How the Coronavirus is Killing the Middle Class
May 14, 2020
Day-care centers are among the myriad small businesses that are in danger of liquidating as the economic shutdown prompted by the coronavirus pandemic shows no sign of easing.Illustration by Tallulah Fontaine
Kelly Bates is a forty-one-year-old single mom who lives with her nine-year-old daughter, Danielle Lucky, in Collingdale, Pennsylvania, a middle-income neighborhood of aging red-brick row houses a few miles from the Philadelphia airport. Bates, who is willowy, with large brown eyes, had grown up in South Philadelphia in the seventies and eighties, as part of the city’s burgeoning African-American middle class: her father was a heating contractor, and her mother worked for the Bell Telephone Company. But over the decades crime in the neighborhood increased, and, in 2015, Bates bought a three-bedroom house in Collingdale for seventy thousand dollars, hoping to escape the violence. “I wanted Danielle to go outside and play and not worry about getting shot,” Bates told me recently. Since 2016, Bates has worked as an assistant director at Kinder Academy, a chain of five child-care centers around Philadelphia. Through her work there, she received a grant to earn a bachelor’s degree in early-childhood education, and is about a year away from graduating. “Babies are my passion,” she told me. “I’m part mom, part dad, part therapist, part doctor, and part food-program officer.”
On March 16th, as the coronavirus spread in Pennsylvania, Governor Tom Wolf ordered all nonessential businesses, including child-care centers, to shut down indefinitely. That evening, Leslie Spina, Kinder Academy’s fifty-four-year-old owner, decided that she was going to have to lay off all hundred of her employees. The state had allocated some money to support child-care centers, but Spina didn’t think it would last more than a month or so. She also worried that the longer she waited to let her employees go, the longer the line would be for unemployment. She’d known most of her employees for decades and had helped raise their children at the centers. “The decision almost broke me,” Spina said. “It’s not like other businesses. They are my family.” One of the workers she had to lay off was her own mother, Debby, who is seventy-three.
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The day after the centers closed, she met with her employees on Zoom and read them a letter she had written, announcing the layoffs. She didn’t allow her mother on the call, so that she wouldn’t have to break down in front of her. “We’re used to turning to Leslie to fix every problem,” Monica Hernandez, a center director, told me. “Here was a problem she couldn’t fix.” Spina offered to set up one-on-one tutorials with her employees for navigating the state’s arcane unemployment-benefits system. She and her assistant spent days helping employees who didn’t have computers submit claims. Spina’s mother had to apply twice, after an initial application was lost.
That Tuesday afternoon, Bates filed for unemployment. When I spoke to her on the phone, several days later, she was feeling disoriented. “I’ve always been able to provide for me and my daughter,” she said, “and now I’ve just applied for food stamps for the first time in my life.” Bates normally makes about forty-one thousand dollars a year. “I am a person who lives check to check,” she told me. “But I take care of my responsibilities and I don’t live beyond my means.” In 2019, she used her tax refund to take Danielle on their first cruise, to the Bahamas. This year, with no income, she used it to pay her mortgage, car payment, water and gas bills, and car and life insurance. After that, she had eight hundred dollars in her bank account.
Spina called Bates privately to offer help. About ninety-five of the ninety-seven children at the Oxford Circle, Northeast Philadelphia, branch of Kinder Academy, where Bates worked, are on some form of public assistance, and the day-care center operates in partnership with a diaper bank and food pantry next door. (Across all of Kinder Academy’s locations, about ninety per cent of families receive public assistance.) Bates was accustomed to helping the families at Kinder Academy find a little extra assistance when they needed it. Now she found herself needing some aid, too. “I never imagined anything like this would happen,” she told me. That Wednesday, she drove to the shuttered center and packed a grocery bag with applesauce, fruit cups, mini-pancakes, cereal, and the small cartons of milk used at Kinder Academy for the kids’ snack and lunch.
Of all of her mounting concerns, Bates was most frightened of not being able to pay her mortgage. “If I lose my house, I would feel like a failure as a parent,” she told me. Every other bill would come second: “If my lights get cut off, we’ll use candles.”
n the last four weeks, as large sections of the global economy have shut down, more than thirty-three million Americans have filed
for unemployment. People with jobs that aren’t deemed essential, or that render telework impossible, are suddenly without work, and, in many cases, savings. According to the C.E.O. of Feeding America, the pandemic is likely to leave an additional seventeen million Americans needing food assistance in the next six months. Recently, in Los Angeles, Pittsburgh, and Irving, Texas, people waited outside food pantries in lines that stretched miles. Tens of thousands of people who can’t pay their bills have gone on rent strikes
The disaster has become so dire so quickly owing, in part, to the legacy of the 2008 financial crisis. Minimum wage, in real terms, is more than thirty per cent lower than it was fifty years ago. (Since the nineteen-eighties, most of the benefits of America’s growing economy have gone to the wealthy.) Meanwhile, housing costs have more than doubled since 2000. “When people say they live paycheck to paycheck, it’s not that they’re managing their money poorly,” Sharon Parrott, a senior vice-president at the Center on Budget and Policy Priorities, told me. “Instead, their housing costs are taking up a disproportionate share of their incomes.” The result is a slim margin of error: forty per cent of Americans don’t have four hundred dollars cash to spare in an emergency, and would need to rely on credit cards or friends and family to come up with the money. “We know for low-wage workers, three unpaid days away from a job threatens their ability to buy food for a month,” Vicki Shabo, a policy expert at New America, a nonprofit think tank, said.
