Part 1

Kai Ryssdal: From American Public Media, this is Hard Times in Middletown, a special report from Marketplace and American RadioWorks. I'm Kai Ryssdal. I'm talking to you from the basement of a church in downtown Muncie, Indiana.

Woman 1: Lemonade, tea?

Woman 2: Lemonade please.

Once each month volunteers at the First Baptist Church of Muncie make dinner for about 100 people. The idea is get people in the door and then hook them up with a new kind of social support system to help make their lives better.

Molly Flodder: What this program does is to link people in the community with people who are lacking resources so they can become friends and work their way out of poverty.

For many people here a free plate of fried chicken and potato salad is a welcome relief. Just figuring out how to feed themselves and their families can be an all-consuming effort for the poor even in the best of times.

Flodder: Got to make sure everybody gets to eat before we see what kinds of seconds we have.

One of the people here who is trying to make it through this downturn and trying to get out of poverty forever is Angelic Wood. She's an expert on what it's like when making ends meet is a daily battle. Angelic, thanks for talking to us.

Angelic Wood: Thank you.

Ryssdal: What is that daily battle like for you?

Wood: You have to balance everything in your life and make sure everything's convered.

Ryssdal: What does that mean? I mean, when you wake up in the morning, how do you plan your financial day?

Wood: Um. Right now, it's just as it comes. The first fire I have to put out, that's what I do.

Ryssdal: Is it to the point where you have to figure out how you're going to get dinner on the table yet?

Wood: Well my food stamps just went up so starting next month that'll be a litte bit better, but sometimes it is like that.

Ryssdal: How much do you get in food stamps?

Wood: Right now it's $262 a month for a family of three. And I have very little income right now, so that stretches it. It's going to go up to over $400.

Ryssdal: Not too long ago, you were doing great. You had your house, a couple of kids and a job.

Wood: Yup.

Ryssdal: Was there one thing that happened to you?

Wood: Losing my job. Losing my job did it.

Ryssdal: What was it like when you were growing up? I mean is this new for you?

Wood: Yes. I was raised middle class. My mom worked for General Motors so - and it was just me, I was an only child. So it was pretty easygoing growing up. I got everything I wanted.

Ryssdal: When did you figure out that you were poor?

Wood: When I had no electricity, no gas. The only utility I had was water. My house was about ready to be foreclosed on and my van had been repossessed. I was scared to death that they were going to take my kids from me because you know you hear about that. People who can't provide for their kids, the kids get taken Wooday.

Ryssdal: It never came to that though, obviously.

Wood: No. It never came to that, thank goodness.

Ryssdal: There is, as you well know, a recession in this country. What do you see that as in Muncie and across the country? What's your experience?

Wood: What I've seen, the jobs are just going Wooday. Everybody's losing their jobs, there's more people I know now that are on food stamps. Their kids are on Medicaid. Free lunches at school. The numbers are just going up and up and up and I think it's going to be a while. I think it's going to get worse before it gets better.

Ryssdal: Angelic Wood, thanks so much.

Wood: Thank you.

She's a client of the anti-poverty group "Teamwork for Quality Living" here in Muncie, and we're going to visit some more with these folks a bit later in the program. Next though we're going to go across town, to the campus of Ball State University and we're going to find out why 80 years ago, Muncie became perhaps the most famous small city in America. Why it became known as Middletown, USA, and what that can tell us about how the recession is battering people on the middle and lower rungs of the social ladder in this country.

[clock tower chimes]

In the library here at Ball State, there's a place called the Center for Middletown Studies. Back in the 1920s sociologists Helen and Robert Lynd set up shop in Muncie to study the social class system in a typical Midwestern city. Their 1929 book Middletown became a national bestseller and since then Muncie has remained one of the most thoroughly researched small cities in America. James Connolly directs the Center for Middletown Studies. He says when the Lynds got to Muncie, they found a city that had once been a quiet farming community transformed by the manufacturing boom of the 1920s.

James Connolly: The biggest industry in the town in the 1920s was auto parts. The city kind of specialized in gears and transmissions and they would make those and go off to Detroit and go into cars. There was also a substantial glass-making operation dominated by the Ball Brothers company and a number of other industries as well.

Ryssdal: What did it look like, these glass factories? Do we have photos?

Connolly: Yeah we do have photos of the glass factories.

Ryssdal: These are the famous Ball jars?

Connolly: These are the famous Ball jars, right here. You see someone standing and there's an assembly line, and I think these two people you're looking at pulling them up are inspectors to make sure there are no problems with these.

Ryssdal: And the folks who worked in these factories, they made solid middle-class wages?

Connolly: Not yet. Eventually they do. But what the Lynds found in the 1920s and the 1930s is a pretty precarious existence. They had uncertainty from day to day about how life's going to work out. If you're injured on the job, you're out. Business is slack, you're out. And what the Lynds are puzzled by is why aren't the workers more angry.

Ryssdal: And what do they find? They must have asked the question.

Connolly: They certainly asked the question and what they concluded was that it was consumption. Even with these limited wages, even with these layoffs that would come periodically, they could still afford the newest appliances, they could go to the movies, they could own a radio, they could probably even buy a car, which was pretty cheap in the 1920s. And so they thought that placated them enough and gave them a sense of belonging and status that was sufficient to keep them relatively satisfied.

