Janesville: A Story of Recovery After the Great Recession

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Author Amy Goldstein discusses her book about the impact of the closing of a GM plant in Janesville, Wisconsin.

Janesvillle bookNo American city was spared from the economic disaster caused by the Great Recession. Conditions were especially hard in Janesville, Wisconsin, where a long-standing General Motors plant provided jobs that put food on the table for many generations of families. When the plant shuttered, taking thousands of jobs with it, the town had to figure out a new future. Amy Goldstein, a Pulitzer Prize-winning reporter with The Washington Post, weaves a powerful narrative about strength and resilience in her book, Janesville: An American Story. She joined the Knowledge@Wharton radio show on SiriusXM to share what she learned from her time embedded in Wisconsin.

An edited transcript of the conversation follows.

Knowledge@Wharton: You spent a lot of time in Janesville. Tell us about your experience there.

Amy Goldstein: I was interested in finding a community in which I could take a closeup on what really happens when good jobs go away, and Janesville very much fit the bill. It’s an old, industrial, small city in southern Wisconsin. The General Motors plant there started making tractors in 1919 and Chevys in 1923. By the time the plant closed, most of the manufacturing there stopped two days before Christmas of 2008. You can just imagine how many generations of people in Janesville had thought of this General Motors plant as providing the best working-class work in town.

Knowledge@Wharton: The decision to close the plant was based on what?

Goldstein: It was based on the financial ill health of the company. This was right in the midst of the Great Recession. This is December 2008, and the recession had begun about a year earlier and would officially go partway through 2009. At the time that the plant closing was announced, it was exactly a year before General Motors would file for Chapter 11 bankruptcy.

Knowledge@Wharton: What was U.S. Sen. Paul Ryan’s role during this period?

Goldstein: When the plant closing was announced, there was a very strenuous bipartisan effort by people in the community and leaders in the community and in the state to persuade General Motors to give the Janesville Assembly Plant another product to make. It had been making full-size SUVs, which weren’t very popular at a time when gas prices had shot through the roof. Ryan — who was a congressman at the time but not yet a committee chairman, not yet a candidate for vice president, and certainly not yet speaker of the House of Representatives — was part of that effort. Of all the politicians in town, he probably knew best the leadership of General Motors, which had thought it was in their interest to form a relationship with him when they wanted things from Congress.

The story that I tell in this book begins with Paul Ryan being home in his kitchen over a break from Congress and getting a call on his cellphone from the then-CEO of General Motors, giving him a heads up that the plant closing announcement was to be made public the next morning. He was aware of this right from the beginning. There was one point when leaders from the state and Congress and the community went to Detroit to plead with the leadership of General Motors to try to keep the plant open or give it something else to manufacture, and Paul Ryan was part of that trip.

“I wanted to tell a story that would be a microcosm of what was happening in many places in the country and with many kinds of work.”

Knowledge@Wharton: A lot of people lost their jobs. What was the impact on the city?

Goldstein: The impact was profound. In the last two shifts that went down, there were about 3,000 General Motors workers who lost their jobs. There were also a lot of supplier companies providing goods and services to General Motors in town. All those people lost their jobs, too. That’s another few thousand workers who suddenly were unemployed. On top of that, there’s this cascading effect. There were small businesses in town that had been going for years and suddenly could not because there weren’t enough people with enough disposable income to go shopping.

There were all kinds of people who lost work. One of the things that struck me was that, for quite a while, there was denial among the autoworkers that these jobs were going to stay gone. This plant had been around for so long, and there had been times over its long history when products had left, products would come back, and the plant would keep going. A lot of people in Janesville had no basis for imagining that this time would be different. But it was.

Knowledge@Wharton: The plant remained dormant for a long time, correct?

Goldstein: That’s correct. For a number of years, this plant was the only one in the General Motors firmament that was in the category called stand by, which meant that it was dormant but could be opened again if market conditions warranted it. That went on for several years, and then a couple of years ago, in the most recent contract between General Motors and the United Auto Workers, the stand-by status was converted so that the plant was then permanently closed. That meant that it was eligible to be sold. The city leadership of Janesville had wanted that because they wanted to find somebody else to buy it.

After a few years of trying to find a buyer, that property has recently been sold to a company called CDC (Commercial Development Co.), out of St. Louis, which specializes in buying distressed industrial property and redeveloping it. It’s unclear what the use might be at this point, but that’s a big, big deal for Janesville after a lot of time of having this plant be the center of its economy.

Knowledge@Wharton: Has the population of Janesville decreased since the plant closing?

Goldstein: Surprisingly, the population has not gone down in the last several years. I think that’s for a couple of reasons. One, people are very attached to this community. That’s not to say that nobody has left to find work elsewhere, but this is a community in which a lot of people have deep family roots and don’t want to leave. I know people who have moved elsewhere, but I know more people who have taken jobs that pay less, or there’s a category of former GM workers in Janesville who have become GM workers elsewhere and are commuting long, long distances.

One of the people I follow in the story took a job after a couple of years in Fort Wayne, Indiana. He leaves every Monday morning and comes home late Friday nights. He’s been doing this for years now and has another several years to go until he’s eligible to retire, and that’s because neither he nor his family want to move to Indiana.

Knowledge@Wharton: Your story focuses in Janesville, but this scenario has played out in cities across the country. How has Janesville been in the years since the recession?