“This is worse and weirder than anything I’ve ever seen,” Heidi Shierholz, a director of policy at the Economic Policy Institute, said. Shierholz served as the chief economist at the Department of Labor from 2014 to 2017 and dealt firsthand with the slow recovery from the 2008 financial crisis. “We know how to wrap our brains around the bursting of an asset bubble of seven trillion dollars in the housing market, or the end of the dot-com boom,” she said. “But we don’t have practice in dealing with the fallout from this pandemic.” We are beginning to see who will be most affected by the economic downturn. Women are losing jobs at a higher rate, because there are more of them in the service sectors most affected by the virus. The crisis has also been increasing racial economic disparities: black and Latino workers are more likely to work service-industry jobs—in restaurants, bars, hotels—and that sector was the first to shut down, and the least likely to fully reopen in the near term. “We always see this during recessions, but this one is likely to be worse,” Shierholz told me.
In late March, to mitigate the disaster, Congress passed a two-trillion-dollar stimulus package, the
cares Act, which included cash payments to workers, loans to small businesses, and a broadening of the categories of Americans eligible for unemployment assistance. “Our normal system has holes you could drive a truck through,” Shierholz said. Yet there were also flaws in the stimulus package, most notably a lack of safeguards, which has allowed federal money to be funnelled to executive bonuses and shareholder revenue instead of workers’ salaries. There was also an arbitrary deadline set for July 31st, at which point some provisions will expire. “Pulling back on provisions then, when unemployment is likely to be at least fifteen per cent, is nuts,” Shierholz told me. “It’s a huge mistake.” She hoped that, in the coming months, the government would take more ambitious steps: in the U.K. and Denmark, for example, the state has been directly paying some workers up to eighty and ninety per cent of their salaries, respectively. “I don’t say this all the time, but right now we don’t have to worry about deficits,” Shierholz said. “We’ll be better off if we make sure that people have enough money to not go into foreclosure and make their car loans.”
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Some younger people with fewer responsibilities seemed to be faring O.K. Kyle McIntire, a twenty-four-year-old actor and waiter recently displaced from New York City, has been sleeping on his mom’s couch, in Salisbury, Massachusetts. McIntire combined his savings and his earnings from his unemployment benefits, and he now has enough money to keep his lease on his apartment in the city, pay rent to his mom, and still save money. “When this ends, I hope I’ll be able to spend more time auditioning instead of working in a restaurant,” he told me. A handful of places where demand has increased have been hiring. In April, Walmart created two hundred thousand new associate positions, and received more than a million applications. In Norden, California, Dennis Kerr posted online that he’d lost his job at a ski resort, and by the time I reached him, in mid-April, he’d found a new one working at a grocery store in Reno, Nevada. But many people are struggling. Nicole Ferrari, a single mother of four who owns a commercial and residential cleaning business in Lancaster County, Pennsylvania, was spending her days scrolling through Facebook looking for tips on applying for unemployment. “You hear people talking about how physical grief is,” Ferrari told me. “I’m not very busy, but I’m exhausted.” Ferrari had applied for a small-business loan through the Paycheck Protection Program, and the loan would be forgivable if she used it to pay herself through payroll. To apply, she had to go through her bank, but her local branch was closed; by the time she finally reached a customer-service representative, on Twitter, she had learned that the loan program
was out of money. “This is what Ruth’s Chris and Shake Shack applied for,” she told me. Pennsylvania’s unemployment Web site had to be redesigned to accommodate federal expansions, and when it finally relaunched, in mid-April, the system kept crashing. When Ferrari got online, the choices in the drop-down menu wouldn’t allow her to choose “self-employed.” She shares the computer with her son, who needs it to attend school remotely, and she eventually gave up. “I’ve seen online that the unemployment office is hiring workers,” she said. “Maybe I should just apply there.” (The Web site’s glitches have since been repaired, and Ferrari’s claim is pending.)
Last year, Abbey Simmons, who is a thirty-nine-year-old merchandise manager for live-music acts, spent three hundred and sixteen days on the road last year. In the middle of March, she was on tour with Destroyer, a Canadian apocalyptic pop band, when covid-19 prompted the sudden cancellation of the rest of their shows. She applied right away for unemployment benefits in Washington State, where she lives, but her claim was denied because the state didn’t count her freelance wages as lost income. “I’ve gotten four letters saying I’m eligible for zero dollars,” she told me. “At least they’re good at the mail.” She was eligible for federal assistance, but the platform that the state had set up kept crashing. “I haven’t even been able to get onto the log-on page,” she said. Simmons hoped that the government would set up some sort of New Deal jobs program so that she could do something useful, like make N95 masks in a factory. She believed that her industry was dead for the foreseeable future. “We all thought we’d be killed on tour in mass shootings,” she said. “I have a tourniquet in my bag, but I never thought to pack a mask and a pair of rubber gloves.”
