Renter Households Stand to be Hardest-Hit by Unemployment Insurance Expiration, Black households likely to shoulder disproportionate burden

• Nationally, high contact-intensity workers — those that require a high degree of face-to-face and close physical interaction — contribute 69% of the median renter household's income, but only 50% of the median owner household's income
• In Black households, workers in those jobs contribute 72% of household income, compared to 53% in white households.
• Just 3% of renter households are estimated to be severely housing burdened with all the assistance currently provided — state unemployment as well as the additional $600 a week from the FPUC program. Losing that $600 per week, but continuing to receive state unemployment, means that share will skyrocket to 41% being severely housing burdened. 

The benefits afforded by the Federal Pandemic Unemployment Compensation (FPUC) program are set to expire on July 31 — meaning that more than 30 million people currently collecting unemployment benefits could soon see that lifeline slashed by $600 a week. Losing that $600 per week and only receiving state unemployment benefits means that the share of households facing severe housing burden will skyrocket — from about 3% of impacted renter households to 41%. Without immediate resumption of income, expanded FPUC benefits, or some form of direct rental assistance, many high contact workers will find it increasingly hard to make rent payments.

This expansion of unemployment benefits has allowed households to cover their necessary expenses — in fact, renter households dependent on service industry incomes typically see their housing burdens lowered when collecting the unemployment compensation currently available. Rental payments have slipped only slightly despite the widespread economic devastation seen during this pandemic — the National Multifamily Housing Council (NMHC) reports that 91.3% of apartment households made a full or partial rent payment by July 20, down 2.1 percentage points from this time last year, and is comparable to the 92.2% who paid by mid-June. 

But without the $600 per week offered by the FPUC program, millions of households will suddenly and disastrously have their budgets slashed at the end of July. Many eviction moratoria are set to expire soon, as well, or have already expired, and the lapse of these policies is likely to result in a wave of housing insecurity — signs of which are already being seen in areas where evictions have resumed. 

To estimate the potential impact of the end of the FPUC program, we looked at households with at least a portion of income coming from high contact-intensity occupations — those that require a high degree of face-to-face and close physical interaction. These high contact-intensity workers are present in almost a third (30%) of US households, and include occupations like healthcare professionals and service workers. Workers in these occupations are vulnerable to shocks from both job loss as their workplaces are forced to shut down or cut back, as well as from the risk of illness in the course of their job. Both outcomes are likely to result in income loss and the need for unemployment benefits.

Among these households, renters are, to no surprise, particularly vulnerable to income shocks. Not only do renters have higher housing burdens and lower incomes, but a larger share of their household incomes come from high contact-intensity workers — nationally, high contact-intensity workers contribute 69% of the median renter household's income, whereas these occupations make up 50% of the median owner household's income. The high contact-intensity workers within renter households are much more likely to be the single earner or breadwinner. They also are likely to have lower incomes than their homeowner counterparts — the median renter household's income from these occupations is $32,000, more than a third lower than the high contact-intensity income of homeowner households, which is $49,800.

So, renter households are vulnerable because their already-low incomes hinge upon their high contact-intensity workers to a greater degree than owner households. This means that when income shocks occur to these workers, these households can quickly tip over into housing insecurity. Currently, 31% of these renter households are already housing burdened (paying more than 30% of their income toward rent) and 13% are severely housing burdened (paying more than 50% of their income toward rent). 

Assuming households are able to apply only their monthly income toward rent, just 3% of renter households are severely housing burdened with all the assistance currently provided — state unemployment as well as the additional $600 a week from the FPUC program — a marked improvement over the status quo. Losing that $600 per week, but continuing to receive state unemployment, means that share will skyrocket to 41% severely housing burdened. Even if the FPUC program was extended with half of its scope — an additional $300 per week instead of $600 — 14% of these renter households would be severely housing burdened, a level comparable to the status quo.

While this is an extremely pessimistic assumption — households likely have some amount of savings from month to month — it still illustrates how necessary the additional FPUC program has been in keeping households afloat and safe. And many renter households indeed lack the safety nets that would allow them to weather income shocks. About 30 percent of renters with the lowest rent burdens and 60 percent of renters with the highest rent burdens have no savings at all.

Disparities between renter and owner households are magnified along racial lines, as well. In Black households, high contact-intensity workers contribute 72% of household income, compared to 53% in white households. The median high contact-intensity income within Black households is $38,000, 15% lower than the $45,000 of white households. White workers are generally in higher-paying high contact occupations — e.g., doctors vs. food service workers. And their relatively higher incomes are buoyed by additional, even higher income within the household. On the other hand, Black high contact-intensity workers are more likely to be breadwinners within their household, with scant additional income to rely on if they get laid off or fall ill.

Milwaukee — an area already seeing spikes in evictions with its moratorium ending — has stark disparities in these income measures among renters and minorities. The median renter household with high contact-intensity workers is entirely reliant on that income — high contact-intensity income makes up 100% of renter household income, compared to 50% of homeowner household income. Similarly, these at-risk incomes make up 100% of Black household income, and 54% of white household income. 

Cleveland, New Orleans, Memphis, and Indianapolis are also areas where renter and Black household incomes are often entirely tied to these high contact-intensity occupations. Without an extension of federal unemployment assistance, renter and Black households in these metros stand to be among the most at-risk of housing insecurity. 

 

Methodology 

We identified high contact-intensity occupations using the proximity index created by the St. Louis Federal Reserve — specifically, those 15 occupations scoring above 75 on the index. These include: "[b]arbers, hairstylists and cosmetologists are at the top of the list, with a physical proximity index of 92.17. Food and beverage serving workers are at the bottom of the high contact-intensity occupations list, with an index of 75.17. Other contact-intensive occupations include those that provide health services as well as pilots, air traffic controllers and flight attendants, and Pre-K to 12th grade teachers."

We used 2018 1-Year American Community Survey data to analyze the incomes and housing burdens of households with workers in these occupations. 

The post Renter Households Stand to be Hardest-Hit by Unemployment Insurance Expiration, Black households likely to shoulder disproportionate burden appeared first on Zillow Research.

via Renter Households Stand to be Hardest-Hit by Unemployment Insurance Expiration, Black households likely to shoulder disproportionate burden