Israel’s Poor Endure Tough Situation

Crumbs tumble down Yigal Alperson’s white beard as he eats his one guaranteed meal of the day at a crowded Jerusalem soup kitchen.

Tables spill over with immigrants, the elderly and single mothers, the predominant faces of Israel’s poor as the country’s economy is battered seemingly from every direction.

Three years of Palestinian violence have scared away investors, a worldwide economic downturn has devastated Israel’s once-thriving high-tech industry, factories are closing because of foreign competition and government cutbacks in welfare and social spending in response to a $6 billion deficit have taken their toll.

"My situation is difficult. We don’t have anything to eat," said Alperson, 66, an unemployed statistician, who supports his wife and five children on the $888 he receives each month from Israel’s national insurance system.

"This is security, you know," he said pointing to a plate piled high with steaming pasta, chicken cutlets and green beans at Meir Panim, a soup kitchen designed to look like a restaurant. "At least you know you’ll be eating today."

Israel’s unemployment rate is near 11 percent, almost 18 percent of families are living in poverty and the number of poverty-stricken children is on the rise. Israel now has one of the highest poverty rates in the developed world, according to 2002 statistics released recently by the National Insurance Institute.

A study of some 150,000 households, released this month by the JDC-Brookdale Institute, found that 8 percent were having severe difficulty buying enough food.

Meanwhile, Finance Minister Benjamin Netanyahu’s announcement last week that Israel’s recession was over sparked a storm of protest. Netanyahu swiftly backtracked from his remarks, saying instead that there were signs of economic recovery.

Exports are up and that’s a good sign, said Karnit Flug, who heads the Bank of Israel’s research department. The stock market also has risen in recent months. But it’s still too early to tell if Israel is headed toward better economic times anytime soon, Flug said.

There is a lot of uncertainty about the "security issue and prospects for improvement of the geopolitical situation," Flug said. "The ability of Israel to utilize its potential growth will depend on improvement in these areas."

The government has argued that the economy’s problems stem not only from the intifada but from more inherent problems in the structure of Israeli industry. To address these problems, Israel is trying to privatize many state-owned companies to boost competitiveness.

It has begun aggressively deporting foreign workers, whom government officials say take jobs away from Israelis and bring down wages for unskilled labor. The 1990s saw a dramatic increase in foreign workers in Israel. With 200,000 foreign workers, the Jewish State has one of the highest rates of foreign laborers in the world, experts say. Whether or not Israelis are interested in taking these unskilled jobs is unknown.

Another government project, reducing welfare support payments for the poor, is expected to increase poverty rates, the JDC-Brookdale study found. By setting a time limit for unemployment benefits, for example, the government hopes to encourage people to go back to work. But in Israel’s present economy, finding work is increasingly difficult.

The reforms "in the short term create a lot more poverty," said Jack Habib, a social economist who directs the JDC-Brookdale Institute. "More people are in need, but all the services they need are being cut back."

Rabbi Yechiel Eckstein is the president of the International Fellowship of Christians and Jews, which funds soup kitchens across the country, as well as a network of warehouses where the needy can receive free furniture and other household goods. The government is embarrassed by how its stringent new fiscal policies are affecting the country, Eckstein claims.

Such policies "have changed the face of Israel. Now the question is how to portray the public image of Israel," Eckstein said. "No one wants to portray it as a third-world nation, but to portray it as an idyllic place where everything is hunky-dory is morally and practically wrong."

The government is defending its policies, taking out ads in the national press saying the reforms are the only way to help the economy. Netanyahu says the cuts are necessary if Israel wants to have a modern economy. Critics say other solutions — such as raising taxes and investing massively in infrastructure — could ignite growth and, in turn, boost tax revenue.

According to recent surveys, however, most Israelis think the economy is suffering because of the intifada and won’t improve until the diplomatic impasse is resolved.

It’s not only unskilled workers who are having trouble finding work. As the economy slides, the highly educated also feel the pinch.

Leah Rizel, 34, has a master’s degree in human genetics and has worked for several years in genetics labs. For the past five months, however, she has been unable to find work. At this point, she said, "I’ll do anything for a job, because I have bills to pay and a child to raise."

It can be overwhelming "to see the amount of educated people, people with degrees, at the unemployment office," she said. "Getting an education these days does not mean you are going to get a job."

On Jerusalem’s Ben-Yehuda Street, the city’s once-bustling pedestrian shopping mall, the situation is grim. Repeated terror attacks have kept both tourists and locals away. Shop owners say they barely clear $220 a week.

