December 5th, 2008
08:05 AM ET

The economy sent me to the basement

Dave Schechter
CNN Senior National editor

Confirmation of what already was apparent – that the economy is in recession – sent me to the basement.

I found the box filled with hundreds of articles I wrote between 1978 and 1983 for the Quad-City Times, the largest newspaper for a community that straddles the Mississippi River and includes the cities of Davenport and Bettendorf in Iowa and Rock Island and Moline in Illinois.

On a map, the “Quads” are dots in the heartland; from an airplane, urban breaks in the fertile land that feeds not only a nation, but much of the world.

A fistful of those articles reported on the battering the Quad-Cities economy took in those years, in particular the farm and construction machinery industry and the men and women who worked for such companies as home-grown John Deere and International Harvester, J.I. Case and Caterpillar Tractor.

Their wages and benefits were the product of often heated negotiations between these companies and the United Auto workers and other unions. In good times, they bought new pickup trucks, vans and campers and boats to fish the Mississippi and Rock rivers.

Then came the last major recession suffered by this country. The farm economy crashed. Demand for tractors, combines and other equipment fell.

In technical terms, the nation was in recession from January-July 1980 and July 1981-November 1982.

In real terms, the Quad-Cities endured a recession that started before and finished well after those dates. Some might say that recovery continues today, even as another recession takes hold.

Labor was one of my “beats” in those years. My byline appeared on what I crudely referred to as the “obits” on some 20,000 jobs. Over time, the presidents of union locals came to dread my calls and company spokesmen gave up putting a positive spin on grim numbers of layoffs and plant closings.

As the equipment makers struggled with declining sales and profits, the unions were asked to make concessions, often on top of previous concessions. When those unions decided they would give back no more, up went the strike shacks outside plant gates. Union funds replaced only a portion of the strikers’ wages. Blue-collar pickets outside could idle non-union white-collar employees inside, as the companies lost production and revenues.

Everyone suffered, but probably none more than International Harvester. In 1979, Harvester’s chief – whose $460,000-plus salary made him one of the highest paid CEOs at the time – pressed the UAW for concessions on top of an earlier cost-cutting program. He underestimated the union’s resolve. The 172-day strike that followed – one of the longest in UAW history, through a bitterly-cold winter – ended with the union retaining most of its benefits. That CEO was gone soon thereafter, but International Harvester was on the road to its eventual demise.

When these big companies suffered, so did smaller firms that supplied parts and services. The result was predictable.

“Clouds on Q-C’s horizon” was the banner headline on the front page of the Times on Sunday, Nov. 8, 1981. My lede sentence: “The stories about layoffs in the Quad-Cities read like wartime casualty reports; the news from the economic battlefront is not good.”

Three months later, on Feb. 14, 1982, the headline read “Layoffs become a way of life.” “The economic formula is simple,” I wrote. “When you have too much of something, cannot sell what you have and are not building more – workers must be laid off.” Caterpillar planned to idle 1,450 workers for a week and 350 indefinitely at local plants. “We can live with this one-week thing, but their 350 indefinite layoffs really destroy families,” the local UAW president told me.

Local merchants were hit hard. More and more downtown storefronts on both sides of the river offered nothing past the glass.

Real estate values steady declined. (I courted and eventually married a local woman and even when her parents moved to Florida in the early 1990s, the price they received for their house in Rock Island was well below its worth.)

Local governments faced budget deficits as tax receipts ebbed. Just as today, parks, libraries, public works projects and services deemed non-essential were eyed for savings.

By November 1982 unemployment in the Quad-City metro area reached a record 17.5 percent, nearly double from a year earlier.

Eventually, the financial pinch reached the newspaper. Ironically, I suppose, I became a statistic, one of a dozen people let go on an unhappy day in January 1983.

The headline on the last article I wrote: “Deere to layoff 200; July shutdown will idle 4,100.”

I’ve seen what recession can do to a community.

And it’s not pretty.

Filed under: 360° Radar • David Schechter • Economy
soundoff (23 Responses)
  1. Roush

    Why are we the tax payers, paying for Senators to travel over seas and talk with governments. Wasting our money is what will bring a longer recesssion. They should leave the world alone and worry about America. There is a governmen department to deal with other countries, and they spend enough money as it is. This government should practice what it preaches, oversight and restructuring!

    December 8, 2008 at 6:21 am |
  2. Angela

    My comment I am American My life has been in turmoil due first to INS reforms married 12 years husband deported and after paying thousands of dollars for nothing so lost his drivers rights but in Gods name I have a child who needs medical care for the rest of his life . My husband and I have always paid taxes but since this and now the economy that tops the down trodden worse no work no money even to go else where to look on the verge of losing my house and what will i do with 7 kids, cats ,dogs and have to live on the street or go and get public assistant and burden the government. We where my husbands problem but now I ll be the government . I could tell you some true story of so many families who have been divide first the by Ins and those who made the first round are coming down in this round. let not man divide what god has joined together

    December 7, 2008 at 11:40 pm |
  3. Larry L.

