Factory towns slow to see job growth from stimulus plan

LAMAR, Mo. -- This southwest Missouri city, tucked amid endless fields of winter wheat and soybeans, felt the recession ahead of the rest of the country, when furniture-maker O'Sullivan Industries closed in mid-2007. That threw 700 employees out of work and turned an economic cornerstone into a million-square-foot vacancy.

Thus began what city manager Lynn Calton calls "a slow death." Stores folded. A 50-year-old car dealership went under. One in 10 jobs disappeared last year. Everyone suffered, from the downtown florist to the dentist who cleaned the factory workers' teeth.

Even Mayor Keith Divine filed for unemployment when his furniture store went out of business. He now sells carpet and mattresses and says he hasn't seen evidence of the 640,000 jobs saved or created nationwide thanks to President Obama's stimulus plan.

"What work? Where?" Divine asks.

Lamar and communities like it, built around dying factories and mills, have been slowest to see relief from the $787 billion stimulus, underscoring how hard it is for Washington policymakers to create lasting work in areas that need it most.

Problem of expectation

For the Obama administration, cities such as Lamar are as much a problem of expectations as it is of policy. For all the items contained in the stimulus, from tax cuts to road work to new schools, nothing could quickly replace what factory towns lost during a recession that shed hundreds of thousands of manufacturing jobs.

That's why the White House says it's unfair to judge the stimulus by the unemployment rate because no amount of stimulus was going to keep Lamar's unemployment rate from approaching 12 percent.

Nationwide, only 2,500 of the 640,000 stimulus jobs announced Friday were in the manufacturing industry, and many of those appear to be mislabeled. Teachers were the biggest winners because states used federal aid to fill budget gaps, then credited the money with avoiding layoffs -- even if no such layoffs were planned.

"We haven't seen any improvements in our town," said Gary Macklem, the mayor of Croswell, Mich., a small city in a county built on farming and factories, where unemployment has hovered just below 20 percent all year. "We lost two factories and the other factories are hanging by a shoe string."

Benefits, not jobs

One of the goals written into the stimulus was to help "those most impacted by the recession." And there are provisions to do that, from increasing unemployment and Medicaid benefits to paying for worker retraining. Places such as Croswell and Lamar also probably would have been worse off if their states had endured their budget crises without federal help.

And there are billions of dollars to upgrade the electrical grid and encourage alternative energy, a historic investment expected to spur manufacturing of wind turbines, solar panels and clean-running buses.

"Will the stimulus program by itself turn around the decades-long decline in that sector? Of course not," said White House economic adviser Jared Bernstein. "But it will help, and it will help in some of the most key areas, where manufacturing can shift from contracting to expanding."

Such benefits are harder to see than a job and a paycheck. In manufacturing towns, those have been difficult to create.

Temporary positions

O'Sullivan Industries was the kind of company that hired workers right out of high school, a company where employees could eventually pull down $16 an hour and work overtime when the plant was running six days a week. Some employees had been there for 30 or more years. People who wanted to start a family and put down roots in their hometown could go get jobs at O'Sullivan.

The stimulus can't create those types of jobs, at least not directly and not right away. So despite Lamar's need, the county saw just 22 jobs from the stimulus. They are temporary positions working on a local highway project, not the kind of thing someone from O'Sullivan could easily walk into.

"They were building ready-to-assemble furniture. Somebody out there pouring concrete is a whole different job," said Calton, the city manager. "I don't know if those people were able to get on with someone doing a highway project."

Those workers count themselves as lucky, but already fear what may come next. One man has a toddler and said he'll take dishwashing jobs to get by once the stimulus project is over. Word at the union hall is that things haven't been this bad in 10 years.

"You put your name on the list, and you're No. 90 or No. 106," said Bob Williams, who has worked construction since 1968. "You ain't going to work tomorrow."