Life After Layoffs: A City's Struggle to Survive

Barbershops offer discounts for the unemployed in this hard-hit community.

Dec. 11, 2008 — -- Nowhere else in America has the unemployment rate jumped so high, so fast than in Elkhart.

A year ago, this northern Indiana community was prospering, with unemployment hovering at 4.4 percent. But this summer the recession hit and it hit hard.

Several big recreational vehicle manufacturers slashed jobs. Then their suppliers followed with layoffs. Unemployment has now reached 10.7 percent -- that's nearly one out of every nine people without work.

"Our plant just closed down," said Ed Neufeldt, who lost his job with RV manufacturer Monaco Coach Sept. 17. "They just closed the doors."

Based on ABC News calculations of data from the Bureau of Labor Statistics, Elkhart's unemployment rate jumped 143 percent in the last 12 months -- it's the highest increase of any metropolitan area in the country.

After 32 years with Monaco Coach, Neufeldt finds himself on unemployment, searching for a new job when most local companies are laying people off.

"We were one of the big corporations around the area. The building was one of the biggest buildings in northern Indiana," Neufeldt said. "When it shut down, it was a big shock to everyone."

When his unemployment runs out, Neufeldt said he hopes to find a job "washing dishes or sweeping floors or something."

To pass the time and give something back to his community, Neufeldt and other unemployed RV workers are helping a homeless shelter gut and renovate a building for an expansion.

"I wanted something to do. I wanted the fellowship," he said. "We've all took a big loss in our 401(k) and we don't have jobs and stuff. It seems like we're happy up here."

The Faith Mission homeless shelter, where Neufeldt and other unemployed workers are volunteering, currently has 136 beds. Their work will allow the shelter to add 20 more.

"To see these people who don't have a roof over their head -- they don't have a job either. They're really down," Neufeldt said. "That just lifts your spirits up and you think to yourself, 'man I've got it pretty good after all, even though I don't have a job.'"

High Gas Prices Killed Local Jobs

Dorinda Heiden-Guss, president of the Economic Development Corp. of Elkhart County, said that the RV industry had been devastated by high gas prices and then a tightening of credit to buy the large vehicles.

"It's discretionary income being spent on larger-priced items," she said.

More than 480 companies in the area have let go of one or more employees, she said.

Donnie Gaut worked for 13 years at RV-maker Travel Supreme before losing his job in April.

"I've been job hunting and haven't found anything," Gaut said. "It's just been such a blessing to be able to help other people out. You don't think about your situation."

On Monday night his wife learned that her company will close and that she will likely lose her job.

"What really helps me out the most is having trust in God and believing he will provide. That's what carries me through every day as far [as] keeping joy in my heart and peace in my mind," Gaut said. "It's what we need around this area right now because every week you hear about somebody else shutting down."

Like many other communities around the country, Elkhart has adapted to a recession that is looking longer and deeper each week.

The local Chamber of Commerce has launched a new Buy Local campaign, telling residents that patronizing area businesses is one way to help fight further local job losses.

The City Council this fall passed a new law limiting residents to one garage sale a month. For many residents it was the only source of income, but they also became a nuisance.

Crime is also on the rise. The 7-Eleven on Main Street has been hit seven times so far this year. And just last week a downtown school was locked down as police searched for two men who robbed a nearby bar.

Haircuts on Sale

The ultimate sign of hard times can be seen on the heads of many men who are delaying haircuts to save a few bucks.

In response, a group of barbershops last week started offering discounts to the unemployed.

"I've been a barber for 41 years in Elkhart," said Lowell Thomas, owner of Lowell's Barber Shop. "After all those years, those people have helped me enough and kept me in business that it's time for me to give something back to them when they need it."

Haircuts at his shop normally cost $13. Now, on Wednesdays anybody who lost a job can get one for $8.

But he too is feeling the squeeze. Residents have stretched out the time between haircuts from about three weeks to more than five, and Thomas said his business is down 20 percent.

"A lot of people are embarrassed to ask. So when they call up and ask how much my haircuts are, I ask them if they are unemployed," Thomas said. "It's not much but it might give a family a little bit extra for Christmas. Five bucks is five bucks anyway you look at it."

Job Losses 'An Emotional Issue'

There has been some recent bright news.

Last week the Mad Anthony Old State Ale House started interviewing people for jobs as cooks, busboys and servers at a new 1940s-style theater opening soon -- the jobs pay up to $10 an hour.

"It was snowing outside. We probably had 60 to 70 people standing in the snow waiting for a couple of hours ahead of time," said Jeff Neels, partner of the Mad Anthony Brewing Co. "We were just overwhelmed with the turnout. It was really a sight. I was just touched by the amount of people."

By the end of two days 650 people had applied for 140 openings.

Typically he sees college students applying for jobs. This time, Neels said there were a lot more out-of-work, blue-collar workers seeking a job.

Jean E. Perrin, who heads the work force and economic development program at Ivy Tech Community College, says that since September more than 800 people have met with her academic advising team, looking for ways to learn new skill sets.

They are taking advantage of $13 million in job-training grants given to the region. Some are trying to go into health care and others are learning more advanced manufacturing skills.

"It's not only an economic issue. It's also an emotional issue for people," Perrin said. "A lot of these people have worked in the RV industry for a number of years. I've been really impressed by people's spirit in a really adverse situation."

Dorinda Heiden-Guss, president of the Economic Development Corporation of Elkhart County, said that the RV industry had been devastated by high gas prices and then a tightening of credit to buy the large vehicles. "It's discretionary income being spent on larger-priced items," she said.

More than 480 companies in the area have let go one or more employee, she said.

But ultimately, thanks to the county's location near a major interstate highway and the highly entrepreneurial sprit of the residents, she thinks there will be a strong recovery.

"This economy," Heiden-Guss said, "is probably the first hit and typically the first to recover."