June 14 (Bloomberg) -- Miguel Gines lost his job as a counselor for troubled children last year and has been surviving by using savings and unemployment benefits to pay for food and rent.
Now Gines, 58, who lives in Dalton, Georgia, is almost out of cash. His $133-a-week jobless benefits stopped in April, two months before Gines said he expected, and his savings are depleted. He may be homeless in July, after rent money he received from the Salvation Army charity runs out, he said.
“I was going along fine, looking for work,” Gines said. “The next thing you know, it was ‘That’s it.’ I was thinking, ‘Oh my God, what am I going to do.'” Gines said he still hasn’t figured out the answer.
Gines is among about 370,000 people in 23 states whose extended unemployment benefits abruptly expired from April 7 to May 12, according to estimates from the National Employment Law Project, an employee-advocacy organization based in New York. The group says the numbers will continue to increase as state unemployment rates dip below thresholds required for continued federal funding.
Beginning this month, legislation approved by Congress in February will begin reducing federal benefits even further, in a separate program that now supports 2.6 million people. Those people will lose benefits entirely in December.
More Americans than forecast applied for unemployment insurance payments last week, a sign the labor market is struggling to improve. Claims increased by 6,000 to 386,000 in the week ended June 9, Labor Department figures showed today in Washington.
In Georgia, 52,000 people received a letter two months ago announcing the end of benefits weeks or months before the end of the extended payment period. The cutoff in Georgia happened after the state’s unemployment rate fell to 8.9 percent.
The formula used to eliminate funding for the long-term jobless doesn’t account for areas with high unemployment within a state, such as where Gines lives.
In Dalton, with a population of 33,000 in the foothills of the Blue Ridge Mountains, and the surrounding area, the unemployment rate is the highest in the state: 11.4 percent, according to government data. Of all U.S. metropolitan areas, Dalton reported the largest percentage decrease in employment from a year earlier, according to April data from the U.S. Bureau of Labor Statistics.
The northwest Georgia city calls itself the Carpet Capital of the World. Sixty-five percent of carpet sold in the U.S. is made within a 30 mile radius of Dalton, according to the Carpet and Rug Institute, a trade association based in the city.
Dalton withstood competition from overseas that undermined the textile industry in the South, only to suffer from declining home construction in the U.S. in recent years.
The city’s unemployed said they can’t understand the logic of cutting benefits.
Emma Bartenfield, 58, a life-long resident who previously worked in the carpet industry, is among those whose benefits were cut off in April. She said she was puzzled by a letter from the state’s Labor Department explaining that the program ended because unemployment dipped.
“They said Georgia had reached a tipping point,” Bartenfield said. “But how can that be, when nobody in Dalton has a job?”
“There are people who were vice presidents now stacking groceries at Wal-Mart,” she said.
She said she remembers when workers could quit one carpet factory job in the morning and get hired at another that afternoon. Now, she said, residents are moving, looking for work in other parts of the country.
The city’s unemployment rate is aggravating tension between Hispanics and non-Hispanics. Bartenfield and other residents complained that some employers prefer to hire Hispanics. That suspicion is fueled by a 2010 settlement of a class-action lawsuit brought against a carpet manufacturer by workers who said it used temporary agencies to depress wages by hiring illegal workers.
Kelly Browning, 29, said she lost unemployment benefits two months earlier than she expected after losing a job as a restaurant parking valet last year. She said she has been looking for work ever since, searching classified ads, Facebook and listings in the unemployment office.
“There’s nothing,” Browning said.
The loss of the $194 weekly benefit “really put me in a bind,” she said. “I have two kids in school, and they’re always wanting something.”
Her 7-year-old daughter needs summer clothes that she can’t afford, she said.
Browning said she’s getting by using food stamps. For now, she and her husband, Jason, live free in a trailer in a foreclosed park because he’s working for the bank, collecting rent from residents. She said she doesn’t expect the arrangement will last long.
In December 2007, when the recession began, 22,700 of the Dalton area’s 39,600 private industry jobs were with carpet factories and their suppliers, according to data from the state Department of Labor. By April, about 5,500 were gone.
Many jobs lost over the past five years won’t come back even when housing construction picks up. Dalton’s carpet manufacturers, including Mohawk Industries Inc., Shaw Industries, now owned by Warren Buffett’s Berkshire Hathaway Inc., and Beaulieu of America Inc., invested in new less-labor-intensive technology during the recession, said Brian Anderson, president and CEO of the Dalton-Whitfield Chamber of Commerce. The technology allows carpets to be assembled in one factory instead of three or four, he said.
Brian Massingill, 48, lost his job when a carpet factory closed in February and began drawing unemployment benefits in April.
For now, Massingill, his wife, Christina, 33, and their three children, ages 3 to 7, are living off unemployment benefits, charity and food stamps.
With the reduction in long-term benefits, the family is concerned that the benefits won’t last long enough if Massingill can’t find a job.
“It’s just a little bit, but it helps keeping a roof over peoples’ heads,” Christina Massingill said.
Gines, the unemployed youth counselor, said he has considered leaving Dalton because of the scarcity of jobs. He doesn’t know where he’d go, he said.
He separated from his wife, he said, and his two children are grown.
Gines said he is trying to get hired as a trucking company dispatcher. He’ll also apply for work at the area’s temporary agencies, which are hiring for the few jobs available in the city, Gines said. He said he didn’t do it earlier because the pay was less than he received on unemployment, and he risked losing his benefits completely if the job didn’t last long enough to qualify him for unemployment again.
When the government money stopped, Gines gave up up his apartment. He moved into an $80-per-week room with a microwave oven by the bed, a knee-high refrigerator and a rail on the wall he uses to hang clothes. He used a one-time donation from the Salvation Army to pay ahead for the rest of the month.
He said he doesn’t know what he’ll do if he hasn’t found a job by July.
“I’m going to try and sneak into a storage room and sleep,” he said. “Sometimes you just have to laugh.”
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