If federal unemployment benefits are not extended when they expire next month, millions of households will be facing both steep rent and unemployment with no assistance. And that means mass evictions.
On July 1, 2020, Meagan Day writes on Portside.org:
An aerial view of San Francisco’s first temporary sanctioned tent encampment for the homeless on May 18, 2020 in San Francisco, California. , Justin Sullivan / Getty
Were it not for the passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which authorized a one-time stimulus check to most Americans and weekly unemployment payments of $600 per week on top of state unemployment benefits, researchers at Columbia University expect that 12 million additional people would have been plunged into poverty.
The CARES Act helped avert that Great Depression–level disaster. A separate study found that poverty rates fell during April and May, due in large part to the fact that the unemployment assistance exceeds what most eligible recipients were earning.
Unfortunately, CARES unemployment assistance is now set to expire on July 31. Among other ugly inevitabilities, this means we’re staring down the barrel of a housing crisis.
While it’s true that businesses are reopening across the country (however irresponsible that is from a public health perspective), it’s also the case that, as Federal Reserve chair Jerome H. Powell said earlier this month, there will be “a significant chunk . . . who don’t get to go back to their old job, and there may not be a job in that industry for them for some time.” The Economic Policy Institute reports that nearly 11 percent of the workforce is out of work and has no reasonable chance of getting called back to a prior job.
No matter how many businesses reopen, the economy is not going to recover by the end of July. Millions of people are going to remain jobless, and if unemployment benefits are not extended, they will not be able to cover their living costs. One of the consequences of this will undoubtedly be a wave of evictions.
An analysis conducted by UrbanFootprint found that an estimated 6.7 million households have simultaneously experienced job loss and are rent-burdened, meaning they pay more than 30 percent of their household income in rent. This makes them acutely vulnerable to eviction if their federal unemployment benefits evaporate and they remain unemployed. Of these, about 3.4 million households are severely rent-burdened, meaning they pay more than 50 percent of their income in rent, putting them at extremely high risk for eviction if their income suddenly plummets.
Part of the reason these numbers are so high is that rent-burdened households, of which there are roughly 20 million in the United States, are twice as likely to experience job loss in the first place. The same people who can comfortably afford their rent or mortgage are the ones who are able to work remotely or who have a financial cushion in the event of job loss. Meanwhile, those whose jobs are on the chopping block are those who earn less to begin with.
If unemployment benefits are not extended, and no other adequate federal aid materializes, the researchers at UrbanFootprint warn that “the level of displacement would be unparalleled in U.S. history and carries the potential to destabilize communities for years to come.” Thus, they conclude that “the United States is on the precipice of a COVID-induced housing crisis.”
Leading Republicans are arguing that an extension of CARES unemployment benefits will discourage people from going back to work — never mind that the jobs required simply aren’t there. Democrats are split, with more progressive representatives demanding a full extension of the benefits and more conservative representatives agreeing with Republicans that the horror of working-class idleness is simply not worth the cost of sparing potentially millions of households from eviction.
If Republicans and conservative Democrats get their way, their zealous austerity will wreak havoc on millions of people who have no job, no income, and no choice. At least the locksmiths will remain gainfully employed.
Gary Reber Comments:
At least 45 million people are now unemployed with many more underemployed with no income or inadequate income to subsist. The stimulus aid has ended, leaving Americans in a crisis of lack of income.
Inadequate income for millions of Americans is an acute emergency amid the pandemic, but one that had been growing well before COVID-19 as American workers at American pay levels cannot compete with slave-labor pay scales in Communist China and other slave-wage labor countries, nor with tectonic shifts in the technologies of production, which replace human labor with non-human means of producing goods and services.
The top 1 percent own more productive capital wealth than the entire bottom half of the country, and is now on track to surpass the wealth of the entire middle class, while billionaires accrued over $500 billion in the last 12 weeks.
Yes, it is a crisis of income and lack of productive input opportunities for the more than 45 million now unemployed and those employed, whether the input is through one’s labor or their productive capital or both. None, except for the upper 10 percent of Americans own any significant productive capital assets to supplement their labor incomes (a second income) or entirely replace the necessity to work at a paying job.
Millions of Americans, following the end of the $600 boost in unemployment insurance income, will fall far short of the income necessary to pay their home mortgage or rent, resulting in the legal grounds for mortgage lenders and landlords to evict them and seek others to purchase a home or rent. The problem will be that they will have problem finding replacement purcherers and renters
Further stimulus money must be printed as an emergency measure to sustain the purchasing power of the 45-plus million Americans unemployed or underemployed. Trillions of dollars in added stimulus will be necessary to stem the economic downturn that is impacting our nation and to deal with the trend in the spread of COVID-19.
We continue to face mass unemployment and thus with the vast majority of Americans dependent on a job to earn income, a job will no longer be a viable means for millions of people as long as the coronavirus pandemic persists without a cure.
Americans will continue to face unprecedented financial uncertainty and disaster requiring that additional stimulus packages will need urgently to address the current devastation and provide support for the aftermath of the crisis and our recovery.
The recession will deepen considerably before it is over as we as Americans have done a pitiful job of stopping the spread of the virus. All the efforts by the Federal Reserve to pump trillions of dollars more into the United States economy may prove futile if the spread of the virus cannot be flattened.
What’s needed is an immediate restoration of consumer household spending power and a protective floor under incomes that may soon also collapse should mass layoffs emerge once again in few months ahead.
In the immediate short term, strictly as an emergency measure, massive government debt will be required, which will add substantially to the national debt now exceeding over $26 trillion (or about $72,000 per citizen) and increasing. This additional debt could amount to over $7 trillion. Such debt results when the government spends money created and regulated by the central bank that has nothing of value behind it other than the government’s promise to pay in the future via taxation. Those measures, however, should cease immediately after the crisis is over. Future taxes should be collected to repay the government’s increasing debt from deficit spending.
Where the new crisis money can be channeled to private sector businesses to produce emergency medical and other supplies needed during the pandemic, and to business employers, such money should flow as loans through financing mechanisms that create equal capital ownership opportunities for every employee in the companies producing such supplies and the goods and services needed. The government would serve as the guarantor of those loans, and as the customer that distributes the emergency supplies and goods where needed.
With the new monies, all manner of environmentally enhanced and sustainable projects can be planned and executed such as clean energy expansion, carbon pollution elimination, public transit development, robust infrastructure construction, smart grid expansion, green building, new “smart” cities, urban redevelopment, housing developments, homeland manufacturing capabilities, etc. –– all requiring workers.
To solve the crisis, assuming treatment and a cure for the coronavirus COVID-19 pandemic is achieved, will require extraordinary planning and system reform.
We can no longer simply pursue the same old paradigm that believes the world will be saved if fixed wages and benefits are increased to a level beyond the dreams of avarice of a century ago. The irony that the higher fixed wages go, the worse off workers become seems to escape our leaders as the price level rises more than the wage increase, and workers get replaced by less expensive machinery and/or the controlling business owners shift production to low cost slave-wage labor countries.
Follow the real solutions to putting our country back together and on the right path to ensuring inclusive opportunity, inclusive prosperity, and inclusive economic justice reflected in my comments to a The Atlantic article at http://www.foreconomicjustice.org/?p=20164.
