In Financial District, everyone feels the pain

When Denise Maniscalco opened her shop doors at 7 a.m. last Tuesday, she already knew it was going to be a bad day. No one was waiting outside her Beantown Variety to buy their morning cup of coffee.

More and more of her office-worker regulars have been scrimping on her blueberry muffins or skipping lunch. Companies have canceled catering orders. Business has plunged 50 percent over the past six months, and she's not sure how much longer she can make it.

"It's the worst it's ever been. The layoffs are huge. People are working from home to save gas," Maniscalco said, as she leaned on the counter of her empty shop on Broad Street last week. "Lotto tickets are the only thing selling well."

The anxiety gripping the Financial District these days goes beyond the bankers and stockbrokers holed up in their offices, hoping the parade of pink slips passes them by. The barbers, shoe shiners, pizza guys, cab drivers, bartenders - they are feeling the pain, too. From Post Office Square to Liberty Square, businesses that depend on a financial sector are slashing employee hours, freezing unfilled jobs, and aggressively offering promotions to drum up sales.

Over the past six months, financial services companies, which are concentrated in downtown Boston, have shed 1,000 jobs, according to the state's Department of Workforce Development. This does not include a rash of layoffs announced this month from Fidelity Investments, Putnam Investments, MFS Investment Management, and Bank of New York Mellon Corp. The financial sector, including real estate, is expected to bleed 9,000 jobs over the next year, according to the New England Economic Partnership. By the time the labor market is expected to recover - near the end of 2010 - the financial sector statewide is estimated to lose 7.6 percent of jobs, nearly double the projected loss for overall employment.

In Massachusetts, the ripple effect could be huge. For every job lost in the financial services industry, roughly three more jobs would disappear: Data processors, consultants, and lawyers, among others, would suffer, according to a report on the "multiplier effect," from the Greater Boston Chamber of Commerce. This doesn't account for the jobs of thousands of other people who serve the Financial District.

"People aren't aware of how big the ripple effect is," said Jim Klocke, the chamber's executive vice president. "There's direct vendors of the financial services industry, like legal services and accounting, but there's also the sub shops, dry cleaners, and card shops that all depend on a lot of people downtown who are coming to work every day and making good salaries and spending some of the discretionary income in the area."

Spend a day in the Financial District from morning to evening, and it becomes clear how job losses and corporate cutbacks have trickled down to the businesses that serve this community.

At Beantown Variety, Maniscalco is getting a somber vibe from some of the office workers and technicians who still order coffee in the mornings.

"People are asking me things I've never heard before: Can they pay me tomorrow or the next day?" she said.

Down the street at the Hilton Hotel, cab driver Stanley Feinberg sat in his taxi for an hour Tuesday morning before someone wanted a ride. It was one of the longest waits in his 40 years as a driver.

"Business stinks and it gets worse every day," Feinberg grumbled.

Inside the hotel, which completed a $10 million makeover two years ago, general manager Sean Smith said business has slowed over the last month. Two companies recently canceled group meetings that would have booked 35 rooms for three nights, along with meals. The hotel can't command the prices it did a year ago, he said, and rates have dropped about 20 percent.

Lunchtime is usually the busiest time for delis, sub shops, and restaurants, when financial workers descend from their towers to grab a bite or meet up for business lunches. But these days, the streets are often empty.

At O! Deli on High Street, Mark Carlson took a seat at one of the many open tables. Munching on a cheesesteak sub, Cheetos, and diet A&W Root Beer, Carlson said the $7.02 lunch is one of the rare expenses during his day. Over the past few months, Carlson, who works at an investment management firm, has begun skipping his breakfast trips to O! Deli and Au Bon Pain and bringing his own granola bars.

"Everyone's worried about the economy, and I'm just looking to save," Carlson said.

Around the corner at the Italian Cafe on Broad Street, the lunch-hour rush has slowed to a near crawl over the past six months and business is down about 20 percent. For now, owner Robert Peppucci has reduced employee hours, but he plans soon to stay open on Friday nights in hopes that hotel guests purchase his pizzas and pastas to make up for lost sales during the week.

Along with lunches, workers in the Financial District say they are also economizing on hair cuts, manicures, suit shopping, and other indulgences.

Around noon at Two International Place, shoe shiner Anderson Andrade, 40, is perched in a black leather chair occupied, in better times, by customers. But finance executives aren't leaving their offices so much anymore for the $5 shine, and business is down 30 percent over the past few months.

Customers are also coming in less frequently at Jordan & Co. hair salon near Liberty Square, so employees have started handing out coupons offering 20 percent discounts to clients who bring in new customers.

At Ari Boston, a high-end suit store in the Financial District, owner Ari Gil said business is down at least 20 percent. He recently sent out cards to 1,000 customers with a 20 percent promotion for coats, sweaters, and scarves. Gil, who has owned the store since 1997, is also staying open on Saturdays in November, a first for his business.

On Tuesday, he persuaded a partner at a wealth management firm to buy a $2,000 Italian suit and some handmade ties, telling the customer, half-joking, that he needed help paying for his children's college tuition. But Gil came up short on the pitch for a new $800 topcoat - he sold the customer four coats last year.

"In good times, we always take care of them, and in bad times they try to take care of us," Gil said.

Restaurants that cater corporate parties and after-work hangouts are also feeling squeezed.

After the Dow first took its 700-point nose dive in September, the impact was immediate at Umbria, an upscale Italian restaurant and lounge on Franklin Street. The shop doubled its sales of its $11 sandwiches, one of the least expensive meals on the menu. But Peter Nelson, general manager, said overall sales are down nearly 20 percent over the past month as diners order fewer items and less expensive entrees. More disconcerting, Nelson said, are the cancellations of big holiday parties, including one by Merrill Lynch, the struggling investment firm, which was acquired in September by Bank of America.

A Merrill Lynch spokesman declined comment.

Nearby at Vintage Lounge, business is down 38 percent so far in November, according to owner David Paratore. December is usually huge for holiday events, he said. Last year, businesses had elaborate affairs with special cocktails in colors that matched company logos, Kobe beef sliders, and open bars. This year, it's wine and beer for those businesses still celebrating. And it's back to the basics with traditional shrimp cocktail and scallops wrapped in bacon.

Across the street at Mr. Dooley's, where some customers go to unwind in the evening, bartender John Brown said business has slowed and bar-stool chatter has taken an anxious turn. And the stockbrokers who used to order pints several times a week after work are nowhere to be found.

Jenn Abelson can be reached at abelson@globe.com. Globe staff Rob Gavin and Ross Kerber contributed to this story.