Ryssdal: This book that the Lynds wrote - Middletown - became incredibly popular. It's still in print today. What accounts for the national fascination with what they found?

Connolly: The Lynds struck a nerve and I think they did it accidentally. The idea was to study a single community. And what they say at the beginning is that this place isn't necessarily typical and any generalizations you make you should do very cautiously. Nobody paid attention to any of that. Instead they believed that the Lynds had discovered the real America. It was very appealing to think that the real America was a small town where everybody was Protestant, everybody was white so it was a homogenous place so everybody shared some of the same values and it was a fairly satisfied place as opposed to the real America being the polyglot city, the big city with all the conflicts and tensions that that entailed.

Ryssdal: So how do we take the Lynds' insights from 75 years ago and apply them to Middletown or Muncie today?

Connolly: Well the big story of not only the Lynds work from the 20s and 30s but also all the other researchers that have come here over the last 80 years is continuity. That this is a place that's stubborn, that doesn't like to change. So one of the things you're looking at is a town that's really being forced by these economic transformations to really reinvent itself, but doesn't want to. And is very much resistant to it and has a very difficult time imagining itself as anything other than a factory town. It's not a city that is well-equipped in a collective mental sense to make the adjustment and so it's been a real struggle.

Ryssdal: Jim Connolly directs the Center for Middletown Studies at Ball State Universy in Muncie. Jim, thanks a lot.

Connolly: My pleasure.

I'm Kai Ryssdal. You're listening to Hard Times in Middletown, from Marketplace and American RadioWorks. For the rest of this hour, we'll offer a set of portraits of people struggling to make a home in modern-day Middletown. For more than half a year American RadioWorks documentary producer Laurie Stern and host Stephen Smith have been checking in on several Muncie families. They focused on the people experts would describe as "the working poor," some of the folks most at risk during this nation's economic crisis. Here's Stephen Smith.

[parking lot sounds]

Roy Foreman: How do you want to put this in?

Stephen Smith: Roy Foreman gets in line early on one of those icy, lead-gray winter mornings.

[sound of rummaging in the truck]

Foreman: I'm here at the what is this, the Holiday Inn Express?

Yep, the Holiday Inn Express, which is giving away its old mattresses.

Foreman: I can't afford a brand new mattress. Why? Because I don't have a job so I have to come here and get a mattress. That doesn't bother me. … To do anything in this town you need help. You can never do anything by yourself in this town because there's no jobs.

[rummaging sounds]

Foreman's getting help today from his girlfriend's father, Howie Heath. Howie has a small pickup truck and plenty of time. After three decades as a skilled technician, Howie is out of work now too.

Howard Heath: Muncie's been going downhill for probably ten years when the factories starting moving out

Foreman: Everything's closing up, closing down, they're tearing buildings down. If you go down the road all the time you see "for sale" signs on everywhere, everything.

Heath: We've got the last major auto factory in Muncie which is getting ready to shut down pretty soon. I'd hate to think how many people are on unemployment around here. … I think by government standards we're probably considered lower income. Which means that you barely get by. You make…

Foreman: You make do.

Heath: You make do.

Foreman: Sometime me and my girlfriend, we don't know if we're gonna make rent this month but we always do. It's tough. I'm stressed out. I love my kids to death but they stress me out, not having a job stresses me out,but I have my family, that's all I got.

[car door closing and car driving away]

Once the mattress is roped down tight, Roy and Howie drive away. We'll see them later. When times are hard, a simple accomplishment - like getting a free mattress - can make for a good day.

[door opens]

Teacher:OK guys. You'll notice at the top of each lesson it has what's called a learning exercise. It gives you the rules.

At the United Auto Workers union hall over on the edge of town, a handful of middle-aged men in flannel shirts and baseball caps meet in a makeshift classroom. For much of the last century Muncie was a thriving industrial town. It specialized in making auto parts. But in recent decades the big factories all shut down. The last of them - Borg Warner - went dark in April. So the UWA is planning to close its local Muncie chapter. In fact the big union hall is for sale. On this day though a teacher is at the hall helping laid off workers prepare to go to back to school and train for new professions.

Teacher: The majority of these men are doing academic brush-up skills. That could be reading, math, language arts.

Charlie Saubert: What are you guys doing anyway?

Men laughing: Going to school!

Charlie Saubert stops by the class. He lost his job at Borg Warner last year. He's here for an evaluation.

Teacher: Charlie this is a locator test. It is a test that will show which of my other tests to give you.

This test will show how many more tests Charlie may have to take just to find out what kind of schooling he needs.

Saubert: So, how long does it take to take a test?

Teacher: About three hours.

Charlie sighs and reaches for a pencil. At 53, Charlie is a 20th century factory man trapped in the 21st century knowledge economy. Charlie was at Borg Warner for 25 years. He worked on the production line making automotive transmissions. He was about five years shy of qualifying for his pension when he got laid off.

Saubert: Sometimes it was hell in there. I didn't mind going in there because once I had my 30 in if I wanted to retire I could; if not, stay on.

Charlie has next to no interest in the school work. But he came to the union hall for testing because he had nothing much else to do. And he's getting desperate for a job.