As weeks of quarantine pile up, Kelly Bates, the Kinder Academy assistant director, told me that she thrives on being busy, and is having trouble not falling into despair. “It’s a daily struggle to motivate myself to get out of bed,” she said on a blustery day in late April, outside the row house in Collingdale. Neighbors walked by wearing masks, and Bates waved hello. Danielle’s dad, Robert, who is no longer with Bates but is still in Danielle’s life, had just lost his job, too, as a residential counselor in a drug-and-alcohol rehab facility. Bates is grateful that, so far, he’d been sending her the hundred and fifty dollars he typically pays each month in child support. Wearing sheepskin slippers and a pair of green sweatpants, she perched atop the concrete steps of her front stoop. I stayed at the bottom, some twenty feet away. Danielle poked a red plastic wand through the crack in the door, and blew soap bubbles, which drifted down the steps and over their small plot of overgrown lawn.
Several times a week, Bates’s boss, Monica Hernandez, has been driving to the day-care center in Oxford Circle to pick up food bags and drop them off for families and staff who need them. When I saw her, Bates was holding off from taking food. “We’re maintaining,” she told me. She was refusing to let herself think about the future, since worrying did her no good in the day she was in. The longer the crisis continued, the more likely it was that women who worked alongside her at Kinder Academy wouldn’t be able to afford to wait until their jobs returned. They’d have to leave the positions, and the education grants that came with them, for jobs at Walmart. Bates didn’t want to take a job that would increase her chance of infection. “If something happens to me, it will automatically hit my daughter,” she said. “Putting myself at risk isn’t an option.”
She had stopped watching the news and was staying away from social media. “You hear so many stories and see so many snippets of conflicting things,” she told me. “It will end in May, or now it’s August,” she added. The rumors made her worry about whether Kinder Academy would survive. “Will I not have a job to go back to?” she asked. “I feel like this is a nightmare I don’t wake up from. It doesn’t seem real. I miss going to work. I miss seeing my babies.” The teachers at Kinder Academy were still meeting weekly by Zoom. “We shoot ideas to each other as far as staying in touch with our kids and our families, so they can come back when things open up,” Bates said. She was concerned about the children. “They’re used to seeing us for almost twelve hours, and some depended on us for three meals a day,” she told me.
When day-care centers close, it also affects the families. Quarantined together and separated from the outside world, many families face an increased risk of abuse. Hernandez has been texting the families who use the center the question “Are you in a safe place?”—which is general enough to apply to both personal safety as well as housing. Families have also lost access to nutrition programs. Before the pandemic, Martha Hackett, a retired social worker who raises four children, could count on them eating at least one meal a day at school or at Kinder Academy. Hackett has now been relying on a lunch program sponsored by a nearby mosque, although she isn’t Muslim. “It’s such a help,” she told me.
The absence of child care also makes it nearly impossible for essential workers who are parents, especially single mothers, to do their jobs. Dominique Nelson, a teacher whose ten-year-old usually attends a Kinder Academy aftercare program, has been struggling to teach remotely with her child at home. “How do you do your own work and homeschool your own child at the same time?” Another single parent, Rochelle Logan, a psychiatric nurse who works with incarcerated patients at a state hospital, said she is required to accept scheduled shifts or risk being fired. She often works doubles, from 11 p.m. to 3:30 p.m. the next day. During the pandemic, Logan has been leaving her two small children, one of whom has been diagnosed with autism, with a niece, who was visiting her from Jamaica and was stranded in Philadelphia when the borders closed. But when the borders reopen and her niece leaves, Bates isn’t sure what she’ll do. She told me, of child care, “You never realize how important it is until you don’t have it.” It’s likely that, as the shutdown drags on, many day-care centers will go bankrupt; research suggests that this will have a disproportionate economic impact on women.
At the end of April, after the
cares Act passed, Leslie Spina, the owner of Kinder Academy, got some good news: the center would receive a federal loan for six hundred thousand dollars to pay its employees’ salaries. Spina decided to reopen the centers virtually: teachers who wanted to return would spend their days doing online training. The center would offer thirty minutes a day of virtual interaction for preschoolers and fifteen minutes a day for babies and toddlers. (Spina felt that more screen time would be developmentally inappropriate.) Teachers would read books to children and talk to them and their families online. Spina was happy that she could offer her employees a chance to come back, but worried that, when the money ran out in two months, she would have to lay them off again, and they would be at the end of long lines for unemployment benefits.
By this point, Bates had begun to receive unemployment payments, and was making two hundred dollars a week more than she earned at Kinder Academy before the shutdown. Still, she joyfully accepted her old job back. On the last day of April, to celebrate and thank her employees, Spina hired a caterer to prepare takeout dinners of baked ziti, salad, and sugar cookies for dessert, along with confetti eggs and big bottles of wine. Bates drove to Spina’s office to pick up dinner for herself and Danielle, which the two ate together in quiet celebration. Bates was fine with making less money in order to see the kids and families she worked with, even virtually. “I just want to go back to work,” she said.
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