Connect with Isthmus:         Newsletters 

Friday, February 27, 2015 |  Madison, WI: 6.0° F  Fair
The Paper
Share on Google+
Janesville on the brink
The GM plant's collapse was only the beginning of the city's downward spiral
For more photos, click gallery, above.
Credit:Phil Ejercito

Bill Truman's connections to Janesville run deep. He was born and raised here, bought a home and started his own family. It's where four of his five children, and his grandchildren, still live. It's where he found a family-supporting job.

Lately, all of that has been falling apart. His future is cast into doubt, like that of the city itself. But Truman, a member of the City Council (he just finished a term as president), focuses on what Janesville's sudden, precipitous drop in economic well-being has meant for others.

"It's hard to see the hurt on families," he says quietly. "We were an automotive town. You had three, four generations working in the GM plant, and now here we are."

Truman drove a truck for LSI, a General Motors supplier of car seats that shut down in the wake of the auto plant's closing in late 2008. He remains unemployed and is increasingly pessimistic about finding a job that does not involve becoming, at 52, an over-the-road truck driver who has to spend long stretches away from home.

Janesville, heavily dotted with vast expanses of parkland and bisected by the picturesque Rock River, was for many years an oasis of broadly shared prosperity. Located just 40 miles southeast of Madison, the city was something of a mecca for good-paying blue-collar jobs.

The source of the city's identity and the foundation of its prosperity was General Motors' assembly plant, proudly known as the nation's largest factory under one roof. It mostly made cars, except during World War II, when the plant churned out artillery shells; it finished out its days making gas-guzzling SUVs.

A 1937 sit-down strike had helped establish the United Auto Workers as the workers' voice and protector. In 2008, when the plant closed, production workers at the GM plant averaged about $56,000 per year, according to former GM worker and UAW official Amy Loasching.

With these high wages pushing up the local standard, Janesville became a solidly middle-class city of 60,000. Residents took pride in their park system, local sports teams, tastefully colored Victorian "painted ladies" and neat bungalows.

Driven by GM's decisions to produce an unsustainable product line while siphoning off jobs to low-wage countries like China and Mexico, the shutdown of the Janesville plant just before Christmas in 2008 ended 2,800 jobs and stilled the city's economic heartbeat (see >"From Promised Land to Graveyard," 7/4/08). It wiped out at least 3,000 additional jobs at GM suppliers like LSI and retail businesses that depended on local consumers.

But that was only the first blow. The foreclosure crisis and recession have also hit Janesville hard. The city's official unemployment rate now tops 13%, more than twice the rate in Madison. And there are rising levels of poverty, homelessness, hunger and domestic violence.

Russell Kashian, a UW-Whitewater economist who has been studying the surge of foreclosures hitting southeastern Wisconsin, wonders, "How much harder can Janesville get hit?"

Tragically, there are signs that a new hurricane of misery will hit Janesville in the next few months, as some 3,000 jobless workers run out of unemployment benefits. This could unleash an even deeper crisis for the city, adding to the toll of foreclosures, falling home prices and homelessness.

Sighs Truman, "We haven't seen the full effects yet."

Fighting for its life

As John Dohner Jr. sees it, there is a lot more reason to fear than hope.

"It scares me what could happen here," says Dohner, the financial secretary for UAW Local 95, as he leans on a counter at the union hall, which now serves as a training center for jobless workers. "Without manufacturing, I don't see a future for us."

Like other factory towns across the nation, Janesville is fighting for its life. It risks falling into the same abyss as deindustrialized cities like Youngstown, Ohio, and Flint, Mich., which have lost their economic cores and are grappling with unemployment at Great Depression levels.

Some 1,200 Janesville members of UAW Local 95 used their negotiated right to transfer to find work at GM plants in Fort Wayne, Ind., Kansas City, Mo., and Arlington, Texas. But many of them have been unable to move their families to the cities where they now work because they can't find buyers for their homes.

The average sale price of a Janesville home tumbled from $132,000 in the second quarter of 2007, before the recession hit, to $111,500 in the fourth quarter of 2009, according to the Wisconsin Realtors. And potential buyers have continuing problems in getting mortgages from banks.

"So these guys can't see their families except on weekends or even every couple weeks, because it's a 16-to-18-hour ride from Arlington," says Truman.

And the situation in Janesville will likely get worse, as several thousand jobless workers exhaust their unemployment benefits and lose their ability to keep up with their mortgage payments.