Saubert: I'm trying to find 'em but I just ain't hearing nothing from nobody.

About 65,000 people live in Muncie and the unemployment rate is almost 11 percent. That's a few points worse than the national average in this recession. The local job market is as flat as the surrounding Indiana landscape. Like so many of Muncie's laid off blue-collar workers, Charlie Saubert never expected to be looking for a job at this stage of his life. In the years when he pulled a lot of overtime at Borg Warner, Charlie made close to $100,000 dollars a year. He often worked seven days a week. Now the rhythm of life is very different.

At home Charlie builds a fire in the cast-iron stove. He lives in a neat, tiny bungalow with his wife Pam and their 21-year-old daughter. Charlie spends a lot of time at home these days.

Saubert: These are western saddle bags, just stamping.

[tapping sound]

Charlie's hobby is hand-tooling leather bags and pouches. He uses a hammer and a set of dies to sink intricate patterns into the cowhide. It's just one of the things he does to keep busy.

Saubert: It's been cold lately so no tress to cut but if I have a chance to cut wood I cut wood to heat the house. And then a lot of times, her aunt, she had her leg taken off, so I run her around…

Pam Saubert: His typical day is usually he gets up early. Putters around the house, watches cowboy shows, lots of educational shows. He's been doing laundry, dishes.

Saubert: Going up to Work One…

Pam Saubert: Going up to unemployment ... So that's about his typical day.

Saubert: Work with my leather a little, so.

Meanwhile Pam, who's also in her 50s, manages the family expenses and works occasionally as a substitute teacher. She's back in school studying for a teaching certificate. The Sauberts are trying to live on Charlie's unemployment check.

Pam Saubert: We get $351 a week, that's all we get. I'm getting things paid. They may be a month late but we're getting them paid. I finagling around to where I get what we need.

Finagling, yes. But also doing battle. Every month, Pam tangles with the mortgage company. Sometimes that's one bill they can't pay.

Pam Saubert: There was one day they called here over 20 times in 10 minutes. All they wanted was their money and I kept tryin' to tell them there isn't any. They'd hang up. Minute later, they'd call again, just constantly. And we've told 'em they're harassing us. I said "Look, I'm working with you guys why are you calling us?" Didn't do any good. And finally we just shut off our phone.

Charlie Saubert expects to find some kind of work some day. The Sauberts have already tapped into Charlie's 401-k plan. He and Pam are just hoping to keep enough cash flowing until he can start drawing his pension. That won't happen until 2017. Meanwhile, the Sauberts could quality for food stamps and government health insurance. It's been a long drop from the middle-class lifestyle they used to enjoy, and the Sauberts are frustrated that America's social safety net does not seem to be catching them.

Pam Saubert: The government officials need to look at some of these guidelines they make people go through. … I mean, it should'nt be this tough when you really need help. It should not be this tough to get it.

Charlie Saubert: I talked to somebody at the unemployment office last week and they wasn't even from Borg Warner and they said they'd been out of work for two years and still couldn't find nuthin'.

Pam Saubert: He and I have worked all of our lives, paid our taxes, and now that we need help we're having to jump through hoops to get it. And that shouldn't happen. So I can just imagine these real low income people who don't even have what we've got coming in, what they're having to do.

[Christmas party]

Actually, Pam and Charlie Saubert have a pretty good idea what poor folks go through in Muncie.

Pam Saubert: Now there's bows over there on the table and there's name tags.

The Sauberts volunteer with the anti-poverty group that meets in the basement of the first Baptist Church. Tonight is the Christmas party. Pam helps an excited swarm of kids wrap presents. The gifts were donated so that all the children would have something to give their parents and grandparents for Christmas.

Pam Saubert: Get your tape out. Get some tape.

Across the church basement, Angelic Wood sits at a big round table. She's the single mom Kai Ryssdal talked to at the beginning of the program. Angelic Wood has a plastic plate heaped with barbecued cocktail wieners. Her boys sit on either side of her.

Angelic Wood: This is Jayson, he just turned 13, and this is Tristan, he turns nine the day after Christmas.

Angelic is a large woman with coal black hair and gray- blue eyes. She's in a social group you might call "the brittle class," people who struggle to make enough money to stay one step above the poverty line.

Wood: Being a single mother, my income is so much less than what my bills are. So, I'm in risk right now of being sued for credit cards I had back when I actually had a decent job.

The story of how Angelic Wood became poor is common for someone in the brittle class. All it takes is one big problem -- very often a health problem --and a person's life tips down the slope toward financial catastrophe. For a time, Angelic got by on part-time jobs and child support payments from her ex-husband. But her prospects darkened in 2002, when she was diagnosed with fibromyalgia. It's a chronic disorder that causes intense muscle pain and debilitating fatigue.

Wood: Living with fibromyalgia is really bad. The pain causes depression, the depression causes you really not to be able to do anything.

She had a job at a software company in customer service, but because of the illness began missing a lot of work. Angelic lost her job in 2007. A long spell of unemployment set in…and she nearly lost everything else…including her home.

[sound of phone ringing]

Wood: Hello

[phone caller: Hi. This is the dentist's office calling about Jayson and Tristan's appointments Thursday at 11:20.]