    Some business will thrive in the down economy,I'm a small business with 9 employees,I'm hoping to grow the company now.I print checks and manufacture business forms,in the past few years I haven't been able to grow the company because business has been making so much money,that saving money,has just has not been a consideration,the most important things have been vacations and living it up.That is why all of these companies are in trouble now,they've been mismanaged.Now , I think they will be motivated to listen to my sales pitch,and buy.

    Turn a lemon into lemon aid

    December 7, 2008 at 11:19 am |
  4. Carl C

    What has the impact of the economy had on me? Let's see; I have a 68 year old father whom I take care of that is in stage 3-b of 4 stage lung cancer (His medical insurance from medicaid don't pay it all) and the retail job that I had was cut in August of this year, at age 37 I am finding that there just isn't alot of work out there. I am hounded daily by Wells Fargo (Whom of all my creditors was the ONLY creditor unwilling to work with me) All my bills are falling behind, and things look so hopeless. I spent a very long time repairing my credit after a messy divorce in 1996, took nearly 10 years to get it to where it was before this country feel apart. to top that off, I found out that the house my father and I bought and financed through Countrywide for $52,000 is really only worth $40,000 leaving us with negative $12,000 equity. Countrywide I think should have let us know the house was not worth the asking price. Further more I paid Countrywide for a home
    inspection that came back clear, but there was thousands of dollars worth of termite damage that I have had to foot the bill to fix. I like many of the people I talk with feel used and abused by these company's whom our government is quote "Bailing out" they have got there money, and just like they tell us "they should have saved it!"

    December 6, 2008 at 9:31 am |
  5. Brandon Jones

    If the government keeping bailing out all the businesses that come to Washington asking for help, who is going to bailout the taxpayers? The government are writing check that it can not cash, we all know that. I was told once that people only ask for help when they have hit rock bottom. The economy I fear is nowhere near rock bottom. I easily foresee additional 500,000 to as high as 5 million jobs more lost before the economy hits rock bottom. So 2.5 million President-elect Obama said he is going to create will not touch the high numbers of unemployment we will see. The government writing checks out is not the answer. The government needs to finding the CEO that fiddled as Wall Street burned to the ground. And have them be held accountable. But as I know government too must be held accountable for failing to protect the people that they took an oath to protect and represent.

    December 6, 2008 at 5:43 am |
  6. William Courtland

    Government does not understand its required social-evolutionary position as what is required for true orders for civilization.

    Its failure allowed a corruption of union bodies by governments own lacking.

    Unions should pay for apprenticeships and so with the loss of the workers employment creates the loss of the ability for the (unneeded) education the next generation and the obsolete trade goes missing.

    A general bill or workers rights should be created to replace the law which assembly of unions abuse with their social interuptions, and places of employement should allow for the access to a different member of congress (your workplace assumed a second legal residence, but denies the right for a second vote unless a workers representative is to be elected...)

    December 6, 2008 at 12:24 am |
  7. JOHN

    constant huge trade deficit put our country on credit, more and more companies started riskier credit, until now the defaults can not be absorbed. Now you'll see a heavy decline and suffering.

    The ways out are: solar power, biomass, plug in cars. anything to prevent out country from buying overseas oil. keep the money here...

    no more pensions, our companies can compete in free trade with those costs...

    December 5, 2008 at 7:59 pm |
  8. hugh ~ california

    Obama said America's best days lay ahead. When it comes to the economy I hope it comes soon, because we sure could use it right now. When it comes to wallstreet these days, no news is good news.

    December 5, 2008 at 5:45 pm |
  9. geoff, Madison NJ

    If you want to slow industrial outsourcing , we have to address all components of labor cost not just wages. Health care costs are destroying Detroit now, as they decimated the textile industries and electronics industries earlier-Boeing is next. One fast solution for Detroit's crisis would be to put all UAW and retirees under Medicare using derivatives of HR 676 Conyers-Kucinich or HR 2034 . This immediately reduces Detroit's per unit costs by $2000 bucks or so per car.
    After that impact gets plugged in we can then , under calmer conditions, evaluate the right way to save the US Auto industry.

    December 5, 2008 at 2:34 pm |
  10. Matt

    Certainly there are multiple reasons and guilty parties ... politicians, bad trade agreements and imbalances, greedy ceo's, greedy investment bankers and investors, short-sighted corporate financial leaders ... the list goes on.

