ROSEBURG -- Each time Steve Keller picks up his newspaper he turns to the home foreclosure notices and, with mounting dread, searches for his name. He hasn't found it. Not yet.

"I do see friends in there all the time," says the 51-year-old electrician.

Middle-class families like Keller's with two jobs, a house and a 401(k) aren't supposed to face these problems. But thousands are, especially in rural Oregon.

The recession's punch hit the state's rural communities first and hardest. In rural areas, the economy still drags, now tugging down many middle-class families with it. Families that once worried only about future retirement or college costs now face foreclosure or need food stamps or ask charities for help to keep the heat on.

The slow economy is "touching families that in the past have managed to escape these problems," says Mark Edwards, an Oregon State University sociology professor. "It's a wave that isn't just taking out the blue-collar workers; it's hitting all the associated white-collar workers, too."

Oregon’s rural economy

Per capita income (2009)

Metro counties: $37,719

Non-metro: $30,733

Statewide: $35,571

Food stamp recipients (January 2011)

Metro counties: 18.5 percent

Non-metro:

23.6 percent

October 2011 unemployment rate (seasonally adjusted)

Oregon:

9.5 percent

Portland metro:

9.0 percent

Douglas County:

13.4 percent

Harney County:

14.4 percent

Crook County:

15.8 percent

Sources: Oregon Department of Employment; Oregon Department of Human Services

More

Some rural communities never replaced the high-paying jobs lost when the timber industry went bust in the 1980s. Others saw booming growth and soaring housing prices, but homeowners there are now stuck with underwater mortgages on property that is hard to sell.

"We're seeing new people who have cashed in their retirement. It's either go hungry or apply," says Barbara Dunham, who helps people who come to the Department of Human Services office in Roseburg get food stamps and other government assistance.

"People are resetting to a 'new normal,'" Dunham adds. "And some have accepted that things might not ever be the same."

Keller is doing everything he can think of to get back on his feet after the electrical contracting business he had for 11 years collapsed along with the construction industry.

He borrowed $50,000 from his 401(k), but couldn't pay it back before the deadline, adding $16,000 in income taxes to his load. A lawyer recommended bankruptcy, but Keller's wife, Julie, says, "We want to pay our debts."

At a time they'd expected to be in a financial position to help their three adult children, the Kellers are cutting everywhere they can. They've traded the satellite dish for a television antenna, sold tools, cut the telephone landline, stopped eating out.

Two years ago, they asked Bank of America to modify the terms on the $2,400 monthly mortgage on their home and five acres 10 miles outside Roseburg. The bank put them on a trial plan, cutting the payments to $1,600. After they made more than a year of reduced payments, the bank told them their modification wasn't approved after all and they owed the balance.

The Kellers are hoping the bank will reconsider. They're also counting on Julie keeping her state job and that Steve will continue working at one of the few remaining timber mills left in their area. Steve says he was headed to Afghanistan to work for a government contractor when the mill called.

"I'm so thankful for the job," he says. "Except now I have to work from 4 o'clock in the afternoon until 3 in the morning."

Assistance

More than 24,600 Oregonians have exhausted their unemployment benefits since the beginning of the year. The number of Oregonians receiving food stamps is expected to top 800,000 before the year is over. Government and nonprofit agencies expect even higher demand for food, rent and utility assistance as winter sets in.

Roughly a third of the people living in Douglas and Josephine counties get free groceries through food pantries supplied by a giant new warehouse operated by the United Community Action Network in Roseburg. The shelves were disturbingly bare during a recent visit.

Over the past few years, United Community Action has received about $3.4 million from the federal government. That money is almost all spent, and there's no indication that Congress is going to send any more, says Executive Director Mike Fieldman.

The past couple of years have been rough, he says. "But this year and next year are the ones I worry about."

State and local officials are focused on what it will take to remake Oregon's rural economies. In temperate Roseburg, there's excitement about an expanding wine industry. Call centers employing hundreds have located in Roseburg, Coos Bay and Grants Pass. The new, Medford-based Sustainable Valley Technology Group is helping startup companies in southern Oregon get what they need to grow.

"We see a real opportunity to help build more technology businesses in the Rogue Valley, and that will help us recover and pay higher wages," says Jeff Allen, interim director for the group.

Rather than court an out-of-state company to the region, Allen says, "What we're trying to do is help the people who are here to build companies here."

Building companies takes time, and Lorraine Randolph figures she has just weeks of unemployment checks left.

Randolph, 50, who has worked as a flagger on highway construction projects, hasn't had a steady job since Nov. 1, 2009.

"I don't know what we're going to do," she says, adding that she may go back to school for an accounting degree. That's something she never thought she'd do at her age.

She lives with her longtime boyfriend, Thomas Armstrong, in Days Creek, a hamlet about 40 miles south of Roseburg. They are raising Randolph's 7-year-old granddaughter.

Armstrong's career has been spent in the forests, firefighting and replanting. There hasn't been much of either kind of work the past few years. He says he'll receive his final unemployment check Dec. 28 -- his 60th birthday.

"I'll probably be a Mr. Mom," he jokes. "We'll see what happens. If I have to, I can wash dishes or work at McDonald's."

They have no plans to leave their small town and say they couldn't have made it this far without their community's support. The church offers free haircuts. Last year, Randolph's granddaughter participated in the Myrtle Creek Fire Department's Clothe a Child for Christmas program. Thanksgiving week, the family learned she will again receive $100 through the program.

"It means a lot because she gets to pick out clothes, shoes and a jacket," Randolph says. "I am very thankful."

Shrinking counties

Rebuilding Oregon's rural economies presents a multigenerational challenge, notes Lola Jones, who works for 211 Info, a nonprofit that connects families to social services in Linn, Benton and Lincoln counties.

There's a generation of loggers and fishermen who are proud of that heritage and "there's a little resentment when somebody suggests they look at a new trade or new tools," she says. "At the same time, there's a lack of motivation for people my age -- I'm 25 -- to go and get a college education and come back."

U.S. census numbers show no population losses in urban Oregon over the past decade while eight nonmetro counties shrank. The nonmetro counties that did grow gained at a rate less than half that of metro counties.

Shara Burris, 34, loves small-town Oregon but plans to leave.

Raised in Albany in the mid-Willamette Valley, Burris thought she and her husband would raise their two young sons there, too. She both laughs and cries when she talks about the past few years.

Burris and her husband, Billy, used a subprime loan to purchase a $105,000, three-bedroom home. It was a fixer-upper and Burris says she knew the $1,250 monthly payment would be a stretch.

Then her husband became ill and took a disability leave from his job at Home Depot. Burris, who worked as a customer service and logistics clerk at United Van Lines, saw her hours cut back. She found another job but was laid off from that in January 2010.

By that time the couple had already fallen behind on the mortgage and lost the house. It's still hard to drive by. "We have to pass the house when we go to the Boys and Girls Club," she says. "We all get quiet."

The family lives in a rented mobile home in Tangent. The neighbors couldn't be more supportive, she says. They bought the school supplies when Burris' oldest boy started school.

Unable to find another job, Burris went back to school full time to study sales and marketing. Her unemployment benefits will run out sometime after the first of the year but she is still planning a move to Portland, where she'll finish her degree at Portland State University.

"I'm not going to get ahead down here in the field I want to go into," she says.

Ten years from now and with Oregon's current economic troubles buried in history, Burris says she hopes her family will be "well established in Portland."

"I hope I can pay my bills, buy my husband's medications and that my kids are successful in school," she says, smiling. "I'd like to buy another house. That's the dream, right?"