My Birthday Is July 30, and I’ve Never Dreaded It So Much

The uncertainty around whether expanded unemployment benefits will be left to expire at the end of the month, raises serious concerns about the ability of millions of renters to make rent going forward.

By Caitlin Walter, Ph.D.

Caitlin Walter is vice president of research at the National Multifamily Housing Council (NMHC) in Washington, D.C. She can be reached at cwalter@nmhc.org.

Why? The bulk of expanded unemployment benefits created under the CARES Act are slated to end July 31. And while the NMHC Rent Payment Tracker numbers show that the majority of apartment renters have continued to pay, there are several economic indicators that suggest millions are still suffering financially.

The added federal benefits are likely the main reason payment rates have been as high as they are. If there is no financial assistance available when the CARES Act’s supplemental benefits expire, millions more renters will no longer be able to meet their financial obligations. We would expect that the NMHC Rent Payment Tracker numbers would show a drop-off, possibly steep, following the expiration of the additional benefits.

Don’t Forget Unemployment Numbers Remain at Historic Highs

The U.S. unemployment rate currently sits at 11.1 percent. Data from the weekly Census Household Pulse Survey indicate that low-income households have been disproportionately affected by the economic downturn, and results have consistently shown that half of renters surveyed are not currently working. (This includes people that were not in the labor force before the pandemic.) However, another metric conveys the situation—43 million renter households have experienced a loss of employment income due to the pandemic.

The Census Household Pulse Survey also includes a question about what individuals used their stimulus funds for, and the results show that a large percentage of individuals used at least a portion of their funds for basic necessities—69.6 percent reported using the funds for food, over half (52 percent) used some funds for utilities and telecommunications and 29.6 percent paid for their rent using the stimulus funds.

The Household Pulse Survey data have also shown consistently that approximately one-third of all renters have either no confidence or only slight confidence that they will be able to make next month’s rent. The survey also includes a question about whether or not their rent payment was late, and the percentage who were late has never reached one-third, meaning that many of the overall renters have somehow been able to make their rent payments so far. But how long does “so far” continue for?

No Government Shutdowns Doesn’t Mean the Economy Won’t Be Affected

An argument against continuing the existing financial assistance has been that it dissuades people from going back to work, and now that jurisdictions have lifted restrictions, it could impair the economy. But there may be other factors that will keep people from going back to work.

Austan Goolsbee and Chad Syverson’s recent analysis of economic activity in metro areas that spanned jurisdictions with shutdowns and without found that it was not government shutdowns, but rather the intensity of the virus, that influenced consumer spending. With COVID-19 infections soaring in multiple jurisdictions, consumers may be less likely to begin venturing out of their houses, meaning fewer revenues and less of an ability to continue paying employees.

In addition, skyrocketing infection rates mean that many school districts are beginning the academic year online. For many households, that means choosing between the costs of childcare or working. The median annual childcare fee for a 4-year-old child in 2017 was $8,672 according to Child Care Aware for America. For working-class families, that represents a sizeable chunk of the household budget.

The Outlook Darkens Without More Renter Assistance

These are all the business cases for why financial assistance for renters is needed; this does not consider the fact that housing insecurity is an additional worry in a period of already-heightened emotions. If there is no sort of financial assistance available for households that are unable to return to work either because they cannot due to childcare or medical issues or because there is no job to return to, we should expect that the share of residents able to make rent payments will be lower once benefits expire.

Caitlin Sugrue Walter cwalter@nmhc.org