The worn out jacket and hat show that the person is destitute. Homeless people used to commonly sell pencils on the street.
The joke is that nobody interviews to be a pencil salesman. It's not big business. It's easy to sell pencils because they are everywhere, they're dirt cheap, and everyone needs them. Well, not so much anymore, but this was 44 years ago.
I’m interpreting as this man is clearly desperate for work, I’m sure he’s not being picky here. There’s an absurdness to an employer asking “well tell me why pencil selling is your passion” as if only offering labor is not enough, an employee must be enthusiastic about their labor, regardless of how mundane it is.
And really we see this everyday at ordinary job interviews.