Hard Times in the Heartland

By WILLIAM A. HENRY III

Recession, fleeing firms and the auto slump stagger Michigan

At 8:30 in the morning, outside St. Peter's Episcopal Church in Detroit, about 20 men slouch against a wall, waiting for Father Tom Lumpkin to open a soup kitchen. Some are the traditional clients: winos and street people, refugees from a coherent, workaday life. But these days there is a new and growing group whose presence seems to Father Lumpkin a shocking sign of Michigan's economic blues. They are men in their prime, sturdy, able but unemployed, and baffled to find themselves taking charity.

Says one, a black who identifies himself only as John: "I'm here every morning. I'd be in bad shape if it wasn't here." Another man, a white in his late 40s, offers this embittered apologia for coming: "The economy is lousy. If it wasn't, we wouldn't be here." By day's end perhaps 300 people will have been fed at St. Peter's, four times the number who were served when the kitchen opened in 1976. A thousand more will drift into other kitchens across Detroit. They are among the most visible, and the most humbled, of the jobless in a state where one in every eight workers is unemployed.

Of the troubled states in the industrial heartland of the Midwest, Michigan is by far the hardest hit. Beset by nationwide recession, the migration of business to the Sunbelt and the auto industry's slump, Michigan had an unemployment rate of 12.7% in October, vs. a national average of 8%. Worse is to come. The University of Michigan's annual Conference on the Economic Outlook two weeks ago projected that the state's unemployment rate would climb to 13.3% in 1982.

For decades, when Americans sang of the open road and Detroit's big three were going full throttle, Michigan was among the most prosperous states. There are still residues of that auto-mobilized prosperity. Wages in the private sector, led by United Auto Workers' contracts, are the highest in the nation, at an average of $315 a week. State unemployment and workmen's compensation programs have generous eligibility rules. For example, Michigan, unlike other states, does not require disabled workers to accept retraining in another field. Welfare payments to families with dependent children have been cut three times this year (to about $450 a month for a mother and three minors), but last year Michigan ranked second in the nation in such payments after California. The auto, which transported Michigan's economy to affluence, has helped to stall it. The industry, which sold 9.3 million vehicles in 1978, will sell only about 6.2 million this year. Last week brought more bad news. General Motors reported that its sales for the second ten days of November (a total of 89,707) were down 33% from the same period a year ago. Ford sales were down 23.6%, Chrysler 24%. In the past three years almost 300,000 auto jobs have been lost nationwide. So have an estimated 500,000 to 600,000 laborers for parts suppliers and steelmakers. Michigan's share of that loss: 250,000 or more.

Governor William Milliken is seeking to restrain social programs, public sector salaries and the cost to business of unemployment and workers' compensation. For the longer run, Michigan Director of Commerce Norton Berman is pursuing longstanding efforts to diversify the state's economy. Some of his aims involve futuristic technology industries, such as the construction of industrial robots, computer-aided manufacturing and genetic engineering. Berman also hopes to exploit the state's natural resources of wood and water. He claims enthusiastically that Michigan's borders embrace or touch on 20% of the nation's fresh water, while booming Sunbelt states are running dry. He has not specified, however, how the water can be used or how lower water costs can offset the state's winter fuel costs.

Meanwhile, the suffering goes on. The day before Thanksgiving, Albert Fouchia of Southfield lost his job with a rivet supplier for the second time in 18 months. At the unemployment office in the Detroit suburb of Royal Oak, a dozen long lines of people wait for benefit checks in shamed, disconsolate quiet. Most act too embarrassed to talk even to fellow job seekers. Few seem hopeful of finding work. Says Gloria Condele, 44, a laid off cashier: "Even people who are still working are worried." Roy Gavel, previously laid off as a Chevrolet assembly worker in 1975, got certified as a diesel mechanic to ensure more steady work. His new job lasted about a year; after more than 20 applications for jobs, he has given up on Detroit and, joining a growing tide, plans to move his wife and infant son to Texas.

Some of Michigan's new hopeless are crowding into bingo games, raffles and the offices of the nation's biggest grossing state lottery. Legal gambling alone commands an estimated $1 billion a year, or $108 for every resident of the state.

Business and personal bankruptcies tripled in the past two years. There are also smaller signs of decay. Humane societies note an increase in reports of stray pets, as owners abandon animals they can no longer afford. Last Friday Jimmy Johnson showed up at a downtown Detroit center with two German shepherd pups. Said Johnson, out of work for two years since he was laid off by Chrysler: "It's either feed the dogs or feed the kids." Public amenities are disappearing: next summer all but the most popular state parks will have to close for lack of funds.

Even General Motors, a symbol of the state's traditional pride as well as its current problems, resorted to gimmickry in an attempt to sell an overstock of houses owned by transferred employees. GM offered to give each buyer of a home another longtime American dream, a new car free of charge. The company sold 46 homes in metropolitan Detroit. But every buyer in these tight-money times turned down the car--and took a cash discount instead.

--By William A. Henry III. Reported by Christopher Redman and Paul A. Witteman/Detroit

With reporting by Christopher Redman, Paul A. Witteman/Detroit

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