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Energy Innovation May Be Long-Term Fix

But even though states and cities have provided lists of "shovel-ready" projects to the Obama administration, it will be months before they are ready to accept applications.

"The roads, the bridges, the schools -- all that takes at least 120 days to get going just from the time they get the money," said Diane Swonk, chief economist at Mesirow Financial in Chicago. "Unfortunately in the short term there's nothing that can be done to avert the fact that things will get worse before they get better."

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"I would say use this time to get more education," Stiglitz said. "The evidence is pretty clear that those with strong, broad education are more agile. And when they switch jobs their wages go down less. Most Americans will get another job, but on average, their wages will go down. That is always hard to accept."

Indiana's Annette Silver is one example of someone taking that advice. When the 45-year-old mother of four lost her job at the Monaco RV plant, she applied for a $6,000 state grant and is now a technical school student learning how to make artificial hips and knees for the booming orthopedic industry.

"I've been out of school for 26, almost 27 years. So to jump back into school again is just overwhelming," she says. "But I'm a very determined person and a lot of the people here are determined because they are scared."

Most economists agree that after bursts of infrastructure spending and retraining, the best long-term fix is innovation, especially in the field of energy. With the right tax incentives, the wind farms of Indiana could quickly ramp up production, and Elkhart's idle labor base would be a perfect fit.

"We've hired guys locally who will not only work with us on this wind farm, but we'll take them with us to the next one down the street or the one across the country," says Ron Ritter of RMT Wind Connect.