End of extra unemployment benefits could cause crisis for renters

by Ryan Smith27 Jul 2020

With more than 32 million people set to lose the additional $600 per week in unemployment benefits when the Federal Pandemic Unemployment Compensation (FPUC) program expires this week, the share of renters facing a severe housing-cost burden could skyrocket – with Black households disproportionately affected.

According to a new analysis by Zillow, the expanded unemployment benefits have had a marked impact on households suffering from the economic impact of the COVID-19 pandemic. While missed rent payments have grown – 12.4% of renter households paid no rent in the first two weeks of July – they haven’t grown as much as might be expected given record unemployment levels. Renters in the service industry actually had lower cost burdens when collecting all benefits available to them than they did prior to the pandemic, according to Zillow. And only 3% of renter households in high-risk jobs are severely cost-burdened if collecting all the available unemployment benefits.

But those benefits are set to expire around the same time that many eviction moratoriums will end. With unemployment claims remaining twice as high as the worst week of the Great Recession, that has the potential to cause a wave of housing insecurity, Zillow said.

“The boost to unemployment benefits from the federal government has played a crucial role on keeping renters afloat, and has helped insulate the rental market as a whole,” said Zillow economist Jeff Tucker. “The rate of missed rental payments hasn’t risen nearly as much as expected, and eviction moratoriums are keeping many of those unable to make payments in their homes. But those temporary measures are mostly expiring soon, so without some form of extension to the unemployment benefits boost or eviction moratoriums, we could see a widespread eviction crisis as summer turns to fall.”

Among the most vulnerable are “contact-intensive” workers – those in jobs that require a high degree of face-to-face, physically close interaction, such as healthcare and service jobs. Contact-intensive workers have been especially vulnerable to both illness and job loss during the pandemic – and they’re present in about 28% of renter households.

With the assistance provided by the government, only 3% of renter households with at least one contact-intensive earner and receiving all available benefits would spend more than half their income on rent. With the cessation of the benefits, however, 41% would spend more than half their income on rent.

This also causes disparities among racial groups. Contact-intensive workers contribute 72% of household income in Black households, compared to 53% in white households, according to Zillow. The median income of Black households with a contact-intensive worker is 15% lower than the median income of similarly situated white households.

“This means Black renters are more vulnerable to the widespread income loss prevalent in these industries,” Zillow said.