    BUT THE CORE OF THIS PROBLEM to me is that most Americans chose in the last few decades to stop living within their means, which leads to debt. The materialism led to buying all kinds of stuff we don't need, with money we don't have, from foreign countries that would sell it to us cheap, and savings rates plummet. The national savings rate is now a negative 1-2%. We spend more than we make, as does a government without financial discipline. At a macro economic level, over time, that spells disaster.

    As a bright side, if you own a car, any old car, or if you have change in your pocket or money in your bank ... you are among the 8% wealthiest people in the world! Think about that for awhile, and thank God for the blessings of this country.

    Iowan (not far from Quad Cities)

    December 5, 2008 at 1:54 pm |
  11. Jason L.

    Until the government quits meddling with the economy in order to pursue political goals, these problems will continue. The only real fix is to get our monetary system back to an objective standard so that it cannot be manipulated by Congress or Treasury officials. Any attempt by the government to "manage" the economy will necessarily lead to periodic disasters.

    December 5, 2008 at 1:35 pm |
  12. steve

    perhaps if the fed didn't tinker so much with the economy and we actually did have free markets the recesionary blight wouldn't be this bad, but those in power believe, unwisely, that they can fix this with spending, and that's where the common sense apparently gets thrown out the window.

    Years of excess spending and consumption, mostly through artificially low credit, cannot be fixed with "created credit" by the monetary authority, although they would have you believe that it can. Spending got us in this mess and more spending will not fix it.

    The problems of interventionism cannot be solved with more interventionism, similarly, the problems of inflation (increase in supply of money) cannot be solved with more inflation.

    The more the powers that be try to exert influence over the markets, the more the markets push to correct, and ultimately the market will win. The big question is whether they will destroy the dollar as a consequence of their unwillingness to accept the truth.

    Unfortunately for us Iowans, as well as the rest of the nation, the writing appears to be on the wall.

    December 5, 2008 at 1:31 pm |
  13. Chad

    I ideally watched the years after NAFTA, GATT and all of those schemes to transfer production to the lowest cost nation for years and waited to see the benefits which I believed would come because both Dem's and Republican's supported them. I then watched all of the businesses that supported my home town go bankrupt and leave empty shells where once mighty industrial companies stood during the 1980's.

    After college, I personally worked trying to save two companies in my home town supporting thousands of jobs, both of which ended up Bankrupt anyway. I then ended up unemployed with an MBA and had to move my family hundreds of miles away because my home town of Waterville Maine was completely gutted by globalization. No one came to bail us out! No political parties did a thing to help. I am now completely disgusted that the United States has become a giant welfare state supporting the Rich and Corporate America under the farce that what is good for the Rich Banks and Bankers will benefit everyone.

    The only ones that benefited from all of these trade agreements are now looting our pockets again for this Financial Bailout t that is also clearly not working. I hope the auto companies get some help, I wish that the Republicans and Democrats actually gave a damn about not handing away our livelihoods through these Unfair Biased and Flawed Free but not fair trade agreements that have reduced our standard of living and LOWERED our incomes.

    I am more disgusted that now the focus of our Government's effort is on maintaining Ridiculous real estate values rather than increasing INCOME in the US. Supporting overvalued real estate while INCOME growth in the US has been flat or non existent is another fruitless endeavor and a TOTAL WASTE OF MY TAX MONEY. CAN WE HAVE SOME CHANGE IN WASHINGTON? Please, get me a new Independent political party.

    December 5, 2008 at 12:59 pm |
  14. Kevin

    I'm pretty disgusted with the whole system right about now. Real work doesn't pay. The only people that ever get promoted and get good jobs are the friends of the people at the top. As long as thier firends are at least semi competant, they get promoted. Other people who are equally or more competant don't even get a fair shot at it. CEO salaries are ridiculous. Is anyone really worth more than $1 million per year? Honestly? No, I don't think so. Anything over $1 million/year in salary and benefits, including stock options should be taxed 100%. And don't try to tell me people won't work hard if they know they can only make $1 million per year, that's a bunch of BS. Do you thin the CEO of GM wouldn't take the job if the salary and benefits maxed out @ $1 million/ year? If every other job did too, he would still take it.

    December 5, 2008 at 12:58 pm |
  15. Darryl

    You want to know the problem? A huge number of Americans will drive an import car to their local retail stores and they won't be able to buy anything made in the USA. It's not rocket science: low prices for imports don't mean much when you don't have a job. The US trade deficit with China in 2007 was ca. $280 billion and the US World trade deficit was $763 billion in 2006 and 2007 was even higher.
    I live in SC and we have the third highest unemployment rate in the US. The huge loss of jobs in the textile industry here over the past 25 years has not been compensated by new industry and the"service economy" just doesn't porvide the same benefit as manufacturing.
    Americans need to wake up, we need to oust half the politicians in washington tha got us here

    December 5, 2008 at 12:54 pm |
  16. RC

    I remember when that recession hit. I was a teenager looking for a minimum wage job in our small town. Unfortunately or thread factory closed and many of those workers found those minimum wage jobs I was trying to get. I was lucky to have some connections and ended up as a dishwasher at a new restaurant since I knew the manager.