Angelic Wood and her two boys live in a cluttered, one-story house in a run-down Muncie neighborhood. She's owned the place for nearly a decade. But last summer her finances hit bottom. The house was in foreclosure; her minivan got repossessed. Nine-year-old Tristan tells what happened next.

Tristan Bell: We didn't have any hot water, all we had was cold, and we can't use our oven cause it runs on gas, and it was just really bad.

Wood: When my electricity got shut off I had just gotten home from spending $200 at the grocery store, got home, didn't have a refrigerator to put it in.

Angelic's mother was able to help some - but she has serious health problems too. Eventually, Angelic found work she could do from home.

[hear computer keyboarding sound]

Wood: What I'm doing is sending a message to girl named Jennifer that takes care of schedules.

Angelic Wood is the voice on the other end of a toll-free number.

Wood: Hi. This is Angie Wood, identification number 442978 speaking on behalf of the IRS. May I take your forms order please.

She types the request into her computer and a package of tax forms gets shipped from a processing center somewhere.

Wood: It's kind of repetitive. It's easy though. It's not stressful. Yeah, I like it. I have a job. It may be only part time but it's a job. It's a lot better than last summer.

But not long after this interview, the tax season ended. The telephone job dried up. Angelic Wood was out of work, again.

Fully one-third of the people in Muncie are in the "brittle class." If you are one of them and you get caught out on the thin ice of layoffs, low-paying jobs, too much debt… it's hard to keep from going under. Remember Roy Foreman? He's the guy who got the used mattress? Well, when we meet Roy again, he and his girlfriend Ashley are bracing for new difficulty. And Roy still does not have a job.

Roy Foreman: Actually, I'm just waiting. 'Cause Ashley, she goes in for surgery tomorrow so I'm going to wait until she gets out.

Ashley Chalfant: Tomorrow, in the morning, at 5:30 in the morning, I gotta be at the hospital, and they're fusing the bottom part of my spine together.

Ashley Chalfant is worried about how the family will make ends meet while she's recovering from her operation. Ashley is 23 years old and works at a drug store. Her pay is a little more than $200 a week. The operation will make Ashley miss two months of work and she doesn't get much in health benefits.

Chalfant: I get one week of full pay, and then four weeks of half pay, which is going to be absolutely nothing. Today my sister went and bought us groceries for my kids to have. So while I'm in the hospital they have food to eat.

The children are 4, 3 and 2 years old.

One afternoon last winter, Roy takes the couple's car to get the kids from day care. But Ashley needs to run an errand so we give her a lift.

We drive to a store that rents furniture. Ashley needs to pay part of an overdue bill. She hopes that by showing up in person she can persuade the manager not to repossess her living room set. The way Ashley sees it…being poor is hard work.

Chalfant: Only way out of this is up. And hopefully not down. I know there's a lot of people that are in worse situations than what we're in. But I don't know if it can get any worse than this.

When Ashley was younger it looked like she'd do well in life.

Chalfant: All through high school I got good grades, I wasn't a bad kid or anything, I always did my homework - everybody always says I'm book smart.

But then came children.

Chalfant: I don't regret my kids, - it's just, I just messed up. I graduated from high school. When I went to IUPY - that was a college in Indianapolis - and I just messed up by dropping out because I had gotten pregnant with my first.

Although she lives with Roy, her children's dad, Ashley is technically a single mother. So the government pays for free day care and pays most of her rent. She and Roy could get married, but it's a lot cheaper to stay boyfriend-girlfriend, she says. And when you live on the ragged edges of poverty, there's just so little margin for error and so many ways to end up in crisis.

[cell phone rings]

Chalfant: That's Roy

As we drive Ashley on her errand she gets a call on her cell phone. It's Roy.

Chalfant: Oh my god.

Roy's been stopped a few blocks away. He was speeding. Now, the day care will close in 15 minutes. And the rules say that if Ashley doesn't pick her children up on time, the daycare will call county authorities. The next phone call is from an officer arresting Roy.

Chalfant: [siren] I understand that you're taking him to jail, that's your job. But my kids, you have no compassion whatsoever. If I don't get my kids by 6 o clock, my kids will be in your custody. Now how am I supposed to get my children?

The police tell Ashley they're also going to tow her car.

Chalfant: OK. So, where is my car now? I'm coming to get my vehicle.

We round the corner into a blaze of flashing red lights. Squad cars surround Ashley's Dodge Intrepid. There's a tow truck idling. Roy is in handcuffs. Ashley meets the officer in charge.

Officer: Take a deep breath, calm down, it's not quite as bad as what it seems.

Chalfant: It's just I'm trying I know, I'm having back surgery in the morning and my nerves are already shot.

Officer: I believe you, he told me the same thing. He's being very honest with me, very cooperative, it's just he's got warrants, and he's suspended prior.

Chalfant: Yeah, we knew. That's not a big shock.

Roy's under arrest for driving on a suspended license. It got suspended because he skipped paying some fines. But then there's more bad news. Police can't tell if the car is stolen because the license plates don't match the owner's title. It turns out Ashley bought it from a shady used-car dealer. And though she says she's been paying on the car for months she has no proof she owns it. With Roy under arrest, the surgery tomorrow, the clock ticking at the day care, Ashley's at wits end. She calls the used car dealer.

