UP CLOSE | The recession at Yale

It is measurable, perhaps most simply, in numbers: the University endowment down by 25 percent, as many as 100 staff slated to be laid off, departments cutting costs by 7.5 percent.

It is measurable, too, in empty storefronts. Gone are the Yankee Doodle Coffee Shop, Cosi and Cooper’s Dress Shop, with the likes of TJ’s Breakaway Deli on their heels. The doors of the storied eating club Mory’s have been closed since December as the restaurant reevaluates its financial viability, hoping to reopen in the fall.

Many businesses across the Elm City have felt the effects of the economic recession in slowed sales, employee layoffs or closures.
Grant Smith
Many businesses across the Elm City have felt the effects of the economic recession in slowed sales, employee layoffs or closures.

It is measurable, too, in signs. Sandwich boards promoting sales and specials line the sidewalks downtown. At V. Ferrucci Ltd., a men’s retail store on Elm Street, a posting in the window last week announced the “Ferrucci stimulus package” — a special offer on suits to “stimulate the economy” and help clients to “rescue their wardrobes.”

It is measurable not just in words but also in pictures. Down the street from Ferrucci, at the 133-year-old stamp and sign store A.D. Perkins Co., owner Jay Smilovich keeps a black-and-white photograph from the late ’50s or early ’60s. It shows his father, an Italian immigrant, resting from construction work along highway I-84 with the Hartford skyline behind him. Smilovich speaks of the road construction project, part of president Dwight D. Eisenhower’s interstate highway program, as the country’s “last big stimulus.” In an economy Smilovich calls the worst he has seen in his lifetime, he reflected on the construction job that helped to propel his father to financial stability, adding “I hope that this stimulus and all those ideas [President Barack] Obama has work out to put America to work.”

It is measurable also in conversations. Seniors in the dining halls discuss fears of not finding work after graduation, considering instead graduate school or non-profit work.

Numbers, storefronts, signs, photographs, conversations — the recession at Yale and in New Haven is measurable in all these ways.

But even as staff are laid off, students struggle with tuition, seniors worry about post-college careers and Elm City businesses see sales drop, in many ways, the University is able to cushion the worst of the downturn’s effects, promising students a largely untarnished Yale experience and pumping life into the city.

TAKING THE PLUNGE

Just as students prepared to head home for the holidays mid-December, University President Richard Levin announced news of Yale’s plummeting endowment. The endowment was projected to have lost a quarter of its value — roughly $6 billion — since June 2008, Levin wrote in an e-mail message sent to faculty, staff and students.

While in an interview with the News at the time Levin cautioned “this is not the end of the world,” the endowment’s plunge, he made clear, would necessitate a scaling back across the University.

Construction projects not already underway were delayed. While the renovation of Morse and Ezra Stiles colleges in the 2009-’10 and 2010-’11 school years, respectively, would still move forward as scheduled, plans for the Yale Biology Building, the School of Management campus, the Yale University Art Gallery and — perhaps most notably — Yale’s planned 13th and 14th residential colleges were put on hold until market conditions could improve. Scaffolding and blue mesh concealing Payne Whitney Gymnasium — where the downturn has tabled façade work for at least a year — are just one sign of the University’s construction semi-freeze.

Inside Yale’s buildings, staff are tightening their belts, as well. Levin in February called for departments to cut personnel and non-personnel costs by 7.5 percent — a mandate that has resulted in a variety of creative savings ideas. The Yale Admissions Office, for example, made the vast majority of rejection letters paperless this year, and the Yale College Publications Office will likely allow undergraduates to opt out of receiving hard copies of the Blue Book for the coming academic year.

In perhaps the most extreme example of cutbacks, departments across the University will make as many as 100 involuntary staff layoffs to cut costs before departmental budgets are finalized mid-May, according to information from Vice President for Human Resources and Administration Michael Peel.

And as University staff adapt to the recession, the people Yale serves — its students — have faced financial constraints of their own.

With more than 13.2 million Americans unemployed as of March 29 and many others facing pay cuts, economic realities appear to be taking their toll on students’ and their families’ ability to pay for Yale.

Among applicants to Yale College’s class of 2013, for one, Yale saw a 9 percentage point increase from last year in the total number who intend to apply for financial aid, the News reported early this month. Seventy-three percent of applicants indicated on their applications that they “intend to apply for need-based financial aid,” compared with 64 percent last year and 70 percent the previous year, Director of Student Financial Services Caesar Storlazzi said.

