IT still has not sunk in here - that 3,500 jobs at Bethlehem Steel's massive facility will have disappeared for good by the end of the year.

Layoffs are already well underway at the area's major employer, which not so many years ago was the third largest steel mill in the country. By the end of October only 9,250 workers remained on the job.

There were 11, 500 employed on Aug. 18 when Bethlehem shocked the city of Lackawanna and most other communities in the Buffalo area by abruptly announcing a 40 per cent cutback in steel production and a permanent workforce reduction to 8,000 by December.

Since mid-July Bethlehem and other major steel companies either have laid off or announced their intention to lay off more than 20,000 blue-collar and white-collar workers. Some of those are idled only on a temporary basis, until demand for steel products improves.

But others - such as those at Lackawanna or at Bethlehem's Johnstown, Pa. plant or Youngstown Sheet and Tube's Campbell, Ohio works - are permanently idled as companies shut down whole producing divisions.

The steel companies universally blame the need to curtail operations on government pressure to keep prices down and a heavy influx of foreign made steel, which they claim comes into this country at unfair prices.

Lackawanna's laid-off workers - many of whom received special government benefits last year when they were laid off for dozens of weeks because of import competition - join the thousands of workers in the steel industry who have lost their jobs over last several decades either to automation, reduced production or relocation adjustment assistance Friday by the Labor Department.

Each of the workers who will lose a job by December has his or her own story to tell. But in many ways the plight of the laid-off Lackawanna steel workers is shared by hundreds of thousands of workers in steel and other industries in the industrial northeast who have seen their once licrative employment vanish.

They are reluctant to leave the area, even though no job potential exists. Even those young or mobile enough to leave their homes are confused about where to go and often lack the resources to get there anyway.

"You feel so helpless," worried Don Grosso, a 38-year-old purification engineer who has so far kept his job. "Go somewhere else. You know what that means? My father is 73. My mother is 68. All my friends are here. It's not as easy as it sounds to go find heaven somewhere else."

Many of the workers remain unconvinced that an employer such as Bethlehem that has employed their fathers, grandfathers and in some cases their great-grandfathers, that has dominated the community, even giving the city of 28,000 its name, could suddenly be wrenched away. The Lackawanna Steel Co. mill, opened in 1902, antedates the founding of this heavily Polish, Italian and Irish town by seven years. Lackawanna Steel was acquired by Bethlehem in 1922.

Like a patient who cannot at first accept a terminal diagnosis, the worker remains an unbeliever, convinced that if he somehow hangs on, the mill will hire him again.

Although the ranks of the permanently unemployed in and around Lackawanna may be swelling, there is no panic yet at Curly's bar on Ridge Road across the street from the Union headquarters - or in Poor John's or any of the other bars where workers gather for a drink near the giant mill on Lake Erie's shore.

The off-track betting office near the plant has good days and bad days like usual but no sudden upsurge in wagering by desperate workers out to make a compensatory killing.

Nor is there a drop in bank business, no storm of workers seeking to refinance mortgage or other loans, not even a noticeable decline in new car applications, according to Jean G. Kern, manager of Marine Midland Bank's Lackawanna office.

"It's too early yet," judged the bank's assistant manager Derian Green. "The steel workers get good benefits. Many of them have been through layoffs before. Some of these guys have been around 20 or 30 years."

"Wait until February," warned Art Sambuchi, president of Local 2603, the largest of the six Lackawanna locals of the United Steel Workers. By then the spirit of camaraderie will have worn thin, Christmas and Thanksgiving will be over and the holiday bills will be coming in.

By that time too, in fact by the first of the year, the special unemployment benefits laid-off steel workers get in addition to their $115 a week state check will have expired. The Supplemental Unemployment Benefits fund at Bethleham has been depleted by layoffs in earlier years and will probably be unable to pay any worker with less than 20 years seniority. It already is paying out less than maximum benefits.

Workers such as 37-year-old Ed Soda - who faces $2,500 of uncovered medical bills this year to help pay for delicate operations for his seven-year-old daughter - has 19 SUB checks left, but doubts he will get more than seven before the funds runs dry.

Yet Soda - hangs on in Lackawanna, filing grievances against the company for laying him off ahead of other workers. Soda was laid off for 56 weeks in 1975 and 1976 and only a lump-sum check from that special government program fro import-related layoffs enabled him to pay $1,800 in medical expenses he had run up last year.

Sambuchi - who is on layoff himself, choosing to try trade adjustment assistantance rather than exercision the "super seniority" his union post grants him - said that the "first time a guy has to put out his entire unemployment check to pay a fuel bill, that's when it will sink in."

Maybe so. But Lackawanna workers have faced many long periods of unemployment in recent years. The plant almost closed in 1971, re-opening only after local officials pushed through the state legislature special property tax breaks designed to benefit Bethlehem. Year-long layoffs were not uncommon during 1975 and 1976 as a recession hit the steel industry about six months later than it hit most of the country.

It may be that familiarity with long periods of layoffs has convinced many of those recently laid off - young, middle-aged and old - that they will yet get back their old job, or at least some steel job.

The jobs are gone for sure, though Lackawanna Mayor Edward Kuwik said that his main concern is keeping the remaining 8,000 jobs. Neither he nor Erie County executive Edward V. Regan harbor any hopes that Bethlehem - which just posted a $477 million third quarter loss, a U.S. industrial record - will resuscitate the coke [Word Illegible], rolling mills or blast furnaces it has shuttered.