"To say I have grave concerns abut what's coming down the pipeline is an understatement," says Lisa Furseth, executive director of Community Action Inc., Janesville's largest advocacy and service organization for the poor. "The crash started a year ago, and it's just getting increasingly worse. The more pieces that you take out of individuals' safety nets, the harder it becomes."

Many families have already exhausted their savings. Some have taken to renting out their homes and are staying with relatives. "We're seeing that dislocated workers are using up their credit cards, their home equity, and cashed out 401ks," says Furseth. "They've already gone through, 'What do I have to fall back on?'"

Furseth is a member of an alliance of community agencies and groups working to keep Janesville families in their homes. "We're currently helping about 150 families to try to negotiate something on their mortgage, and we've had a 70% success rate. But you can negotiate a workout, and then someone else in the household loses their job, family income drops, and you're back where you started."

Indicators of hurt

Even before the widespread exhaustion of unemployment benefits begins to occur, the social effects already felt in Janesville have been sweeping and devastating.

Foreclosures in Rock County, including Janesville and Beloit (population 32,000; unemployment rate 18%), have nearly quadrupled, from 317 in 2000 to 1,165 last year, according to UW-Extension researcher Matt Kures.

Furseth says local lending institutions have generally been willing to work with families to prevent foreclosure. Some have even added staff to deal with the problem.

That's not necessarily true for larger lenders. Bill Truman, the city councilman, says the Bank of America, beneficiary of a $25 billion taxpayer bailout, inexplicably raised his mortgage payment by $519 a month, from $855 to $1,374, including an escrow payment for property taxes.

In response, Truman and his wife decided they could no longer afford their spacious three-bedroom home. So they moved into a small, tidy duplex with an adult daughter and two grandchildren. A son is now occupying their old home to prevent vandalism, and the family is making no more payments to the Bank of America.

A massive man at 6'4", Truman tears up at this part of his story. "I'm not ashamed of what I have done [in stopping payments]," he says. "I'm really ashamed of the Bank of America. What have they done with their billions in taxpayer bailout money?"

As foreclosures boom, the number of homeless people in Rock County has risen by about one-third since 2007, reports J. Marc Perry, planning director for Community Action Inc. Surveys taken in January show a steady climb: 294 in 2007, 311 in 2008, 364 in 2009, and 403 in 2010.

A group of local churches operate a shelter for homeless men, providing sleeping space on a rotating basis. "Many of the guests have jobs, but for a variety of reasons lost their homes or apartments," says Tom McDonald, a local attorney who volunteers with the program.

The economic pinch will also likely lead to more bankruptcies, which for all of Rock County rose from 527 in 2007 to 894 in 2009, a 65% increase.

Demand for free or reduced-price lunches in Janesville's public schools has soared, says nutrition director Deb Goad. By the 2009-10 school year, nearly half of the students in these schools qualified for these lunches.

Another indicator of hurt is the growing demand for help from Everyone Cooperating to Help Others Inc., a local faith-based organization. In 2003, the program provided 285,071 meals to Janesville-area residents in need of food. This climbed to 2,382,471 meals in 2007, then to 2,960,071 meals in 2009.

Many laid-off workers have lost the health-care benefits provided by their former employers. "Over the past two years, we've seen a 77% increase in the number of patients," says Traci Rogers, executive director of the HealthNet free clinic. The clinic, which opened in 1994, uses mostly volunteer staff and raises most of its funding from foundation and community contributions, although it has gotten some federal stimulus money.

"We're limited by our funding," says Rogers. "We feel the difficulties of the economy directly, so now people have less money to contribute while the demand for services goes up. But if we didn't exist, 80% of our patients would have no alternative and be showing up in emergency rooms, which is much more expensive for everyone."

And then there's the rise in domestic abuse. In March 2008, the Janesville YWCA's Alternatives to Violence Shelter provided 232 nights of shelter. The following March, after the GM plant's closing, this disturbing figure had skyrocketed to 640, according to Marilyn Lensert-Harris of the YWCA.

More recently, shelter use has dropped a bit. But this hasn't been due to an easing of family stress or a diminished male impulse toward violence, Lensert-Harris surmises. Rather, it likely reflects the lack of viable alternatives to abusive relationships for women.

"I believe a lot of women aren't finding options because the opportunity to find work, if they leave a relationship, just isn't there," she says. "They feel they at least have some kind of support system if they stay."