Chalfant: [On phone] The car's being towed and Roy's in jail. Because the plates do not match the car and I can't get the car out of tow. We have nothing showing that this car is ours. So I'm getting everything out of this car, everything, and you guys can just have it back it's caused me too many problems. [crying]

Ashley collects her children's car seats and a few toys. Then the police escort her to the squad car where Roy sits handcuffed in the back seat. Softly, he says he's sorry. Then it's time to go.

Officer: Alright Ashley, I gotta take him, OK?

Chalfant: I love you. Oh your money - I need cigarettes.

Ashley Chalfant watches the Dodge get towed away. She can't afford the impound fee and she can't afford to bail Roy out of jail.

Chalfant: Everything in my life, this is what happens, it's just one thing after another.

Once she's calmed down, we drive Ashley to the daycare and get her children.

Ryssdal: I'm Kai Ryssdal. You're listening to a special report from Marketplace and American RadioWorks - Hard Times in Middletown. Our program tracks the lives of poor and working families in Muncie, Indiana as they try to weather this economic crisis. Coming up.

Sarah Lyttle: If your spirit is broken, if your ability to dream is missing, then you truly are in poverty.

To see photographs of the mattress giveaway and more scenes from Middletown, visit our Web site, American RadioWorks-dot-org. You can learn more about the history of Muncie and the studies of Middletown. You can also find all of American Public Media's coverage of the global economic crisis. You'll find more documentaries from ARW and links to all of Marketplace's extensive reporting on the recession. That's at American RadioWorks-dot-org.

Support for this program comes from the Northwest Area Foundation Fund of the Minneapolis Foundation. American RadioWorks is supported by the Batten Institute. The research center for global entrepreneurship and innovation at the University of Virginia's Darden School of Business. Hard Times in Middletown will continue in a moment, from American Public Media.

Part 2

Ryssdal: From American Public Media, this is Hard Times in Middletown, a special report from Marketplace and American RadioWorks. I'm Kai Ryssdal and we are on Walnut Street here in downtown Muncie Indiana, smack in the heart of America's industrial rust belt. Walnut Street is what you might call an eclectivc mix of retail, small bistros, some residential up on top of these stores. You might call it hangin' on. It's getting' by. And we've got our economics correspondent Chris Farrell here to talk about that a little more with us. Chris, how are you?

Chris Farrell: I'm doing well, Kai.

Rysssdal: Describe what you see from where we stand right now.

Farrell: What you describe is almost a metaphor for this area. You have sections of this economy that are growing and doing well: health care, education. But you have other sections of this economy that are dying: the factory part of town. So this area that we're in downtown where you have definite signs of life - the boutiques that you're talking about - right next door, an empty building.

Rysssdal: Tell you what, let's duck inside. There's the Blue Bottle Café right there. Let's get a cup of coffee and talk a little more about Muncie and what it means.

Farrell: OK.

[door opening, bell jangling, espresso machine whirring]

Ryssdal: One of the reasons we're here is the research that has been done on Muncie. It was done back in the '20s and '30s, a groundbreaking study known as Middletown. This city became the sort of prototypical small American city making a transition from farming to industrial. The reason you're here is to help us understand how this town now can conceivably represent what's happening to the rest of the country now.

Farrell: To some extent Muncie - Middletown - has gone through the transformation that the rest of the country is now going through. Recessions, mini-depressions, whatever you want to call what we're going through right now - accelerate economic and social change. The story is decline of manufacturing, rise of the service sector. Well that's really been happening here in Muncie and now it's happened nationwide. Manufacturing is shrinking, education and health care are growing.

Ryssdal: But the middle class prosperity that was built in this town in the 20th Century was built on manufacturing, right?

Farrell: Absolutely.

Ryssdal: So what does that mean for the rest of the country if Middletown, or Muncie, is ahead of what's happening elsewhere?

Farrell: Here's the fear and it's a legitimate fear. What if everyone loses manufacturing - these middle class jobs. By middle class what I mean is you earned a decent income. You had a pension plan, a health care plan. You made enough money to own your own home especially if you had a factory job in a unionized plant. It is no longer enough to have a high school degree and be willing to work hard. Teachers, lab technicians, there's a lot of good middle class jobs. The problem is you have to be educated to get into them. It's a world of knowledge , skill, technology in a global economy.

Ryssdal: What we have is a huge enormous recession the likes of which we have not seen in generations. As we try and deal with that, we're trying to feal with the shift in the underlying economy that you've been talking about and that's where education and the concentration on higher skilled jobs comes in.

Farrell: So what we have is an economy dominated by education and health care, government, advertising. It's really where you build intangibiles, ideas, long-lived ideas. It's not a widget that lasts for a long period of time: it's an idea, it's an insight. And the challenge is, can you have a vibrant middle class in an economy dominated by the intangibles, dominated by knowledge, dominated by services. That's one of the big questions.

Ryssdal: Chris, what about the people really on the fringes of this economy, the people we're calling in this broadcast the "brittle class," the working poor?

Farrell: They're really getting hammered in this economy. Take a look at what a lot of state governments are doing right now. They're cutting their programs that are geared toward helping out the poor. Most of the time they're turning to the nonprofit sectors of the economy, churches, organizations that teach people the skills they might need to get themselves out of poverty. They're trying to fill in the gap, but you know what? A lot of them are overwhelmed.

