Copyright ©2012 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

MELISSA BLOCK, HOST:

This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.

As we continue our series this week on poverty, we return to Reading, Pennsylvania, which has been labeled the poorest city in America. People there are hurting. Opportunity House is an organization that's supposed to help. It provides low-income families in Reading with day care, housing and emergency shelter. But Opportunity House itself is also hurting.

In the third part of our series, NPR's Pam Fessler reports on efforts to salvage services for the poor by salvaging junk.

PAM FESSLER, BYLINE: Many families in Reading rely on Opportunity House, people like Tracy Boggs, single mother of two. She lost her full-time job a few years ago. Now, she tries to make ends meet by cleaning stores. Opportunity House helps her with housing and day care.

TRACY BOGGS: If they weren't here, I don't know where I'd be. I would be, I don't know, probably in a gutter somewhere.

FESSLER: But, like Tracy, Opportunity House is also feeling the squeeze. Pennsylvania has cut its budget. And the non-profit group now gets less money to provide round-the-clock day care for parents who might not otherwise be able to work. To make matters worse, enrollment is down because unemployment here is so high.

So the group's president, Modesto Fiume, recently did something he hoped he'd never have to do. He laid off 20 percent of his staff.

MODESTO FIUME: It was an absolutely horrible, horrible experience.

FESSLER: Seventeen low-wage workers - teacher aides, assistant teachers - people Fiume knows will have a hard time finding other jobs.

FIUME: Really, it was a lot of tears and lot of people upset, because some of these people had worked for us for a number of years.

FESSLER: He's also had to stop offering day care on Sundays, all to make up a $335,000 deficit. Fiume says donations and volunteers can fill some of the gap but not nearly enough. So, like many non-profit leaders, he's desperately looking elsewhere for help.

(SOUNDBITE OF MACHINERY)

FESSLER: Which brings us to this unlikely place clear across the country, a 26,000-square foot warehouse in Oakland, California. A worker with thick gloves has just put a stripped down box-spring mattress on what looks like a big meat slicer at the deli.

(SOUNDBITE OF MACHINERY)

FESSLER: As he pushes the mattress forward, the metal springs are sheered off the wooden frame.

TERRY MCDONALD: He just literally pulled about a hundred staples out of that piece of wood. But he did it with that machine in just a few seconds.

FESSLER: That's Terry McDonald, known to some as the Junkyard King, because he spends so much of his time trying to turn America's waste into cash.

MCDONALD: And he repeats the process for the next one.

FESSLER: But McDonald's real job is director of the St. Vincent De Paul Society of Lane County, Oregon. It's a non-profit that provides services for tens of thousands of low-income residents. It's also the largest mattress recycler in the country. With a facility here and another in Oregon, McDonald recycles about 175,000 mattresses a year. He holds up a piece of quilted cloth and foam that's been stripped from one of them.

MCDONALD: That material is recycled into commercial carpet. The next layer underneath that is generally polyurethane foam pad, and that's recycled into residential carpet pad.

FESSLER: He says about 90 percent of a mattress can be recycled into something else and sold. But this is only one of many businesses or social enterprises that McDonald runs. There are thrift shops, appliance repairs, furniture production - anything to use stuff that other people discard. The big payoff? These enterprises raise enough money to cover more than half of the Oregon charity's $24 million a year budget.

MCDONALD: The model is, is that, well, if there's an opportunity to add value to something, let's do it.

FESSLER: And that model is getting lots of attention these days. The Robert Wood Johnson Foundation has given Terry McDonald a half million dollars to spread the word. He's already helped other nonprofits set up mattress recycling in Orlando, Florida and Bridgeport, Connecticut. He sees potential everywhere.

Walking through the Oakland warehouse, McDonald points to bins piled high with books.

MCDONALD: That's our book recycling program and CDS and VHS, that we do a few thousand tons of those.

FESSLER: Now, he's talking to Opportunity House and Reading officials about how they too might tap into trash. Modesto Fiume is definitely interested.

FIUME: Because that will bring jobs, meaningful jobs, jobs that pay you know, a decent - not minimum wage, maybe 12, $13 an hour, with health benefits.

FESSLER: And that means a lot in a city that's been bleeding jobs for years. Fiume knows it could also make Opportunity House less dependent on donations and government funds.

FIUME: If you want to survive as a nonprofit, and you want to continue to meet the needs of the folks who are most in need of support, then you have to kind of reinvent yourself. So that's what we're doing.

FESSLER: Fiume is now trying to figure out the next step - where to get a warehouse and equipment and start-up funds. For a non-profit more accustomed to helping the poor than running a business, it's a whole new world.

Pam Fessler, NPR News.

Copyright © 2012 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.