The blog of the Urban Institute
July 24, 2020

Reducing the Amount of Federal Unemployment Insurance Would Increase Rent Burden for Millions of Households

The $600 in supplemental weekly unemployment insurance from the Coronavirus Aid, Relief, and Economic Security Act has enabled many families who lost jobs to pay rent and has improved their chances of doing so in the future. But current funding is due to expire at the end of July. Democrats propose extending the $600 federal weekly supplement unless unemployment rates decrease, and discussions continue between lead House and Senate negotiators and the White House, on extending the funding and other stimulus proposals.

The amount of unemployment assistance provided in the next relief package will affect the housing security of millions of renters who recently experienced job loss. We previously estimated 8.9 million renter households had at least one member who lost their job between February and April 2020. We updated (PDF) the estimates with unemployment numbers from February to June 2020. Because of a slight economic recovery, the estimate of renter households with at least one member who experienced a job loss decreased to approximately 6 million.

In a new analysis, we explore how a decrease in unemployment insurance would affect households’ cost burden. We estimate that, in the absence of any federal weekly supplement to state unemployment insurance, 4.1 million (68 percent) of the 6 million renter households with job losses would pay more than 30 percent of their income on rent, and 2.8 million (46 percent) of those 6 million households would pay more than 50 percent of their income on rent. This is significant because paying 30 percent of income for housing is the generally accepted threshold for affordability.

Rent-burdened households already make trade-offs between spending money on food, medical care, and other essential expenses and paying rent. Decreasing the weekly federal unemployment insurance supplement and therefore increasing the number of households with cost burdens would put millions of households at increased risk of eviction.

The receipt of the $600 federal supplement has prevented many of the 6 million renter households with job losses from becoming cost burdened or severely cost burdened. Before the crisis, we estimate 2.4 million of the 6 million renter households who lost jobs were cost burdened. With no benefit, that number would have climbed as high as 4.6 million, but the $600 per week supplement has kept the number stable. Reducing the amount of weekly unemployment insurance to $200 per week would lead to an increase in cost burdened households to 3.5 million.

Number of unemployed renters who are cost burdened

The receipt of unemployment assistance is especially important for renter households who could face severe rental cost burdens. Before the crisis, we estimate 1.1 million of the 6 million renter households with job losses were severely cost burdened, meaning they paid more than 50 percent of their income on rent. Despite losing their jobs, receiving the $600 supplement mitigated what would’ve been a sharp increase in severe cost burden (figure 2).

Number of unemployed renters who are extremely cost burdened

Reductions in unemployment insurance will likely have an adverse effect on Black and Latinx households (PDF), who not only faced unsustainable rent burdens and were more likely to have difficulty paying rent before the pandemic, but who are also more likely to work in affected industries more prone to job losses. In addition, unemployment insurance skews toward higher-income households (who were more likely to have jobs in the first place) and does not address the needs of households whose members remain employed but lost hours or have intermittent employment.

Unemployment insurance is an imperfect method for providing support to renters. But during the crisis, unemployment insurance, alongside eviction moratoria, has kept families housed. As federal, state, and local eviction moratoria expire, extending unemployment insurance would reduce the risk of eviction for families whose employment has not returned—or may never return.

A car with "extend $600 now!" written on the rear window participates in a caravan protest on July 16, 2020 in Miami Springs, Florida. The caravan was driving to the Coral Gables office of Senator Rick Scott to ask him and other senators to support new legislation that extends unemployment benefits for all laid-off Americans as the coronavirus pandemic continues to disrupt the economy. (Photo by Joe Raedle/Getty Images)

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