Ryssdal: Chris Farrell, our economics correspondent with me here in the Blue Bottle Café here on Walnut Street in Muncie, Indiana. Chris thanks a lot.

Farrell: Thank you.

Ryssdal: With all the factory closings in recent years Muncie's population has been slowly shrinking. About 65,000 people live here now. The official unemployment rate is nearing 11 percent. And a third of the people living in Muncie are now said to be "working poor." We've been calling them the "brittle class" because their economic situation is so fragile. Stephen Smith of American RadioWorks continues our story.

Smith: Roy Foreman was still in jail for those unpaid traffic fines when his girlfriend Ashley Chalfant had back surgery. As always, Ashley's parents helped out the best they could. Ashley's extended family pools its money. The various unemployment checks, the subsidized day care and the government health insurance - all of it goes into the mix. But for most of this spring only one person in the whole family had a job: Ashley's mother, Cindy.

Cindy Heath: Hello. Is the water yours?

Cindy works at Ball State University, afternoon shift, as a cashier in the food court.

Heath: My name is Cynthia Heath. We're at the Atrium at Ball State University. I work 2 to 10:30 and I get a half hour break. I think I'm just lucky to be here cause there's so many people out there doesn't have jobs.

Cindy is quick and courteous at the register. She's 38, with crinkly red hair and blue eyes.

Heath: Hey Allison. Good, how are you?

About 3,000 people work at Ball State University. It's the largest employer in Muncie. And with the big factories gone, Ball State pays some of the best wages. Cindy earns $13.68 an hour, plus benefits. But it's not enough. Her husband, Howie, used to make $23 an hour at a heating and ventilation company. Back then, Howie's paycheck covered all their bills. The couple used Cindy's paycheck for discretionary spending, like eating out or buying things for the kids and grandkids. But Howie got laid off last summer, after 30 years on the job. And he is still trying to adjust.

Howie Heath: Your whole life changes. You don't buy the same foods you don't do the same things, you don't buy extras. It sucks.

On many nights, Howie drives over to Ball State and joins Cindy on her dinner break. Howie doesn't eat at the cafeteria - that would be an "extra." He and Cindy just talk. And they worry about staying afloat.

Heath: The kids are struggling and I always was able to help with their electric or help with their food or help when the grandkids need new shoes, or help with coats and gloves and, you know, I just couldn't do that this year. That was really hard.

So Howie and Cindy's downward mobility is making life tougher for their adult children as well. While we talk, Howie checks the time on his cell phone. Cindy has only 30 minutes for dinner break. They need ten for a smoke.

They can't light up in the food court, so they dash through the rainy parking lot to Howie's truck. That's where they'll mull over the latest bad news. Last week a bill collection agency garnished Cindy's paycheck. That means a chunk of her take-home pay goes directly to overdue debts. Now Cindy can't even support herself and Howie. The Heaths actually need to find money so they can file for bankruptcy.

Heath: Yeah, 'cause I have $50,000 in medical bills that I can't seem to pay. We always made payments and stuff but now that he's lost his job we can't make the payments any more and now we're so far behind we can't catch up.

Howie Heath: And garnishments have started, 25 percent.

Heath: Twenty-five percent

Howie Heath: Of your take-home.

Heath: Of my take-home. Yeah, it just happened on Friday.

Howie Heath: We just went to talk to a lawyer a couple of days ago.

Heath: So he's going to have the garnishment stopped.

Howie Heath: As soon as we give him $700 which we'll be giving him any day now.

Heath: It makes me feel like a loser, like I can't pay my bills. I don't like it at all. And of course it's public notice so anybody who reads the newspaper when it happens will know. So that sucks. But you gotta do what you gotta do. So.

What Howie's got to do is find work. He plans to apply for a job as a janitor at Ball State. It could be one of the best blue-collar jobs left in town. Cindy says the family would strike out for someplace more prosperous, if they could.

Heath: We don't have the money to move, up and leave. That's a big thing right there. There is no money to save to move at all. But I hate to cut this short but I will get in trouble if I'm late [laughs].

With that, Cindy Heath scoots back through the rain to her cash register. And Howie steers his truck toward home.

Back during the Great Depression of the 1930s, more than a quarter of Muncie's workers lost their jobs. When the sociologists Helen and Robert Lynd wrote about Muncie as "Middletown USA," they found the community's faith in the march of progress held strong despite the Depression. So what would the Lynds observe if they could visit present-day Muncie?

James Connolly: That's a great question [laughs].

Again, here's James Connolly of the Center for Middletown Studies.

Connolly: They came to Muncie because they wanted to see what industrialization did to the way people lived; the way people thought; what people's values were. What they found was, it didn't change as much as they thought it should have. There's a bit of a "wake up and smell the coffee" tone to some of what they write about Muncie, particularly in the '30s. And so I wouldn't be surprised if they had kind of the same thing, which is: "You guys are going to have to really start to think about how the world works a little bit differently if you want to deal with this."

Connolly says some people in present-day Muncie are thinking differently. City leaders have been working hard to attract high-tech manufacturing to town, especially so-called "green" industries. But Connolly predicts that new jobs won't change Muncie's fundamental character.

