When Ivy Hopson’s elementary-school crush learned that he liked her, she dismissed him as a “little nappy-head boy.’’ At home later that day, Hopson tried cutting his own hair and messed up badly; the next day at school, he was teased mercilessly. But he kept at it, and by middle school, he cut his hair so well that classmates began asking him if he could cut theirs. ‘‘Sure,’’ he would say. ‘‘For a dollar!’’ And that’s how Ivy Hopson became a barber.
Today, Hopson is 49 and owns the Menz Barber Lounge, a six-chair shop on the North Side of Milwaukee. As he works the clippers — he favors Andis clippers — the men in the shop talk politics, religion, sports. ‘‘We call it the black man’s country club,’’ he said. Hopson charges $40 a cut and works by appointment only. ‘‘You have to be an artist,’’ he said, but a quick-handed one. The more heads you cut, the more money you make.
When Hopson started out cutting hair, before he established a clientele, his income fluctuated. Some years he made $35,000; other years, he brought in only $15,000. In lean times, he and his young family relied on food stamps, also known as the Supplemental Nutrition Assistance Program. ‘‘That’s a terrible feeling, man,’’ Hopson reflected. ‘‘That’s like a handout.’’ But that was a long time ago. Before the coronavirus struck, Hopson brought in a steady middle-class income. With the revenue from the shop, he only needed to work three times a week. On off days, he and his wife regularly drove to Chicago for dinner.
In Milwaukee, a disproportionate number of those who have died because of the virus were black, reflecting a nationwide trend. Even before Covid-19, black-owned businesses like Menz received less financial backing and were more vulnerable to going under than white-owned shops. Comparing establishments that existed in 2002, 40 percent of white-owned businesses and 51 percent of black-owned ones did not survive the 2008 recession. In further decimating the ranks of the American middle class, the recession hastened a process already years in the making. From 2000 to 2013, Wisconsin lost a larger share of middle-class households than any other state. No state’s middle class expanded over that period.
When Hopson closed Menz in compliance with social-distancing orders, he applied for unemployment support for the first time in his life. In normal times, he isn’t eligible to, as the standard program doesn’t support (and isn’t supported by) independent contractors, which many barbers are. The CARES Act provided states the option of lifting that exclusion, which Wisconsin did in April. When Hopson signed up, it felt very different from the time he applied for food stamps. ‘‘We were forced into closing down,’’ he said. The beauty-and-personal-care industry has experienced among the largest reductions in work hours owing to the pandemic, declining more than 90 percent since the beginning of March. Under those circumstances, Hopson felt no shame in petitioning the government for relief.
In April, the U.S. unemployment rate hit 14.7 percent and many economists expect it to reach 25 percent this summer, rivaling levels not seen since the Great Depression. Early hopes of dipping into an economic slump only to quickly hop back out of it — the so-called V-shaped recession — have been abandoned. A return to normalcy appears impossible while the Covid-19 threat still looms, which could mean years of economic stagnation. As the United States slides toward what could be a new depression, what will become of its fragile middle class?
Most Americans think of themselves as members of the middle class, even as its numbers have fallen. As the economic fates of workers have moved further apart, the U.S. economy is no longer shaped like a Christmas bulb, fat in the middle and tapered on the top and bottom, but an hourglass. In 2016 the Pew Research Center released a study that examined 229 metropolitan areas across the country: In 203, the share of adults living in middle-income households declined from 2000 to 2014, while the share of adults living in lower- and upper-income homes each rose in more than 150 areas. Economists have watched the American middle class wither for decades, linking its decline to waning union power and wage stagnation.
An empty Wisconsin Ave. in downtown Milwaukee. Lyndon French for The New York Times
At the same time, the cost of minivans, homes, health care and college tuition has increased. Families reacted to this new reality by plunging themselves into debt and neglecting to save, because, in America, you become middle-class by consuming: If you cannot afford a home in a respectable school district, a pet, summer vacations and so on, you have not ‘‘made it.’’ Despite their outward trappings of prosperity — and often because of them — many middle-class families have negligible savings and too much debt. ‘‘The middle-class way of life can be maintained for quite a while with smoke and mirrors — and many credit cards,’’ write Teresa Sullivan, Elizabeth Warren and Jay Lawrence Westbrook in their 2000 book ‘‘The Fragile Middle Class.’’ Before the pandemic, Americans saved approximately 8 percent of their income, which would cover a fraction of their living expenses. American households carry an average of $111,198 in debt. Even in flush times, this kind of financial exposure can be stressful. During long spells of unemployment and underemployment, it can lead to ruin.
The American middle class long has been presented as evidence that self-reliance leads to stability, even prosperity. The very existence of a middle class appears to prove the notion that if we work hard enough and make the right choices, everything will be OK — and also its corollary: that the poor must have somehow brought poverty upon themselves and that we, industrious workers that we are, will surely never be one of them. But the American middle class is neither stable nor self-reliant. Recognizing this is the prerequisite to determining what we need to weather this storm.
