By PETER T. KILBORN
YORK, Pa., March 15 - The stock market's shrapnel is spraying all over this industrial town, just under 200 miles from Wall Street. Like many Americans, the city's truck drivers and clerks, nurses and assembly line workers are new and largely accidental participants in a game that was once played exclusively by men who wore suits.
Starting in the late 1980's and encouraged by tax breaks, the men and women who work here in the Harley-Davidson plant or at the air-conditioner factory bought into their employers' 401K retirement plans and watched them grow and grow year by year. Then a year ago, at the peak of the market's heady rise, their fantasies of condos in Florida began shriveling, and for many this week, they collapsed.
Over deep-fried chicken at the R & D Luncheonette downtown on North Duke Street, Barbara Ruby, 48, said the markets have hammered her 401K and dashed her hopes of early retirement. "I thought I'd be leaving my job by the end of the year," said Ms. Ruby, a customer service worker at the York Water Company. "I want to go do something fun in horticulture, start my own little business." But the market's slide has left her unsettled. "Now, do I have to rethink my whole plan?" she asked.
Another customer was Barbara Zinn, 41, an accounts payable clerk at a communications company. Only within the last year did she and her husband, a paper company worker, begin investing in 401K plans. She contributes $50 a month and he $130 a week. "I never wanted to start it, and they talked me into it," Ms. Zinn said. "Ever since, I've always had minuses on the statements."
During the 1990's, the city of York prospered - helped along by well-paid, unionized industrial workers, established construction businesses and flourishing banks and financial services. The city, with a population of 41,000, witnessed a remarkable democratization of the stock market with the proliferation of 401K plans and other tax-favored investments like Individual Retirement Accounts.
The 401K plans, particularly, became popular among employers because they relieved them of providing conventional pensions, which assured retirees of a steady and predictable check regardless of the stock market's ups and downs. With deductions from their pay and varying amounts of employer contributions, workers on 401K plans have assumed most of the risk and burden of providing for their retirement.
"The manufacturing worker was not even aware of the crash of '87," said Jack H. Grim, manager of the Janney Montgomery Scott securities office on East Market Street, York's main commercial artery. "But he's extremely aware of it today." Many are stunned. "I can see people pulling in their horns," Mr. Grim said.
With the market's drubbing, investors in York are wary of President Bush's proposals to let them invest part of their Social Security payroll contributions in the stock market.
Barbara Ruby, chastened by the fall of her 401K, doubted that she could make any better informed investments than government economic institutions. "I'm not smarter than Greenspan," she said.
Kurt Dagenhardt, 46, who usually votes Republican, built up a sizable 401K fund by making his own investments. He did so well, in fact, that he was able to retire from his job as a salesman for a kitchen cabinet manufacturer and move home to York from Texas to be near his aging parents.
But eventually he wants a Social Security benefit that he can depend on like the one that helps sustain his parents. "I think that the government should continue to shoulder the Social Security program rather than leave it up to individuals," he said.
Mr. Grim predicted that the Dow Jones industrial average would leap 1,000 points the day Congress enacted a plan permitting workers to determine a part of their retirment investments, and that workers' Social Security funds would rise over the long term. Still, he added, he thought it would now be difficult to assure workers of an ever-rising Dow.
The Japanese market has been down for more than a decade, he said. "That's never happened here," he said. But if it did, "it would be extremely precarious," he said.
Among Mr. Grim's 1,000 clients, mostly people who earn less than $100,000 a year, is his sister-in-law, Holly Shearer. A nurse practitioner who lives in Mechanicsburg, north of York, she said: "I'm concerned. I'm feeling very nervous."
Ms. Shearer said she and her husband, Sam, manager of a Sears store, had gone on a spending spree last year, amassing a credit card debt. But two months ago, Ms. Shearer said she reduced her contribution by about 80 percent to pay off the bills. "Right now," she said, "I want to be safe and take my losses."
Those close to retirement do not have that luxury. Marlow Palmieri, 60 and the president of the United Auto Workers local at the York air- conditioning plant, said that until last spring he had around $45,000 in 401K stock funds. Fearful that he was putting funds for his imminent retirement at risk, he shifted all but $11,000 of his savings into a cash fund. Since he made the move, the $11,000 in stock has fallen to $8,000. "I've been putting in $50 a month and then $100 a month all these years and I just got lucky," he said.
The crowd at the Rose Haven bar is generally a little further from retirement. Nearly everyone coming into the smoke-filled bar with a homey feel across from the York International air conditioner plant is in the market in some way, most through 401K plans, but many, too, through their own accounts with brokerage firms.
Everyone here has a story about wins and losses, including the bar manager, Kelly Snyder. About four years ago, she received an unexpected check for $2,000. Unfamiliar with the market, a tipster told her about a company that has since become Sirius Satellite Radio. She bought 500 shares for $1,875.
On March 3 last year, the stock had reached $69, bringing her total investment to $34,500. Today, Sirius was trading at $19.75 a share. Though Ms. Kelly is still ahead, she feels chastened. "I'm not happy about that at all," she said. "But I've had fun with it. I still think it's going over $100 a share."
As the bar's television drones with hourly reports from Wall Street, Jim Bell, the customer with the least to fear, plays the naysayer. Mr. Bell, who is 75, still works, driving trucks for $10 an hour. He also collects more than $1,000 a month in Social Security. He has a camp trailer, a custom van and he raises rabbits for show on the side. "We are headed for a crash," he said, thumping a fist on the bar. "It's going way more down."
At 70, investors must begin withdrawing funds from their 401Ks. "I pulled beaucoup out to remodel the house," said Mr. Bell. And on the advice of his broker, he put his additional withdrawals into relatively stable utility stocks.
Crash or no crash, most of the Rose Haven's customers seem willing to stick it out. They have innoculated themselves against panic with a verbal vaccine called "the long haul."
Jim Dellinger, 47, and his wife work at the nearby Giant Foods, where they have enrolled in 401K plans. Mr. Dellinger, a baker, has put most of his money into a Fidelity fund that has fallen 12 percent this year and a Janus fund that has dropped 16 percent.
As the market slides, Mr. Dellinger said: "I think about it every day. I have basically my life savings in there." But with his retirement 15 or 20 years off, he said: "I do have a long time. I'm in it for the long haul."
But for such investors, holding on in the market does not always mean holding on to battered funds and stocks. Most 401K plans permit employees to allocate their savings among high-risk and low-risk mutual funds, and some have been shifting their funds as the market has fallen.
Steven Zinn, 35, a letter carrier, watched his stock fund investment drop from $71,000 to $48,000. "I pulled everything out of the stock market three weeks ago," he said. "I put it in government securities, which is guaranteed 6.5 percent. I don't think the market's quite down to where it's going to be at its low."
An investor's age is a factor in the risks people here take. While Mr. Zinn has opted for a conservative strategy, he said he was planning to take a much bigger risk with a $5,000 fund he has set up for his 3-year-old daughter. The money's in a bond fund now - but not for long. "I'm going to take $2,500 of that and put it in science and technology," he said.
On East Market Street, Craig L. Ludwick, 34, who manages the Farmers Fire Insurance Company, put his 18-month-old son into an aggressive growth equity fund. "It's down substantially - 30 percent in the last six months. But my philosophy is, you stay the course."
http://www.nytimes.com/2001/03/16/business/16ECON.html?pagewanted=2?ex=98571 9233&ei=1&en=d194cdfa98a89f72
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