CUSHIONING THE BLOW

Though the recession’s financial toll on the University ­— its facilities and its operation, its employees and its students — is a clear reality, in many ways Yale has gone to lengths to mitigate the effects of the downturn.

Larry Laconi is one of Yale’s employees bearing the brunt of the University’s cutbacks. As the national accounts and special markets manager for the Yale Press, Laconi will have his hours at least provisionally reduced from 37.5 to 20 per week.

He and his wife Annie — a landscape architect whose company has also seen layoffs — are expecting their first child in August. The couple is also in the process of renovating their 174-year-old New Haven house.

“The stresses have probably never been higher in my life,” said Laconi, who has been at the Press since October 2005.

But all things considered, he added, “I can’t imagine it being handled better or being treated more fairly throughout the entire process.”

John Fitzpatrick — whose position as associate director for research information technology support will be eliminated as of the start of the new fiscal year on July 1 — explained the ways Yale has eased his transition to unemployment.

In addition to being given 90 days notice before his required departure, Fitzpatrick said, he will get two weeks of severance pay for each of his seven total years of employment at Yale— which is double the amount typically doled out. The University will continue to make its usual contributions to his retirement account during this severance period, and his health coverage through Yale will be extended for seven months after his position is terminated, explained Fitzpatrick, who acts as a liaison between faculty and Information Technology Services.

In addition to noting that Yale will give displaced employees special consideration for open University positions for which they are qualified, both Fitzpatrick and Laconi praised the Yale Career Center, created this month to assist displaced employees through services such as résumé writing and interviewing workshops.

“I joke with people that I live in the U.S. but I work in France,” Laconi said, referring to the University’s benefits.

PAYING THE BILLS

In the winter of 2008, the University announced a new financial aid policy exempting more low-income parents from paying tuition fees and cutting the costs of attending Yale by thousands of dollars for middle-income families. But now, in the face of endowment woes and budget cuts, Yale now must prepare for a potential new influx of students needing financial support.

Amid the recession, some current work-study students on financial aid have sought more hours and, in some cases, searched for second jobs to help pay for tuition. One freshman, who lost her job at the Yale Press last semester, took on three jobs at first before settling on a stable on-campus job — though it paid less and offered fewer work hours than her position at the Press.

At the same time, the number of students with on-campus jobs — about 52 percent — has remained consistent this year compared with previous years, said Matthew Long, the manager of the Yale Student Employment office and associate director of Student Financial Services. “I really haven’t seen much effect [from the recession] at this point on student work,” Long said.

And as of the beginning of this semester, increased need for financial aid appeared to be minimal for current undergraduates. In November, the University announced it would offer additional financial aid for the spring semester to families struggling during by the economic crisis. But as of Jan. 9, the Office of Financial Aid had received only 26 requests for recalculations connected to the economic crisis.

Still, Storlazzi noted, the number of students requesting more financial aid for the 2009-’10 school year, which will not be calculated until the summer, is likely to rise compared to this year. Indeed, in a Yale College Council financial aid survey, the results of which were released in March, 47.2 percent of student respondents said the economic crisis had at least moderately affected their ability to pay for Yale.

“We expect to see more of the effect of the economic downturn in [financial aid] applications for 2009-’10, especially because the spring term bill was due by Dec. 1,” Storlazzi said. (Yale offered to recalculate all spring term financial aid bills after the Dec. 1 due date.)

But, Storlazzi stressed in an interview with the News early March, “Yale is going to be able to meet any increased needs for next year as a result of the economic downturn.”

A BITTERSWEET GRADUATION

While the University is working to mitigate the effects of budget and staff cuts, students preparing to enter the work force will soon no longer be insulated from the effects of the recession — making leaving college both emotionally and financially bittersweet.

Alexandre Jenn ’09 expressed general concern about the job market his class faces.

“There’s a hiring freeze, and it’s not just geographical; it’s a global hiring freeze — in New York, London or Beijing — it’s the same thing.”

When students donning business attire clamored this year for on-campus interviews with the top financial and consulting firms, there are fewer opportunities for future job prospects. In February, Undergraduate Career Services reported that there was a 13 percent drop in the number of interviews taking place on campus compared to last year. Now, several seniors interviewed said, the bleak job market has left them to pursue alternatives to post-graduation employment.