Moreover, laments Regan, the latest Bethleham layoffs represent just a further erosion in the industrial employment base around Buffalo. Erie County has lost 20,000 industrial jobs and 12,000 retail jobs in the last five yars. Regan is vice-chairman of a newly formed caucus of steel communities bent on convincing the government to do something to help ailing industrial areas, like Erie County.

Erie County's problems are found all over the industrial northeast. For years major employers have been leaving New England, New York and the Mideast. They leave for many reasons. Some build new, more efficient plants that take up more space than is available in the densely populated old metropolitan areas. Others are seeking to avoid the more militant, unionized work forces in the Northeast. Yet others have closed their doors permanently, the victims of imports or simply declining demand for their products.

But while the industry, and the jobs, may disappear or relocate, the workers do not. Steelworkers at Lackawanna were once a prosperous lot. There were 20,000 of them 15 years ago and as many as 14,500 in 1974 when the U.S. steel industry was producing at full-speed.

By August their numbers had dwindled to 11,500 and by the end of the year there will be only 8,000 jobs at Bethlehem. Even that may be a high number. It assumes the mill is producing reasonably close to its new full capacity.

Yet, as in other industrial areas, the workers at Lackawanna appear reluctant to go elsewhere, choosing unemployment and, as a last resort, welfare. The mill may be the only source of income their families have known for decades. Even younger workers, unencumbered by the mortages and educational entaglements of middle age, stay put.

"Leave the area?No that's one thing I won't do," says 23-year-old Richard Preischel. He was reporting to the unemployment office on Abbott Road in Lackawanna. "There are jobs. They're just hard to find."

Preischel should know. He has been looking since the summer with no luck, and has been employed on and off for the last four years at Bethlehem. For now, he said, he and his wife can get along on his unemployment benefits. Preischel's state benefits do not run out until May.

He still harbors thoughts of returning to Bethlehem, even though the company and the union have made it clear that most younger workers will never make it back. He joined thousands of other workers in writing to President Carter to "tell him how bad things are." He maintains that "steel is good work. The benefits are good."

"Where am I going to go," asks William Pagano, also 23. "What am I supposed to do, pick up and leave my mother and my sister. My mother works at a $2.65 an hour job and my sister goes to Erie Community College."

Besides, he said, "where else can I get a job that pays as well. I have no schooling. I went into the service after ninth grade. I'd have to go back into school." And, Pagano queries, where is he to go?

While younger workers like Preisechel and Pagano, who lack seniority, are nearly always the first to lose jobs during layoffs, this permanent lay-off is affecting many older workers, some with 20 or more years at the Bethlehem facility.

Whole departments are being eliminated, which means that even highly skilled craftsmen are forced into low-paying general labor pools, bouncing younger, inexperienced employees on to the unemployment rolls.

During periods of layoffs, workers with the most seniority usually keep their jobs. But when whole departments are closed, workers with seniority are thrown into labor pools that cover several plant departments. Special provisions in the contract smooth the abruptness of the pay loss for the higher-paid worker, but do nothing for the less-skilled, suddenly jobless pool laborers. Nor, acknowledges Sambuchi, is there anything that can be done to alleviate the internal union frictions that are mounting as higher-paid workers move to lower-paying jobs, displacing younger colleagues.

Wiley Cole, 21 years at Lackawanna and treasurer of Sambuchi's Local 2603, was forced into such a position. Used to earning more than $20,000 a year until 1975, he has had to use the "super seniority" conferred on him as a union official, to go back to work.But since his entire department has been eliminated, Cole moved into the labor pool and has gone to work as a janitor at $250 a week.

Cole, who also received a big trade adjustment check last year, hedged his family's bets on the steel industry an dused most of the family savings to put his wife through a master's degree program at Buffalo State University. But, the Coles now have discovered that she can't find a teaching job either. Cole, who has three children and a relatively new house, said he would leave the area "if I were younger."

For 57-year-old Agnes Moran, the final option appears to be welfare. Moran, who only worked 13 weeks last year is going to a special school the union runs on Saturday mornings to try to learn basic math and tool recognition.

"You'd be surprised at the number of steel workers who don't even know how to do fractions," Sambuchi said. "There are jobs for welders around here, but if you don't know how to do a fraction, you cannot be a welder."

But Moran, who was a scrap burner before her last layoff, does not expect to get a welder's job. "I am hoping to get called back," she said, but with only eight years of seniority that appears a remote possibility.

Nor does she expect to get another job. "At 57, who'd hire me. Besides, when employers learn you're from Bethlehem, they don't want to hire you." In part that's because with 3,500 layoffs, employers can pick the cream of the crop and in part, she said, because they know if you get a call back, you will leave in a second.

Moran, who is divorced but has no children young enough to need support, might consider a pension. But she has only eight years seniority and needs 10. While Bethlehem Steel's wage payments to the workers and the community are declining sharply, the company continues to pay big property taxes, keeping local governments reasonably solvent.

But the company - which go local officials to co-operate in pushing through that property tax reduction in return for building a modern, $100 million bar mill which opened last year - has been complaining again about the size of its property tax bill, that property taxes at Lackawanna are highest of any of the many plants the nation's second-biggest steel producer operates.

Local officials like Mayor Kuwik said they believe Bethlehem's statement that the company contemplates no further shutdowns at the mill (although they feel they got a similar pledge last July, just week's before the Aug. 18 retrenchment), but shudder at the thought of an abandonment of the property.

The payroll loss - estimated to be $71 million of the $206 million the plant paid last year - is diffused throughout the Buffalo area.

But Lackawanna is still a company town as far the city's budget is concerned. The school district relies on the $5 million in plant taxes for more than half its outlays and the $4.1 million Bethlehem pays the city of Lacakawanna is nearly half the community's total budget.