According to a new analysis from Zillow, U.S. service-sector workers who are currently receiving unemployment benefits as a result of the coronavirus pandemic collectively owe more than $1.7 billion in rent and mortgage payments each month – $1.2 billion in rent payments and $500 million in mortgage payments.
Zillow says these workers, who work in the food, arts, entertainment, recreation and retail industries, comprise about a third of those who have lost their jobs as a result of the pandemic.
“As we’re watching resilient buyers return to the for-sale market and more renters able to pay on time in May than in April, it’s important to remember that much of the confidence that led to that improvement rests on massive government aid,” says Skylar Olsen, Zillow’s senior principal economist.
“By supporting the more than 40 million Americans who have filed for unemployment benefits, that package is not only easing financial hardships but also safeguarding the housing market from widespread evictions and foreclosures that could have devastating effects,” she adds. “That safety net has an end date, so if employment does not bounce back as hoped this summer, the housing recovery could be impeded.”
Safety nets including unemployment benefits, the CARES Act stimulus checks and temporary renter protections have eased tensions for many households for the short-term, at least. But with state reserves stretched, stimulus checks covering only a portion of the typical monthly rent or mortgage payment in many states, and many workers who don’t qualify for benefits, a large share of housing payments could be missed eventually if government assistance expires or jobs don’t return to pre-pandemic levels – likely pushing some into housing insecurity.
Skyrocketing unemployment caused about 22% of renters to not pay any of their rent during the first week of April, up from about 18% last spring. That fell to 20% in May: a possible signal that government aid and the reopening of some businesses is helping to lessen financial stress. More assistance could be on the way in the form of the HEROES Act, but the long-term picture is unclear.
It’s not only service-sector workers that are experiencing mass unemployment during the coronavirus pandemic. Some states with economies reliant on manufacturing are also feeling the impact of heavy unemployment. In Ohio, where manufacturing makes up the largest share of the state’s GDP, 53% of housing payments owed by manufacturing workers are from those whose jobs have been affected by COVID-19. In Michigan, that share is 27%.
Even workers in essential industries that have been largely allowed to continue operations are not immune from unemployment. Many states halted non-emergency medical procedures, such as dental work and routine medical checkups, pushing some healthcare workers to file for unemployment benefits. In both Washington and Oregon, two states among the first to issue stay-at-home orders and limit business operations, healthcare workers receiving unemployment payments made up about 12.5% of the total housing payments owed by workers in that industry in April. That share is even higher in Georgia (19%), Rhode Island (18%) and New Hampshire (13.5%).