Instead of asking where their classmates will be working after graduation, seniors are overheard asking more broadly: “What are your plans?”

The number of applications to national service programs such as Teach for America, the Peace Corps and AmeriCorps broke records this year. And the tough job market has also lured more college graduates to pursue further schooling.

Lauren Blas ’09, an economics major, said the dismal job market prompted her to go to law school after Yale.

“The recession basically accelerated my plans to attend grad school,” she said. “I was going to take some time off to work before applying, but advice from parents and faculty members convinced me to continue my education.”

At Yale, applications to at least 10 of the 13 graduate and professional schools have been up this year — and some by record amounts.

“It’s widely known in graduate circles that when the economy goes down, applications for graduate schools tend to go up,” Graduate School Dean Jon Butler told the News earlier this year.

For some students staying in academia, Yale’s resources will even follow them as alumni. Timothy Kau ’09, for instance, received a Richard U. Light Fellowship from the University to study in China after graduation.

INSIDE THE IVORY TOWER

But if they are not thinking about tuition or employment on a daily basis, students are in many ways sheltered from the bleak economic realities around them. The amenities that define the Yale experience, albeit trimmed in some places, are still largely in place.

Despite University cutbacks, for example, the $150 million renovation of Morse and Ezra Stiles colleges is currently set to move ahead on schedule. Plans for the refurbishment include new underground facilities — a gym, recording studio, art studio and 100-seat auditorium — as well as a steel and wood skybridge over the courtyard between the two colleges and air conditioning in all public spaces — amenities largely on par with those in other colleges.

In the heat of the men’s hockey team’s winning streak in late March, Yale administrators gathered roughly $30,000 to subsidize student tickets to the NCAA Tournament opener in Bridgeport. In an effort to meet the demands of hundreds of fans who wished to attend the unprecedented match-off, administrators sold the for $25 each, one-third of their original value.

Reflecting on another splurge — YCC’s $150,000 to $160,000, eight-act, eight-plus-hour Spring Fling concert this year — Cecilia Wright ’11 noted: “I feel guilty spending 100 plus grand on Spring Fling — on a one-day event — when there are many people within the University losing jobs.”

Even in instances where the economic downturn has seeped into student life, the effects have, in the big picture, been minimal.

Last Saturday, the signature event at Pierson College’s annual Pierson Day — Jell-O wrestling — was absent from this year’s festivities; the company that made and stored the college’s special pit for the storied Pierson tradition went out of business. Some Piersonites jokingly relabeled Saturday “recession day.”

But the Jell-O was not too sorely missed. Said Pierson College Council president Elaine Sullivan ’10: “It seemed like people were happy with the dunk tank.”

To be sure, though, student groups on campus have faced funding cutbacks and budget constraints.

A cappella and improv groups have struggled to book and keep clients, student publications have cut pages due to declining revenue, and Freshman Outdoor Orientation Trip leaders are expecting fewer FOOTies to pay to participate in the program in the fall.

Additionally, the President’s Office intends to cut its contribution to the Yale College Council from $50,000 to $40,000 next school year. And the Undergraduate Organizations Funding Committee received a record number of requests this year because other University offices, such as the Dean’s Office and Chaplain’s Office, have reduced funding, UOFC chair Bryan Twarek ’10 told the News last week.

AN ‘ECONOMIC ANCHOR’

On the city streets outside Yale, the economic climate is decidedly grimmer.

At the Saint Thomas More Soup Kitchen on Park Street, Katie Byrnes, the assistant chaplain, said the kitchen has seen an increase in the number of people coming in for meals this year.

“We have more and more folks who work at least part-time, who find their way here just as a way of paying the bills,” Byrnes said. The kitchen’s fastest growing crowd, she explained, has largely been made up of people who have lost their jobs, rather than customary patrons, such as the homeless.

Among Elm City http://www.infonewhaven.com/1641 businesses, the catering business and eatery Madi & Mia’s on Orange Street, for one, has seen clients cut back on add-ons like drinks and paper products, owner Norbert Ponte Jr. said. At Hello Boutique on Chapel Street, manager Christina Parent said more customers go straight to the sale section downstairs, though overall sales have remained strong.