Reflecting the American creed of individualism, Ivy Hopson expressed discomfort with government aid, ‘‘a handout,’’ he called it. But virtually every American has benefited from some form of public aid, from programs widely recognized as ‘‘welfare,’’ like food stamps, to more hidden subsidies issued through the tax code, like government-subsidized retirement benefits. As the political scientist Suzanne Mettler has shown, the average middle-class American family (with a before-tax household income of $66,400) receives more help from the government than it pays in federal taxes and collects more aid than the average American family in the lowest income quintile (with a before-tax household income of $24,600). America is not divided between successful ‘‘makers,’’ who can independently support themselves through work, and flunky ‘‘takers,’’ content to eke out a small life on government handouts. We’re all on the dole, however meager it may be.
In moments like this, it takes the federal government to keep everyone afloat. It has already distributed $239 billion in individual stimulus checks and approved $512 billion in loans through the Paycheck Protection Program. Earlier this month, the Democratic-controlled House passed an additional $3 trillion relief package, called the HEROES Act, which would, among other things, expand unemployment benefits, provide rental and mortgage assistance and authorize another round of stimulus checks. But President Trump threatened to veto the bill, as House Republicans called the legislation ‘‘a socialist wish list.’’ The Oklahoma congressman Markwayne Mullin said in a statement, ‘‘Speaker Pelosi’s bill forces us to become dependent on the federal government.’’
But countries with more robust welfare states have been able to respond to the recent economic downturn with a high level of competence and the kind of deep investment that the Covid-19 pandemic demands. As Emmanuel Saez and Gabriel Zucman, economists at the University of California, Berkeley, observed, jobs have been destroyed in America at a much faster rate than everywhere else. In nations like Britain and Germany, workers have been allowed to keep their jobs even as businesses shuttered because their governments are paying all or most of their wages. In the United States, workers have been laid off and forced to seek refuge in an overburdened, backlogged unemployment-insurance system. Many who have applied for unemployment have received nothing. Ivy Hopson in Milwaukee is one of them. ‘‘I’ve got some savings,’’ Hopson told me. ‘‘It’s just me, my wife and my daughter. We don’t eat a lot.’’
A convenience store near to Ivy Hopson’s barbershop in Milwaukee. Lyndon French for The New York Times
Because Germany already had a system, known as Kurzarbeit, in place to pay workers whose hours are reduced during economic crises, it didn’t need to reinvent the wheel when the coronavirus began to spread. Other countries that didn’t have such a system in place, including Ireland and Denmark, quickly fashioned one. That means it’s not just the design of a nation’s welfare infrastructure that matters but also its level of commitment to protecting basic human needs. Germany pulled out of the global 2008 recession much quicker than the United States. From 2008 to 2010, when the U.S. unemployment rate almost doubled, unemployment in Germany fell. Nations have responded to economic crises of this magnitude in transformative ways. But just as states go to war with the army they have, in a recession they tend to catch the unemployed with the safety net they have.
America not only lacks many programs that buffer workers from economic calamity — such as the right to housing or universal health care — it is also bereft of a national culture characterized by social solidarity and faith in government. About a third of Americans express trust in the government, unlike most Germans, Norwegians and Swiss. This is a longstanding historical trend and cannot be solely attributed to the current occupants of the White House. By and large, countries that have been able to bend the curve of Covid-19 cases, both in Europe (Switzerland, France) and Asia (South Korea, Taiwan), have been those where citizens recognize the importance of strong government. Countries that have yet to respond as effectively — including Brazil, the United Kingdom and the United States — have publics deeply skeptical of their governments as well as current heads of state (Jair Bolsonaro, Boris Johnson and Donald Trump) who share, and stoke, that sentiment.
Despite all our talk of individualism, though, most Americans support a strong welfare state. That support does not fade during economic downturns. A majority of us believe that we are spending too little to help the poor and that the government should be responsible for ensuring everyone has health coverage. Most Democrats and Republicans oppose funding cuts to Social Security, education and unemployment. In a 2012 poll, a majority of Americans said that they wanted the government to do more to prevent foreclosures during the housing crisis. ‘‘The American public consistently expresses a desire for more government effort and higher levels of spending for almost every aspect of the welfare state,’’ Martin Gilens, a political scientist, wrote.
When Americans were hurting during the Great Depression, the U.S. government stepped up, creating enormous social programs through the New Deal that shielded families from scarcity and hunger. For the mass of Americans who had long known poverty before the 1930s — the ‘‘ill housed, ill clad and ill nourished,’’ as President Roosevelt would later describe them — the Depression pushed them deeper into an already familiar pit. But for the middle class, the Great Depression was arguably more devastating. Reports of suicides during the Depression have been wildly exaggerated, but suicides did increase as unemployment rose. It was not generally miners and tramps who stepped from windows or stuck their heads in ovens; it was dentists, bankers and clerks. A 2012 study published in The Journal of Epidemiology and Community Health found that temporary bank closures to stanch the panic were strongly correlated with higher suicide rates. That would only matter if you had money in the bank to begin with.
