Slow labor market takes toll on Lawrence, Mass.

LAWRENCE, Mass. -- Pablo Garcia describes himself as a hard worker and has the broad shoulders and thickly muscled arms to prove it. But like so many people in this timeworn former mill town, he's been involuntarily idle for months.

"There's a lot of people looking for work. They're in the same situation I am," Garcia says. "I've been looking everywhere. It doesn't matter the salary. I just want a job."

If the worst of the recession is past, as many economists believe, you'd never know it by looking at the labor market. The unemployment rate in this working-class city on the banks of the Merrimack River is 16.6%, up sharply from 7.7% in the fall of 2007 and well above the national rate of 9.5%.

The situation in Lawrence may be especially acute, but it's not unique. From battered auto towns in the Midwest to California communities reeling from the housing industry's collapse, American workers today face the toughest labor market in decades. Unemployment rates are in double digits in 14 states, almost twice as many as one year ago. For every scarce "help-wanted" sign, there are nearly six available workers, according to Labor Department statistics.

"It's a desperate scene out there," says economist Heidi Shierholz of the Economic Policy Institute, a labor-funded think tank in Washington, D.C.

It's going to get worse. The national unemployment rate is headed to 10% this year, President Obama conceded last month, and it may test the post-World War II peak of 10.8% set in 1982. Even once the economy begins expanding again — which most economists expect to be before the end of this year — job growth is expected to lag for "at least another year," Shierholz says.

The Federal Reserve, which has been comparatively optimistic in its forecasts, says unemployment will remain above 9% through 2010 and will take "at least five or six years" before settling at the sustainable long-term average near 5%.

"The unemployment rate is the ultimate caboose of economic indicators," says Stuart Hoffman, chief economist of PNC Financial Services Group in Pittsburgh.

The waiting game

The industrial revolution blossomed in the mid-19th century in Massachusetts mill towns such as Holyoke, Lowell and Lawrence. Handsome five- and six-story brick mills hugging the Merrimack River, which once housed thousands of Irish and German immigrants, are a reminder of the city's former commercial prominence.

The local textile industry jobs fled south in the 1950s, when employers discovered the attractions of less-expensive, non-union labor. Ever since, the city has battled to find a foothold in a swiftly changing economy.