While business is also stable at nearby jewelry store Derek Simpson Goldsmith, customers are buying smaller stones, the store’s manager Gene Dostie said. Even at the penny-wise Salvation Army on Crown Street, business is down as more people sell their used clothes online and donate only what is then left over, the store’s manager Paul said. (He declined to give his last name as per store policy, he said.)

“It’s been pretty crappy here, to be honest,” said Setch Schein, the manager at Villarina’s, a gourmet food and gift store on Chapel Street.

But it could be worse.

Overall, New Haven has seen a “mixed bag of effects” from the recession, New Haven Chamber of Commerce President Tony Rescigno said in a phone interview. While retailers, restaurants and real estate businesses have been hit hardest, Rescigno explained, health care, professional services such as accounting and law, and education have been relatively stable. “New Haven for the most part is faring better than the rest of the state and most of the country,” Rescigno said. “Even though [Yale is] cutting back, they’re still a very strong player here.”

In interviews with dozens of restaurant, bar and shop owners in New Haven, vendors on the whole said the recession has affected business to some extent but that, even as the University cuts back, Yale serves as an “economic anchor” for the Elm City.

On a small scale, businesses like Greg’s Tailor and Formals on College Street rely heavily on student and faculty clients, who rent tuxedos or get dresses hemmed for formals and other events on campus, owner Greg Karachristos said. Owners at multiple nearby bars and coffee shops have said in recent months that faculty, students and their families help to keep their businesses viable. And among New Haven’s hotels near campus — including the Omni New Haven and the New Haven Courtyard by Marriott — representatives recently told the News that Commencement weekend business will be a boon in an otherwise slow year.

But on a larger scale, the University employs more than 11,000 individuals, making Yale the largest single employer in the Elm City. And the University in February agreed to raise its customary voluntary payments to the city by 50 percent, or an additional $2.5 million, beginning in October 2010. Just last week, City Hall officials announced Yale is considering buying and leasing property from the city for up to $3.8 million to help close a potential gap in New Haven’s fiscal year 2010 budget.

“I think in a recession you will see some businesses under pressure,” Levin reflected in an interview. “But it’s really turned around compared to what it was 20 years ago.”

He continued: “We’ll get through this.”

Carmen Lu and Nicolas Niarchos contributed reporting.

Comments

  • local architect

    Yale's decision to put construction projects on hold has had a devastating effect on architecture and construction firms in and around New Haven. Firms are closing or laying off people. Yale clearly has missed the opportunity to act responsibly and support the New Haven area in times like these.

  • Professor

    Architect, you are absolutely correct. However, Yale can afford to wait a year or two as prices collapse, and as contractors and architects struggle for business. Then they can build their new buildings at a fraction of the cost that they would have paid if they had gone forward this year. That is what happened in the 1930s, when Yale's campus was largely built.

    The recession will have longstanding impacts, notably, the emptying out of the suburbs and the virtual end to private automobiles as transit (they will be too expensive for almost anyone, as they already are to vast segments of the population). The city and Yale should be taking proactive steps now to expand transit, cycling and walking in the center city. Unfortunately, all I see are a lot of new parking garages still under construction. Very bad decisions were made by someone. But in the end, cities will benefit from a tide of reinvestment and increasing urban densities, and Yale will benefit due to the nature of its preeminent position among world universities.

    Students looking for work should consider banding together and purchasing a foreclosed house or two in Cleveland or Detroit for $100. They can spend the next year fixing up the properties, working locally, growing their own food, and eventually selling the houses at a profit. Cleveland and Detroit are perfectly fine cities.

  • Timothy Kau

    I believe my interview was warped in this article. I spent more time talking about my small business (thecampuskings.com), a college shoe apparel company than my Light Fellowship.

    I feel used.

  • James

    I fully accept that the endowment was down 25% last fall, and has been on a rocky course since, but the price of stocks has soared since March and commercial real estate values are not down anything like 25%. So I'm skeptical that it's STILL down 25%. If so, then someone's asleep. (Highly unlikely!) If not, then it's being used as a fundraising pitch but unjustifiably so. Concerning the other cutbacks, businesses often use these periods to prune what they think they can do without, knowing that few will challenge given the overall context. That may be happening here as well. The primary protection for workers is their union, as always.

