofit serves low-income residents.

Willis' situation, says staff attorney Bill Whalen, is part of an "economic tsunami" that has devastated many Buncombe County workers. "Most of our clients were barely surviving anyway. They're barely keeping their basics together … and then wham! They lose their job," Whalen explains. Once that happens, he says, it often triggers a cycle of underemployment that can last for years, throwing the lives of whole families into turmoil.

Factor in spending cuts on social programs and you have a recipe for disaster. "The safety nets are being slashed. The debt collectors are coming out of the woodwork; they don't care," says Whalen.

Pisgah Legal attorney Mae Creadick cites the dramatic spike in the local foreclosure rates as evidence that residents who once considered themselves firmly middle class are now suddenly confronting poverty. "What you're seeing are these people who were stable homeowners go from making … well over $100,000 a year to zero," she notes.

Overwhelmed

Between 2009 and 2010, foreclosure filings tripled in the Asheville metropolitan area, which includes Buncombe, Haywood, Henderson and Madison counties. A record 1,496 homes went into foreclosure that year.

Meanwhile, social-service providers in Buncombe County say they’ve been overwhelmed with new clients. Since January 2008, the number of Buncombe County residents receiving food assistance has doubled, from 18,000 to more than 35,000 (about one in seven county residents), notes Tim Rhodes of the Department of Social Services.

The jump in the number of people receiving food assistance is especially telling. "The one thing we've always known about the food-stamp program is it really mirrors not only the national economy, but your local economy," he explains, adding, "I've been working with these programs for close to 30 years." Asked if he's ever seen a worse situation, Rhodes says flatly, "No — by far, no."

Buncombe County, he reports, is on track to spend between $56 million and $60 million on food assistance this fiscal year. In the mid-to-late ’90s, that spending routinely fell shy of $6 million per year, Rhodes reports.

Many of those now seeking food assistance and other county services are doing so for the first time and don't live in areas associated with poverty. In one study, the DSS tracked the number of people receiving assistance on Bear Creek Road in West Asheville from 2002 to ’09. During that period, the number of people on Medicaid doubled, from 39 to 77. The number of households receiving food assistance quadrupled (from five to 20), and the number of households receiving WIC (a federal program for women, infants and children under 5) more than tripled, from 14 to 50.

The Bear Creek Road area, notes Rhodes, is a good indicator, because it’s largely middle-class. In 2009, the median home price there was $199,213.

Unemployed, underemployed

Ironically, amid this grim news, Buncombe County’s unemployment rate has actually been declining. The latest numbers show 7.7 percent of county residents unemployed as of March 2011, down from a high of 9.7 percent in February 2010. Since the economic crisis began, however, the county's total labor force (which includes people actively looking for work) has declined by more than 4,500, from 123,396 in October 2008 to 118,812 in March 2011.

A lot of those workers have simply dropped out of the job market. As of this March, 109,600 people were employed in Buncombe County; a year earlier, there were 110,032. In other words, despite a markedly lower unemployment rate, the county actually has fewer people working than it had when the unemployment rate was 9.3 percent.

Before the economic downturn hit, says Phil Monk, director of business services for the Mountain Area Workforce Development Board, "Our unemployment rate in Buncombe County was around 3.5 percent. Employers were doing everything they could to find ways to upgrade the skills of the applicants out there in the labor force to fill the positions that they had." Now the opposite is happening: Those companies that are hiring can be far more selective. Monks agency provides training and career-development services for the long-term unemployed.

What that means, says Whalen of Pisgah Legal Services, is more people falling into poverty due to underemployment — which, in turn, puts more pressure on those folks who were already poor. "There's a huge number of people … middle-aged white males, who all of a sudden are flooding back into the job market, and they're taking the jobs that less-trained people used to take," he reports. "Every one of these things pressures down on the lowest-income, the most poorly educated. They're the ones who ultimately suffer the combined effect of all this."

Teague, on the other hand, attributes local underemployment to the area's considerable appeal for outsiders. "Underemployment is certainly a better situation than unemployment — completely,” he reasons. “But you're going to find underemployment when you have an area where people want to be, and Asheville's a fantastic place and a beautiful place.” Even when new jobs are created, he points out, “It takes time for that to translate into the overall economy, because you announce today 100 jobs, and it takes two years to fill that up.”

Blue collar, green collar

DeWayne Barton, co-founder and co-director of Green Opportunities, sees deeper reasons for the area’s underemployment problem. The nonprofit provides green-collar job training and placement for residents of low-income Asheville neighborhoods. In those communities, notes Barton, consistently high unemployment and underemployment are perennial problems. "When the economy was good, this population was still scrambling and couldn't find work," he points out.

Green Opportunities teaches these residents skills such as solar installation and weatherizing. Last year, the group says it placed 18 workers in living-wage positions with local companies such as FLS Energy.

While other businesses have struggled, FLS Energy has flourished, going from three founding partners in 2006 to more than 70 employees today. At a time when Buncombe County's construction-job sector has been hammered, the Asheville-based company, which installs large-scale solar systems on residential and commercial properties across the region, is one of the few actually hiring construction workers. "Because of [the economic downturn], we've had some tremendous people come through the door," notes CEO Michael Shore.

"We get to be picky," adds Marketing Manager Joanna Baker.

Other local companies are hiring as well. In December, Arvato Digital Services (David Willis' former employer) announced a $1.8 million expansion of its Weaverville plant that will create more than 400 new customer-service jobs over the next three years. The company reported record revenues of 5.083 billion euros (about $7.21 billion) in 2010, roughly one-third of the 15.8 billion euros in revenues (about $22.4 billion) and 656 million euros in net profit (about $931 million) reported by Arvato's parent company, Bertelsmann AG.

According to an April 15 listing, the new call center jobs pay $9.50 per hour — $3.50 less than the $13 per hour the North Carolina Justice Center says constitutes a living wage for a single adult with a child in Buncombe County.

A brochure given to applicants at Arvato’s May 12 on-site job fair says these workers will be paid for 37.5 hours per week; that works out to $18,525 per year. At the job fair, company officials refused to confirm the salary information and would not allow Xpress to interview any of the applicants.

Smaller firms are also showing signs of life. W.P. Hickman Co., an Asheville-based manufacturer, recently announced plans for a $3 million production facility. Founded in 1945, the third-generation, family-owned business makes metal roof-edge systems for commercial customers such as hospitals, schools and government facilities. And though last year was a down year for the company, CEO Scott Hickman says first-quarter sales are up 37 percent.

The weak economy, says Hickman, actually provides some advantages for companies looking to expand. “You can purchase property relatively cheaply, and you can get, if you have a reasonably decent balance sheet … very attractive financing.”

Hickman believes the expansion will ultimately lead to jobs, but he cautions, “We’re not just going to hire a raft load of folks: We’re going to do it incrementally as we see the market continue to work in our favor.” The company is currently hiring a few welders for $13 an hour with benefits. Hickman says he views his business as a family, noting that during the downturn, no one was laid off for economic reasons. The average employee has been with the company for 11 years, some as long as 25 or 30.

“It absolutely breaks my heart when we see, on a regular basis, somebody coming in to apply for a job, and you know they’re looking hard,” he reveals. “You know they’re talented; they want to work. They’re not looking for a handout. It just kills me — I wish we had 100 more jobs, and maybe someday we will.”

— Christopher George can be reached at 251-1333, ext. 140, or at cgeorge@mountainx.com.