    This town has recovered and flourished as a bedroom community of a nearby city. Now it looks like times in our town will be a little rough again, but this time we don't rely solely on one major employer like we did in the early 80s. This has not changed the fact that many of the newly built stores and restaurants have closed shop, which are our source for jobs in this town. It looks like we will take the brunt of the recession like we did last time.

    December 5, 2008 at 12:36 pm |
  17. Pat Savu

    Yes, workers and their communities have been suffering for decades. My grandmother sold her house in the 80s in Detroit for less than she paid for it. But the average American has been supporting the GNP on credit and that has kept the National economy afloat since the 80s. 70% of the GNP is consumer spending.

    At the same time that the American worker has been losing ground, fat cat CEOs have been making more and more money by moving jobs overseas and creating house-of-card credit schemes that allowed to consumption to continue. Not much of any of this has been "trickling down" to the average American. Americans have to wake up and vote for politcians that support agendas that create and retain jobs directly in the USA. Indirect means like that law that allowed companies with foreign subs to repatriate their earnings without taxes, were supposed to create jobs indirectly by when the company redeployed the capital with the USA. Instead, those companies just bought back their own stock to raise the stock price so that the execs could make more money on their stock options.

    Unfortunately the guy on the bottom (the American worker) will pay again for execs short term thinking and bad management with their jobs. Meanwhile guys like Fuld (from the bankrupt Lehman) will walk away with bonuses of $530 million over a 8 year period; they can afford to never "work" again. You can hardly call what Fuld has been doing "work".

    December 5, 2008 at 12:11 pm |
  18. Ann Holtzclaw

    Who gave the first major tax credits for people who bought SUV's? The republicans! Don't blame the Big Three for not planning ahead. They were building cars the American public was demanding thanks to Congress giving tax credits for gas guzzlers.
    Where was all of the radar scrutiny and demand for accountability when the republicans were handing Bush a blank check to the tune of 10 BILLION a month in Iraq? Three months of money in Iraq will help the auto industry and we'll have cars to show for it.!!
    What does the American taxpayers have to show for 6 YEARS in Iraq?
    And last but not least ALL of the Iraq money has been borrowed from foreign countries.

    December 5, 2008 at 12:03 pm |
  19. Scott

    Thank you for the reminder of the human and family costs of this downturn. I still cannot fathom how we expect to outsource so much production and manufacturing, then depend on the consumer economy to purchase these items at an ever increasing pace. We have lost our most prominent manufacturing to "slave wage" economies where there are few worker or environmental protections. Suddenly, we see that America is the only country that buys our products, and the big 3 automakers still don't understand what the buyers want.

    December 5, 2008 at 11:57 am |
  20. earle,woodstock,vt

    We have been giving the store away for thirty plus years now, with both political party's to blame. Now, the country wants answers as to how we got here? We manufacture for foriegn countries, and at the same time move simultaneously the plants off shore. The business's as a whole we once had,have diappeared (physically) thru globalization (which we all embraced as a wonderful business model) with nothing but a empty shell! We,yes all of us, are a huge part of the problem, for it's always the "other guys ox that's getting gored", but sadly it's are turn we've all been gored,..... sad.

    December 5, 2008 at 11:06 am |
  21. Joanne, Solvay, NY

    I read the prophetic musings of those who feel that the fall of the Big Three automakers will deepen recession beyond any event in our history. Regardless of how one man or woman loses a job, it is lost. Of course the numbers would be much higher in big business. However, it is the focus that is important. Each family suffers, the GM worker suffers the same as the employee of the small business owner who can no longer afford him/her. Perhaps we need to suffer "large" in order to correct the errors in greed...or there will be no fixing our economy!

    December 5, 2008 at 10:50 am |
  22. Pat Marinich

    The farm crisis of the early 80's, like the auto industry crisis of today, was largely caused by outside forces. Then it was Jimmy Carter's grain embargo against the USSR because of their invasion of Afghanistan that caused commodity prices to drop like a brick. Now it is the financial meltdown on Wall Street causing a credit crisis that forces the Big 3 to beg to Congress. The working men & women of America are the victims in both cases. Some of the farm implement manufacturers survived by consolidating. If the auto industry does not weather this crisis, the 80's recession will pale by comparison & we will see Great Depression II.

    December 5, 2008 at 10:14 am |
  23. Cindy

    I expect this recession to be way worse with the lay offs and business closings. We are dealing with big time companies now who have way more other smaller companies attached to them and relying on them for work. It's going to get extremely ugly before we see the light at the other end of the tunnel!


    December 5, 2008 at 9:30 am |