  • grad student

    Yale's decision to freeze hiring and stop constructions has clearly resulted in unemployment for many in the New Haven community. This is especially tough for us graduate students with children. Why? Because we earn little, and therefore heavily rely on our spouses earnings to feed the family. Also, we are tied to Yale and cannot easily leave New Haven in the midst of a PhD program. With the spouses loosing their jobs now, our families have difficulties surviving. Thus, with the current answer to the recession, Yale is hurting one of its most vulnerable segments the most!

  • other grad student

    Actually, to play devil's advocate, I think Yale has done an excellent job protecting its grad students, even increasing our stipends for next year despite the downtown. It's not really fair to complain that Yale should be protecting the spouses of grad students working in New Haven.

    I agree with the earlier posts that it unfortunately takes a toll on New Haven job opportunities when Yale cuts back, but to suggest that they should reconsider because of a small portion of grad students with children whose spouses are affected seems kind of short-sighted.

  • R.E.Schallert

    This reminds me of 1957, when I graduated from the University of Wisconsin; the so-called Eisenhower "recession". We also had a similar situation in the mid-1970's, after the oil embargo and the escalation of oil prices. And let's not forget the very real and painful recession of the early 1980's, when I began teaching at a large community college in Illinois.
    There, thousands of blue-collar workers had lost their jobs at agricultural equpment manufacturers and they were coming to us for retraining. They were "numb", angry and afraid. We worked long and hard to convince them that our economy would eventually recover and they too would manage to get back on their feet. And they did! But it took time, patience, study and, of course, taking jobs they did not really want at first. One forced retiree from Farmall (21 years service) went on to become an insurance agent and, eventually, owning his own insurance agency.
    And I still recall Margo, a 40-plus year old woman, who confronted early one very cold January morning with the comment, "I'm glad I'm coming here every day; IT GIVES ME A REASON TO GET UP EVERY DAY!" That attitude helped her and many others to manage to work through the adjustments necessary to adapt to the changing economic environment. Or, as the Bible says,"This too will pass away!"
    My best wishes to all those at Yale, students, faculty and staff, will manage to keep their wits about them during this trying period. A lot of humor (even gallows humor!) really helps.

  • interested observer

    Can't help but notice that, once again, little focus has been given here to specifics. Exactly what sorts of employees are being laid off at Yale, what positions have been eliminated, etc.? What we get here are anecdotal snippets.

    To write about the "Recession at Yale" as thought it's a kind of a diet that results in equal weight loss across the institution is misleading. What is happening is more like selective amputation, and YDN could do a better job investigating whether there is any pattern to the cuts. How is upper management being affected, for instance?

    "Professor" @#2 is spot on. Very bad decisions were, indeed made by someone --or ones-- though I doubt those are the people who have been laid off.

  • Yale 08

    The suburbs will not be replaced.

    The way to recovery is manufacturing. We need to keep exporting.

    Manufacturing and production is ill-suited for the urban centers- too much congestion, too expensive real-estate, too many rules/regulations/permits.

    Look at the South- it is surviving.

    California and NY are dying.

    The suburbs are positioned between the rural spaces and urban centers.

    It's cheaper for individuals and businesses.

  • yaylie

    @ #2 professor: we did not go to Yale to become menial laborers and fix up houses afterwards. Because I don't know what other kind of jobs you have in mind for us that are currently available in Cleveland/Detroit. As far as that $100 house, why don't you move to the Newhallsville district of New Haven for a year (the ghetto to the Northwest) before making a suggestion like that. Because the neighborhoods those $100 houses are in will make Newhallsville look like New Canaan, CT in comparison.

  • yaylie

    @ #9: manufacturing is done more cheaply overseas except for goods requiring extremely high technical sophistication (mostly DoD type stuff) and heavy items like cars. It is one thing to maintain old factories where the fixed costs have depreciated away and another to build new factories in one of the most heavily regulated environments in the world with workers demanding high wages. For it to become viable again here we would need to sink our workers' lifestyles to the levels of Malaysian, Chinese, etc workers.

    The path to success lies in continued technological sophistication and innovation, so that we continue designing the stuff made abroad and reaping disproportionate rewards from this activity. But with the sciences and engineering programs run-a-f**k at most US universities, the Asians will overtake us in a decade or two unless some radical change happens, which is unlikely.