Gathering Gloom for Workers

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A spreading slump swells the long gray line of the unemployed

Allis-Chalmers to lay off 1,300 in Missouri . . . Smith-Corona to suspend output at three plants employing 3,450 . . . Pennzoil to shut down all its copper and molybdenum operations.

The business-page headlines last week were a relentless reminder of the gathering force of the current U.S. recession. With each passing day, the industrial landscape is increasingly marred by padlocked factory gates and smokeless smokestacks. Spreading from cotton mills in Georgia to lumber camps in Oregon, the slump has swiftly swelled the ranks of the jobless. The Labor Department announced last week that November's unemployment rate rose again, to 8.4%, the highest level in six years, up from 8% in October and 7% in July. This means that about 9 million Americans and their families are facing the Christmas holidays without paychecks. Says Steve Kelly, 25, who was laid off by a sawmill in Horse Shoe Bend, Idaho, and must now support his wife and son on a $525-a-month unemployment benefit: "There's not much a guy can do. We have payments on the car, pickup and house. After we buy food, we just pay some bills if we can. And if we can't, well, we just can't."

The trauma may grow much worse. The Commerce Department reported last week that its index of leading economic indicators, which predicts future business trends, fell a steep 1.8% in October. Most forecasters, including Murray Weidenbaum, President Reagan's chief economic adviser, believe that unemployment will rise to about 9% before it eases next year, when business picks up again. That would equal the postwar record high set during the severe 1973-75 recession.

The downturn has been most devastating in two industries particularly sensitive to high interest rates: autos and housing. Car production in December is scheduled to be 21% below last year's already depressed levels. The big automakers and their suppliers have laid off some 600,000 employees. With housing starts at their lowest level in 15 years, the National Association of Home Builders estimates that 20% of the nearly 5 million U.S. construction workers will be out of work this winter.

Industries that provide materials to the automakers and homebuilders are also in serious trouble. Steel companies have idled about 50,000 employees, and the rubber industry has laid off some 10,000. The timber business has toppled. In Oregon alone, 22,000 lumber workers have lost their jobs. Governor Victor Atiyeh has declared the industry to be in a "state of emergency" in an effort to qualify local businessmen for federal relief loans.

The slump is moving rapidly to industries as diverse as clothing and chemicals, furniture and food processing. Even high-technology firms, which once thought themselves to be immune from recession, are starting to feel squeezed. Two weeks ago, Nixdorf Computer of Waltham, Mass., let go 250 employees, or 11% of its work force. The division of Exxon that makes computerized typewriters and other office gear announced last week that it was dismissing a fifth of its employees and shutting down a factory in Orlando, Fla.

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