Renters may be hardest-hit by $600 unemployment expiration

Since the beginning of the COVID-19 pandemic, millions of Americans have been laid off, temporarily or permanently, and have struggled to make ends meet. The one lifeline that seemed to help was a weekly federal supplement of $600 to state unemployment benefits.

Now that program has ended, and it is threatening to put many in a difficult financial situation. Worst hit may be renters, who are most likely to have less savings to fall back on.

Weekly $600 payments and eviction moratoriums have been a lifeline for many renters out of work, but those payments have now been terminated.

FOX 5 Real Estate Expert John Adams provides some guidance in navigating this challenging time.

Q: John, losing $600 a week in unemployment benefits is a serious blow to most out-of-work renters, right?

A: Right! Weekly $600 payments and eviction moratoriums have been a lifeline for many renters out of work, but those payments have now been terminated. And the biggest part of many renters' budgets is the rent itself. Without these supplemental benefits, households facing a severe housing burden will jump from about 3% to a whopping 41%, according to Zillow. 

Q: So what does the term “severe housing burdened” mean?

A: Housing-burdened is defined as paying more than 30% of household income toward rent, while severely housing burdened is defined as paying more than 50% of household income toward rent. New Orleans is likely to see the highest jump in housing burden, from its current rate of 4.7% up to an estimated 64%.

Q: Who is most likely to be impacted?

A: Households with high contact-intensity workers are more at-risk. High contact-intensity workers are those who require a high degree of face-to-face and close physical interaction in their jobs, like service and restaurant workers. Currently, 31% of renter households with high contact-intensity workers are already housing burdened, while 13% are severely housing burdened.

Q: And does race come into play?

A: Yes, there is a racial component to this issue, as Black households are more likely than white households to have a majority of household income derived from high contact-intensity work.

Q: OK, let’s break this down.  How many people are we talking about here?

A: More than 32 million people collected an extra $600 a week in unemployment benefits at the end of June as part of the Federal Pandemic Unemployment Compensation program, helping to keep missed rent payments only slightly higher than last year

Q: And of these 32 million, who is most likely to be unable to pay rent?

A: Workers in contact-intensive occupations like healthcare and front-line service, who are present in 28% of renter households, have been especially susceptible to income loss during the pandemic, and are more vulnerable to housing insecurity than homeowners. With the previous benefits, only an estimated 3% of these unemployed renters with contact-intensive jobs are severely cost burdened. Losing the weekly $600 benefit may cause an estimated 41% to become severely cost burdened and at greater risk of evictions.

Q: Are those numbers valid for metro Atlanta?

A: No, Atlanta is predicted to be much worse because of the large number of high contact jobs in our service oriented economy. According to Zillow, prior to last week, only 1.3% of unemployed Atlantans were considered severely housing burdened.  But now, they predict that number could rise to 46.3% in our metro area.

Q: Is the threat of eviction a realistic possibility?

A: Not yet in most areas.  Most, but not all County Courthouses are still closed for evictions, but some are opening while others are planning to do so. The courts can’t stay closed indefinitely, so there is a threat on the horizon.

Q: If you simply can’t afford to pay your rent, what should you do?

A: Be proactive. Contact your landlord BEFORE the rent is due, describe your situation, and ask for a temporary accommodation until things improve.  And make sure you find a way to pay at least SOME of the rent when it is due. If you don't, your landlord will
assume you just don’t want to pay.