Rescue efforts

In response to the Janesville community's widespread and severe needs, local businesses, groups and unions are doing what they can. UAW Local 95, for instance, has lined up retraining and support groups through the Southwestern Wisconsin Workforce Development Council.

One notable initiative is Janesville 5.0, a business group that's raised nearly $1 million to promote economic development in the city. "This has come as a breath of fresh air," says Furseth. "The institutions are stepping up. Private employers are aggressively stepping up."

Lawrence Molnar, lead investigator of the federal Community Economic Adjustment Program, which assists about 50 communities trying to recover from major plant closings, praises the Janesville efforts. "The Janesville/Rock County group," he told the Janesville Gazette, "is the most proactive, organized and forward-thinking of any community we've worked with."

Still, the community's future prospects are grim. In all, there are about 9,000 unemployed workers in Rock County - and little reason to hope all of them can find new jobs.

"We see only 40 to 50 new jobs on the state website every week," says Robert Borremans, director of the Southwest Wisconsin Workforce Development Council. "A year ago, I was much more optimistic about getting people jobs before their unemployment benefits ran out."

Borremans' group oversees job training and education efforts involving about 3,900 laid-off workers across six counties. One strategy it's pursuing is a subsidy program for employers who hire new workers. Employers who hire new workers would get their full $15-an-hour wages covered for the first six months, followed by a 50% subsidy for the next three months. Over a three-year period, the $9.7 million program's outlay for 500 workers would represent about one-third the cost of unemployment benefits for the same number of jobless.

Along with unified community leaders recognizing the city's fragile condition, Janesville also has the advantage of high-powered political representation. Wisconsin Sen. Russ Feingold is a Janesville native, as is 1st District Rep. Paul Ryan. And the state Assembly's speaker for the Democratic majority is Mike Sheridan, a former president of UAW Local 95.

Feingold (who through his staff spurned repeated requests to be interviewed for this article) actively opposed NAFTA and other trade agreements that fostered GM's transfer of jobs from the U.S. to Mexico. But Ryan, like many conservatives in both parties, opposes the notion of a government-led industrial policy to restore the nation's economic base.

What more can be done?

Some labor advocates, like UW-Madison labor studies professor emeritus Frank Emspak, call for a major federal program to retool closed auto plants like the Janesville GM factory to make fuel-efficient vehicles and mass-transit vehicles and equipment.

But President Obama and his economic advisers seem intent on relying on "private-sector jobs" rather than large-scale public jobs programs. Obama's economic team has been reluctant to even contemplate serious curbs on the offshoring of jobs in the midst of a major jobs shortage in the U.S.

This approach is far different from what Obama seemed to promise in his fiery speech at the Janesville GM plant in February 2008. "When Obama came to Janesville, he spoke great words about keeping the Janesville GM plant open," recalls Truman. Now he says the people he talks to in Janesville have "lost some of their spark" for Obama.

The media, meanwhile, seem to be taking a Pollyannish view. Editorials in the Janesville Gazette, Beloit Daily News, Milwaukee Journal Sentinel and other papers have held out the promise that Janesville can rebound. The keys, according to a series in the Janesville Gazette, are a willingness to adapt to lower wages, gain more education and go all out to recruit new businesses.

But the truth is that virtually no factory town has recovered from the massive loss of its manufacturing base. Says University of Oregon labor studies professor Gordon Lafer, who has studied plant closings and retraining programs, "I don't know of a single city in the industrial Midwest that successfully replaced lost manufacturing jobs with jobs of equal pay, benefits and unionization."

Similarly, economist Marc Levine of the UW-Milwaukee can cite almost no examples of genuinely broad-based recovery in factory towns devastated by deindustrialization.

Despite this discouraging record, Janesville leaders see no alternative but to keep hope alive by uniting local groups for economic development efforts and promoting optimism, despite the long odds.

Even with his own troubles finding a job and having to move out of his home, Bill Truman tries to look on the bright side whenever he can.

"Dean Health care is building a $150 million hospital here, and we're seeing a couple new eateries," he says. "We're chugging along trying to create jobs. It may be four or five here and there, but we're adding a few."

Similarly, Lisa Furseth remains convinced that Janesville can recover. "We're going to get to the other side of this," she says firmly. "We have to give people a sense that there will be a light at the end of the tunnel. We need to bolster people."

Share on Google+

Log in or register to comment

Select a Movie
Select a Theater

Promotions Contact us Privacy Policy Jobs Newsletters RSS
Collapse Photo Bar