Goldstein: On your point about this having happened in many communities, that was my central idea in setting out to write this book. I wanted to tell a story that would be a microcosm of what was happening in many places in the country and with many kinds of work, because that’s what’s been happening out of the Great Recession. The unemployment level has fallen, but income levels have stayed quite depressed since before the Great Recession until recently, when middle-class wages have started to creep up a little bit.

“This is a town that’s the antithesis of a place that’s just kind of given up.”

So, this really is a microcosm or a metaphor. I’m hoping that many people who read this story will be able to identify with it from their own perspectives. This is a town that’s the antithesis of a place that’s just kind of given up. I didn’t know this when I decided to focus on this community. But it turns out that Janesville is quite a resilient community, and there have been very strong economic development efforts to try to bring new employment to town. There have been a lot of efforts by grassroots social service providers to help people through these hard times when their work has gone away or their wages have gone way down when they’ve found new work. But even with that, this is very hard. It hurts people’s sense of themselves. It hurts people’s standard of living. This is not an easy thing to recover from, no matter how resilient you and your community are.

Knowledge@Wharton: What was the impact on the education sector?

Goldstein: Janesville has always had a well-reputed public school system. I got to know a number of teachers and some students. I wanted to make sure that I was reflecting the experiences of some people who were coming of age as well as the workers who had lost the jobs they thought they’d have for a lifetime.

One of the notable things that’s happened is that the proportion of students whose families are poor enough that they qualify for federally subsidized breakfasts and lunches has shot up remarkably. Even schools that were always the more affluent ones now have some students who are much poorer. One of the people whose story I follow in this book is a social studies teacher who became mindful as the recession was going along that she was seeing students who used to be from middle-class families who are now poor. She started something called The Parker Closet. It’s named for Parker High School, which is named for the Parker Pen Company, which also had a long history in Janesville that ended around this time.

With the help of some other teachers, she began collecting donated food, used jeans, school supplies. She has a little locked closet in the school that’s kind of a food and clothes pantry. It has prom dresses in the spring that she has collected from donations for girls who otherwise couldn’t afford to go to the prom. That’s the kind of home-grown effort that some people have put into trying to ease the economic plight of people in town.

Knowledge@Wharton: People are very protective of their towns and don’t want to see them decline. Did Janesville get a greater sense of community from going through this?

Goldstein: I think that there is a strong sense of community in Janesville. Let me make another point, which is that as time went on, the kind of political polarization that the United States has seen broadly also settled into Janesville. There were people who were very sensitive to the hurt that their neighbors were undergoing, and there were other people who were more affluent who weren’t even aware of some of the troubles that some of their neighbors were experiencing. Even a place like Janesville, with a population of about 60,000, has class divide, and it became more pronounced over the five years of the story that I tell in this book.

Knowledge@Wharton: What kind of reaction have you received to this book?

“Even a place like Janesville, with a population of about 60,000, has class divide, and it became more pronounced over the five years of the story that I tell in this book.”

Goldstein: I have been just blown away by the reaction from the community. It’s a bit of an audacious act for me, as somebody who lives and works in Washington, D.C., to show up in this town that’s not my community, spend years trying to get to know people there and understand what they’ve been going through, and then write about it in a very public way. I wasn’t certain how people would react, but I have found the response has been overwhelmingly positive. I have been back in Janesville twice to give talks, and the second time was to have a community discussion about themes from the book. I’ve heard some people tell me that they feel as if what I’ve done has honored their community and given voice to their experiences. I wasn’t necessarily expecting that kind of affirmative response.

Knowledge@Wharton: What’s next for Janesville?

Goldstein: I think it’s always very hard to predict the future. Where things stand now is that the unemployment rate, which had shot up to above 13% in early 2009, a few months after all these General Motors jobs had vanished, is now down to about 4%, so it mirrors the decline in unemployment throughout the country.

On the other hand, if you look at manufacturing jobs, they really have not come back. And if you look at wages, the pattern is much, much lower than the $28-an-hour wages that General Motors was paying most of its workers at the end. It depends on how you measure things. Some jobs have come back, but they’re not paying anything like these manufacturing jobs used to pay. And it’s just unknowable right now what that property is going to become.

Knowledge@Wharton: What about the issue of retraining those workers?

Goldstein: I was very interested in the question of retraining. It seemed to me that if I was looking at a community that had lost thousands and thousands of jobs, the next thing to look at was what do we as a government, as a country, espouse in terms of what people should do about this? If you think about the economic policies that Democrats and Republicans advocate, there isn’t much overlap on those two lists except for job retraining. That’s something that’s very widely embraced by people with all kinds of ideologies.

One of the reasons I picked Janesville is that it has a technical college that was doing a huge amount of job retraining. A few thousand former factory workers suddenly became students in the couple of years after these jobs went away. With the help of a couple of labor economists, I did a statistical analysis looking at what happened to people who had lost work in this part of southern Wisconsin and did not go back to school during this period of time. It turned out, very surprisingly, that the people who went back to school had less likelihood of having full-time work. And if they had work again, they were making less than people who had not retrained. That’s a pretty stark finding. I don’t think it’s an indictment of job retraining all over the place, but I think it is a cautionary story that if you’re trying to do really intensive retraining in a community that hasn’t yet generated new jobs, people aren’t necessarily going to prosper on the far end.

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