Connolly: You know, when Lynds came here in the 1920s, what they found was a place that was really quite certain about the value of individualism. And that hasn't changed dramatically. There's still great deal of skepticism about government. There's an emphasis on a "pull yourself up by your own bootstraps" mentality in a lot of people around here -- it's a fairly conservative place and it has been for a century.

The Lynds wrote that a person's job was the watershed down which the rest of his or her life flowed in Muncie. Employment determined the kind of life one could afford and what friends one had. The "business class," as they called them, kept to the north side of the train tracks. The working class lived on the south side. And that's still largely the case. But in these tough economic times, there's one group in Muncie working harder than ever to reach across the divide.

Sarah Lyttle: We are walking through Cristy Woods. A little section on Ball State campus that is really swampland. It lends itself to some beautiful wildflowers and mushrooms and hawks and wildlife. Yeah, it's a protected site on campus.

On this bright winter morning, Sarah Lyttle is showing her friend Eva Zygmunt-Fillwalk a hidden natural oasis in Muncie. The snowy path through the forest leads to a building of frosted glass.

Lyttle: Look at these roots hanging down not getting any nourishment you think…

It's a greenhouse full of rare orchids.

Lyttle: But still they grow into beautiful things with just the slightest little bit

Sarah and Eva go on regular outings like this. They take turns showing each other stuff to do in town. They became friends through a local anti-poverty program. It's called Teamwork for Quality Living. It's the same group that serves up dinners in the basement of First Baptist Church. Sarah came to Teamwork because she was struggling to make a living. After a financially disastrous divorce Sarah found herself on that brittle edge of poverty. Eva is a tenured professor at Ball State with a stable income and family. Teamwork hooked Eva up with Sarah to help Sarah climb back up the economic ladder. The concept is called "circles." Eva explains how it works.

Eva Zygmunt-Fillwalk: An individual or family who has decided they're willing to invest time and the energy in moving towards self-sufficiency, and they've committed toward that action, they're identified as what we call "captain" of the circle. And what Teamwork does, then, is very carefully match them with 3 or 4 people in community that we call "allies,"that will support them in their quest toward self-sufficiency.

The circle is generally made up of middle-class professionals like Eva. The person at the center, getting help, is called the captain.

Zygmunt-Fillwalk: What happens in a circle is that the captain of the circle is in charge of driving the ship….They really articulate what their vision is; what their goals are; where it is that they wanna be.

When Sarah's marriage of 26 years collapsed, she couldn't think of where she wanted to be. She never really had a professional career. Sarah spent a couple years after the divorce just surviving. She got by on food stamps and other assistance programs. And the constant scramble for money consumed her.

Lyttle: If your spirit is broken, if your ability to dream is missing, then you truly are in poverty. And I was. You know I was.

Sarah says she still has trouble paying bills sometimes, but she no longer feels poor. She used to teach yoga as a pastime. Now she's made it a foundation.

Lyttle: Exhale into the bend, sideways bend, without twisting or torquing.

With help from Eva and the others in her circle, Sarah Lyttle established a yoga business, she started graduate school, and tripled her income. Sarah plans to make a career doing physical therapy with kids and older people. Sarah says the circle worked and now that she's back on track, she's on the board of the Circles group, a leader in its campaign against poverty in Muncie.

Lyttle: I'm working for other people. I'm working to help our community and that elevates you in your own mind …If I can reach out and help somebody else, then I'm a contributing member. That's how it's helped me.

The Circles program in Muncie is part of a national anti-poverty effort that is based on building voluntary networks across class lines. Scott Miller of Albuquerque, New Mexico is one of the program national founders.

Scott Miller: Our whole approach is befriending people. It's not mentoring, although that exists. But the fundamental relationship is, "I'm your friend. I want to - with you - help your family get out of poverty. But then I want together to resolve poverty in our communities.

Miller says that the circle can create a sense of stability so that a person in poverty can do things that people from more privileged backgrounds take for granted: like creating a plan and following it. Miller says poverty doesn't make much room for planning.

Miller: There is a strong orientation to here and now. Everything's about getting through the thing in the moment. And we have found so many people coming to us who are in just constant crises So the idea of planning their future out, a month - two years - it's very foreign. And of course it's absolutely critical for developing a career.

Remember Angelic Wood, the single mother we met at the beginning of the program? She's the captain of her own circle in Muncie. She's meeting with her supporters at a pancake house to chart her goals.

Friends: Say all three of them again.

Wood: Financial, food and family or socializing, especially with the boys.

Angelic's circle includes a journalism professor from Ball State - he's helping Angelic develop her writing skills. There's a social worker and a retired priest. And AnneMarie Voss, a retired teacher who used to volunteer at a food shelf.

Annemarie Voss: and I found that very unsatisfactory because I felt that we were not helping these people to get out of their difficult situations and now that we have the Teamwork, that's what I want to do - help people.

Charles Mason: Angelic, is your yard big enough for a garden?

Angelic Wood: Maybe a really small one.

This is one of Angelic's first meetings with her new support team. The long-term goal is to help her find stable work. But Angelic's new friends are also bursting with ideas to maker her life better right away: like growing vegetables to save money or finding good after-school programs for her kids.