The New Deal provided for the elderly through old-age insurance and Social Security. It supported out-of-work laborers with unemployment insurance and public-works programs like the Works Progress Administration. It stabilized the banking sector by guaranteeing deposits and established the Securities and Exchange Commission, which brought more transparency and oversight to Wall Street. It authorized robust investments in infrastructure. The New Deal did not restart the American economy nor did it redistribute income or dismantle racism. Many inequalities that existed before the New Deal existed after it. What the New Deal did do, however, was provide Americans with security the likes of which they never had before.
‘‘The New Deal erected an institutional scaffolding designed to provide unprecedented stability and predictability for the American economy,’’ writes the Stanford historian David Kennedy in his book ‘‘Freedom From Fear.’’ ‘‘In time, that edifice would serve as the latticework on which the postwar economy grew like kudzu, the ‘mile-a-minute vine’ that carpets much of the South.’’ The quarter century of prosperity that followed World War II was rooted in the profound structural reforms of the New Deal. A strong market was made possible by strong government intervention.
It is now widely acknowledged that the federal government should have acted sooner and spent bigger when addressing the 2008 financial crisis. In March, Neel Kashkari, who oversaw the rescue package (the Troubled Asset Relief Program) and is now president and chief executive of the Federal Reserve Bank of Minneapolis, wrote, ‘‘My experience underscores that if there is a principle policymakers need to keep in mind going forward, it’s this: Err on the side of helping as many workers and businesses as possible rather than on prudence.’’ In 2008, the government hobbled the rescue package by trying to make sure that only ‘‘deserving’’ Americans received help, slowing and narrowing relief. ‘‘The American people ultimately paid more because of our attempts to save them money,’’ Kashkari wrote with hindsight.
When the U.S. government has extended bold relief, it has had a profound impact on American life. By the end of the 20th century, Social Security and associated programs were among the largest items in the federal budget. They saved an untold number of elderly Americans from poverty and has been called the ‘‘most important single piece of social legislation in all American history.’’ In 1948, the G.I. Bill consumed 15 percent of the federal budget. Its home-mortgage program and small-business loans forged the American middle class. A New Deal in the face of Covid-19 will require a similarly serious commitment to the American people.
‘‘The $2.2 trillion in spending the U.S. government already enacted in the CARES Act will be pretty much spent by the end of summer,’’ the economist Emmanuel Saez told me. ‘‘Adding $3 trillion in spending,’’ as the HEROES Act would, ‘‘is necessary for spending after the summer and most importantly to start helping states.’’ J. W. Mason, an associate professor of economics at John Jay College in New York, pointed out that $3 trillion corresponds to a 20 percent decline in private demand, which, based on what happened in the 2008 recession, we should prepare for. The economics journalist Derek Thompson recently argued that it will take $10 trillion to prevent a new depression. There is no crystal ball for how much federal support will be enough. But as Justin Wolfers, a professor of economics and public policy at the University of Michigan, told me, ‘‘As one thinks about all of this uncertainty, I think it argues for doing too much rather than too little.’’
Some have responded to growing calls for ambitious government relief on behalf of the American people with uninspired defeatism. A New Deal today is unrealistic? It’s not as unrealistic as was the original New Deal, which fashioned national programs from scratch during a time when there was a genuine debate in America about whether the government should step in at all. Compared to the original New Deal, expanding government programs we already have in place, like housing vouchers for low-income renters or Medicaid, is utterly feasible. Our nation is too divided? In the 1920s, the Klan said it had five million members. Meanwhile, immigration, particularly from Southern and Eastern Europe, had accounted for a third of the country’s recent population growth. The New Deal was passed when many Americans literally didn’t speak the same language. The start of the Great Depression was as far removed from the end of the Civil War as we are today from Elvis Presley’s first appearance on ‘‘The Ed Sullivan Show’’ — just 64 years.
If the United States is caught flat-footed in times like these, it is because we left the New Deal unfinished and neglected to protect the security of the American people. We have not developed the institutional capacity — delivery channels, government departments, budget lines — needed to deal with a crisis like this. ‘‘The inadequacy of our national response’’ to the pandemic, Kennedy told me, reflects the ‘‘weak governmental structure of our society. We have a welfare state, but compared to a lot of others, it’s anemic.’’ Building a better welfare state will not be cheap. But the Trump administration has eagerly spent big in other domains: signing into law a $1.5 trillion tax cut, increasing military spending beyond the Pentagon’s requested amount in its 2020 budget, demanding billions for a border wall. Why shouldn’t the U.S. government invest deeply in the American people? We are worthy of what we need.
Matthew Desmond is a professor of sociology at Princeton University and a contributing writer for the magazine. He previously wrote a feature about the legacy of slavery in American capitalism.
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