"Zero. There is nothing," snapped Yosef Zakai, owner of a Judaica shop. "Except for someone calling from the United States for a Star of David, there is nothing. There is no work."

A few doors down, a man named Yosef said he wasn’t sure how much longer he could afford to run the women’s clothing store his parents opened in 1949. "This is the hardest period ever for the store," he said.

Across from his shop, he pointed out names etched on a memorial plaque — eight victims of a 2001 suicide bombing.

"Here one died," he said, pointing at a corner of stone pavement. "Here another, here another."

Yosef’s voice trailed off, and he headed back to his store — where, atypically, a customer was waiting.

What’s Ahead for L.A.’s Jewish Economy?

The current recession, deepened nationwide by the Sept. 11 disaster, will hit Los Angeles’ Jewish community like many others. It will have an impact on everything from charitable contributions and bank accounts of the super-rich to the household economies of hundreds of thousands of everyday people.

Yet overall, this may be a time for Los Angeles’ Jewry to count their blessings. Compared to communities in many parts of the country — most notably New York City — the economic prognosis for Los Angeles, and for the industries most associated with Jews, seems relatively rosy.

First, let’s look at the overall economy. It’s been a long time since Jews were consigned to narrow niches in the American, much less the Los Angeles, economy. We are literally everywhere — from aerospace firms to real estate as well as more traditional Jewish pursuits such as garments and entertainment — and, to a large extent, we rise and fall with the rest of our fellow Angelenos.

Basically, Southern California’s economy already has withstood the past year’s downturn — and the cataclysmic events of Sept. 11 — better than many competing regions.

For months, the region’s overall job growth rate has exceeded those of now shell-shocked poster children of the dot-com era, such as Silicon Valley, Seattle and Austin; all of which boast growing and very affluent Jewish communities. Austin, for example, is home to Michael Dell, one of the nation’s largest benefactors to Jewish causes.

The distress is even more severe in the traditional Jewish centers in the industrial Midwest, where slackening demand for big-ticket durable goods is causing dislocation not seen since the 1970s. Detroit, Cleveland and Chicago areas are hemorrhaging blue-collar jobs.

But the most immediate impact, not surprisingly, can be found in New York, which is the only city more critical to American Jewry than Los Angeles. Immediate estimates on the post-Sept. 11 impact are that the city lost an astounding 79,000 jobs last month alone. But most important, according to the city controller’s office, as many as 150,000 jobs may be lost permanently.

Of course, certain sectors of the L.A. economy, such as tourism and durable goods manufacturing, notably furniture, also are reeling from the downturn, but overall, Los Angeles is somewhat less dependent on these industries than many regions. Perhaps the key “Jewish” industry that could be hard hit by the recession is garments.

Overall, as many as 20 percent of business may go out this year, predicts Ilse Metchek, president of the California Fashion Industry Association, although the situation is far from horrendous. Recent concerns about travel to New York and fears of relying on overseas contractors, she believes, is helping shift more business to Los Angeles.

“The people who were hanging on by their fingernails are going out of business,” Metchek says. “But the bigger guys are doing well and will come out of this better than ever.”

But financial services and entertainment, two other key industries for Jews, may actually benefit from the current economy. John Shaw, president of Jefferies Securities, a New York investment bank with a large L.A. presence, believes Los Angeles may gain some of the securities employment that is being displaced from New York. “We are currently redeploying some operations to L.A. right now,” Shaw says.

The third linchpin of the region’s economic recession-resisting force lies in the entertainment sector. On the surface, Hollywood seems to be in a downturn of its own, with significant loss of jobs over the past year. But much of this can be traced to the lingering impacts of the threatened actors’ and writers’ strikes, which led many studios to “front load” their production last year, leaving a large backlog of product for the current season.

The long-term prospectus may be much brighter. Entertainment, which along with trade led the 1990s revival, is traditionally counter-cyclical. Since the atrocities in New York and Washington, D.C., box office sales have jumped by 8 percent, and Internet and cable viewing have risen. There has also been a perceptible bump in the sales of video games, notes Robert Kotick, president of Activision, the largest Los Angeles-based game-maker.

“People want to have a fantasy experience without the cost and hassle of leaving the home,” says Kotick, whose 1,000-person firm expects over $700 million in sales this year. “The home entertainment industry will benefit from this.”

All these forces suggest — in sharp contrast to the devastating L.A. downturn of the early 1990s — that the Jewish community of Southern California, in relative terms, is better positioned both financially and in its ability to attract new migrants, foreign and domestic. This suggests that L.A. Jews may need to play a more aggressive leadership role in shaping the national Jewish agenda in the turbulent times ahead.