Voss: You said they were interested in classes at Cornerstone Center for the Arts.

Wood: Uhhuh.

Voss: Charlie and I have a little thing that we can reward them with that.

Mason: Do we? What do we have?

Voss: You and I secretly we can do this. We can buttonhole some people.

Mason: All right.

Man: These are the movers and shakers, the movers and shakers of Muncie. This is the power elite here.

Buttonholing is precisely what Angelic's circle is supposed to do. Researchers say that less privileged people need access to the kinds of social networks that middle class Americans use all the time to get ahead. Sociologist Katherine Newman has written extensively about people living at the edges of poverty and the kinds of social ties that can pull them upward.

Katherine Newman: You need to find people whose knowledge base and experience is different enough from your own that they are coming into contact with sources of news about opening that you don't know and couldn't know…based on your close ties.

In other words, the close ties are the ones that bind. But they don't help you climb the economic ladder. Newman says for that you need a different kind of connection. Like a supervisor, or an acquaintance, or even a relative - someone who can connect you with a better job.

Newman: And the problem for the people at the very low income or often unemployed end, is that they may have some of those ties. But their most privileged ties are skeptical of them, and worried about blowing their own social capital on the job by referring someone who is potentially untrustworthy or not reliable. So very often people at the very bottom of our society posses network ties but not ones that will work for them.

Molly Flodder: Who are some people at the dinner here, right now, who care? Pam, Angelic, Lester, Rocio?

Every month the Circles group meets in the basement of downtown Muncie's Baptist church. Molly Flodder, the head of the local anti-poverty group, has a whole roomful of people standing in a circle.

Flodder: Find a shoulder and put your hand on a shoulder. Got some shoulders over here on this side.

This is not a group hug. Molly is arranging people in concentric rings to show how poor people can be surrounded and supported by their more privileged neighbors.

Flodder: OK. That's what is should look like when people are struggling to get out of poverty. The whole community should care and some should care even more by coming alongside like this central circle did.

It takes a lot of time to build a voluntary support system like this one in Muncie. But a number of the people here in this group think that the current recession is making it easier to recruit volunteers and bring attention to the fight against poverty. So does Scott Miller, their national leader.

Miller: What we're seeing is more people waking up to just how challenging this economy can be and I'm finding more and more people who have been comfortable and aloof to these issues becoming a lot more serious about them. And then of course the Obama administration has put a lot out there in terms of this is the time to give service, this is the time to really support our next generation at a whole new level. There are a lot of messages and money going out right now about ending poverty.

The Circles program operates in 40 American communities. Its goal is to eliminate poverty in this country. Completely. But sociologist Katherine Newman is skeptical. She says the problem is simply too big for community groups to solve.

Newman: Every bit helps. There is no question in my mind that opening up these networking opportunities can certainly be helpful., But I would argue that what really rescues people from poverty is an extremely strong economy. That is the most important and indispensible medicine. And it's also the most difficult medicine for us to conjure up. Especially right now. But without low unemployment I don't see how we're going to make much progress in blunting the impact of poverty.

A strong economy? Low unemployment? Obviously not part of the near-term forecast for Muncie. Even if the national recession ended tomorrow, it would still take years for Ball State, the hospital and the knowledge economy to replace the empty factories. Along the way more people may leave town. There's no telling when the hard times will end in Middletown. Here's what we do know.

Sarah Lyttle continues to build her yoga practice. She'll be a teaching assistant at Ball State University next semester.

Angelic, the single mom, is trying to get the gas turned back on at home. She couldn't pay the bill. And she lost her Medicaid insurance because she made too much money at that part time telephone work she did for the IRS. Angelic's circle is suggesting she look for work at local temp agencies.

Roy is out of jail. Ashley is back on the job at the drug store. But they split up. Roy still watches the kids when Ashley is working. And he found a fulltime job at a lumber warehouse. He makes $8 an hour. It's half of what Roy used to earn when he worked at a factory but he says at least it's something. Cindy, the cashier at Ball State University? She and her husband Howie filed for bankruptcy. Charlie Saubert, the laid off factory worker, he's breathing a bit easier. Charlie and his wife Pam decided to dig into his 401K plan to pay off their house, so at least the annoying phone calls from the mortgage company are over. Pam is still studying to be a teacher. She graduated from community college and plans to go to the university in the fall. And Charlie is still looking for work.

Ryssdal: You've been listening to Hard Times in Middletown, a documentary report from Marketplace and American RadioWorks. I'm Kai Ryssdal. This program was produced by Laurie Stern and Stephen Smith, and edited by Peter Clowney. The American RadioWorks team includes Marc Sanchez, Ellen Guettler, Ochen Kaylan, Chris Farrell, Ariel Kitch, Nancy Rosenbaum, Suzanne Pekow, Tricia Kostichka and Chris Heagle.

To learn more about the challenge of transforming a town from a manufacturing economy to a service economy, visit out Web site, While you're there you can listen to other documentaries about the economic crisis and find links to Marketplace's extensive coverage of the global recession. That's at

Support for this program comes from the Northwest Area Foundation Fund of the Minneapolis Foundation and from the Batten Institute. American Radio Works is supported by the Batten Institute. The research center for global entrepreneurship and innovation at the University of Virginia's Darden School of Business.

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