More than 32 million peoplei are set to lose the additional $600 per week in unemployment benefits that are part of the Federal Pandemic Unemployment Compensation (FPUC) program. Losing that added compensation on July 31 would send the share of renters facing a severe housing cost burden skyrocketing, a new Zillow® analysis shows, and Black households would be disproportionately affectedii.
Expanded unemployment benefits have had an incredible impact on households suffering financially from the coronavirus pandemic. Missed rent payments have grown — 12.4% of renter households paid no rent during the first two weeks of July, up from 9.9% the previous yeariii — but by much less than might be expected given record levels of unemployment.
Previous Zillow research has shown renters in the service industry actually saw lower cost burdens when collecting all benefits available to them than they did before the pandemic, illustrating the financial tightrope many households walk. And Zillow estimates that only 3% of renter households in high-risk jobs like healthcare and customer service are severely cost burdened if collecting the full suite of unemployment benefits currently available.
The additional benefits are set to expire around the same time that many eviction moratoriums will end, potentially causing a more extreme wave of housing insecurity as unemployment claims remain twice as high as the worst week of the Great Recession. Early signs of this wave have been seen in areas where evictions have resumed — evictions in Milwaukee in June were 17% higher than average, though some of that could be attributed to a backlog built while they were largely halted in April and May.
“The boost to unemployment benefits from the federal government has played a crucial role in 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.”
Using one segment of the workforce as an example, Zillow’s analysis illustrates the potential difficulties renters might face. Contact-intensive workersiv — those in jobs that require a high degree of face-to-face and close physical interaction, such as healthcare professionals and front-line service workers — are present in about 28% of renter households, and have been vulnerable to both job loss and a risk of illness during the pandemic.
With the assistance currently provided, an estimated 3% of renter households with at least one earner in a contact-intensive occupation and receiving all available benefits would spend more than half of their income on rent. If benefits from the FPUC program were to cease altogether, 41% would face this severe housing cost burden. Even if FPUC benefits were extended at half their current scale — $300 per week — just 14% would.
This analysis assumes renters are not able to pull from savings put away for a rainy day, which is often the case. About half of renters said before the pandemic that they could not afford an unexpected $1,000 expense.
This is an especially difficult problem for renters because those with contact-intensive jobs who rent their home typically have lower incomes than their homeowner counterparts — $32,000 is the median income for renters in these jobs, compared to $49,800 for homeowners. These renters are also more likely to be the primary earner than homeowners, so income shocks usually have a greater effect on overall household income.
In addition to differences among renters and homeowners who hold these types of jobs, disparities are evident among racial groups. Contact-intensive workers contribute 72% of household income in Black households, compared to 53% in white households, even though the median household income of Black households with a contact-intensive worker is 15% lower than that of similar white households. This means Black renters are more vulnerable to the widespread income loss prevalent in these industries.
Zillow, the top real estate website in the U.S., is building an on-demand real estate experience. Whether selling, buying, renting or financing, customers can turn to Zillow’s businesses to find and get into their next home with speed, certainty and ease.
In addition to for-sale and rental listings, Zillow Offers buys and sells homes directly in dozens of markets across the country, allowing sellers control over their timeline. Zillow Home Loans, our affiliate lender, provides our customers with an easy option to get pre-approved and secure financing for their next home purchase.
Millions of people visit Zillow Group sites every month to start their home search, and now they can rely on Zillow to help them finish it — with the same confidence, ease and empowerment they’ve come to expect from real estate’s most trusted brand.
Launched in 2006, Zillow is owned and operated by Zillow Group, Inc. and headquartered in Seattle.
Zillow and Zillow Offers are registered trademarks of Zillow, Inc.
i U.S. Department of Labor, Unemployment Insurance Weekly Claims: UNEMPLOYMENT INSURANCE WEEKLY CLAIMS, JULY 16, 2020
ii All household income and housing burden data provided from a review of the U.S. Census Bureau’s 2018 1-Year American Community Survey.
iii National Multifamily Housing Council, Rent Payment Tracker: NMHC Rent Payment Tracker
iv Definitions from the Federal Reserve Bank of St. Louis: Social Distancing and Contact-Intensive Occupations | St. Louis Fed