What It Would Take for States to Support Renters through the COVID-19 Crisis: A Snapshot of Florida, Michigan, and Idaho
When the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) unemployment insurance supplement expires at the end of the July, renters will face a cliff, and Congress will face a choice for whether or how to assist renters going forward. We estimate that the combination of state unemployment insurance and the $600 weekly supplement from the CARES Act covers approximately 80 percent of the income support needed to return renters who lost their jobs to their precrisis rent-to-income ratios. But what happens after that expires?
To understand how much assistance vulnerable renters need during the COVID-19 crisis, our recent brief estimated how the amount of assistance would vary depending on the extension or expiration of the CARES Act’s $600 weekly supplement. Our brief looked at the costs of assisting renters who recently lost their jobs, as well as the cost of assisting renters who might not have lost their jobs but remain cost burdened. The brief provided nationwide estimates, but effects of the dual economic and housing crises—namely the job losses and rental housing cost burdens—vary considerably by geography.
Our analysis estimated the costs of two methods of rental assistance. The first method returns the 20 percent of households who experienced a job loss in our model to their precrisis rent-to-income ratio, with a 30 percent cap. We find that federal and state unemployment insurance has a much larger impact on the cost of assistance, as these benefits go a long way in helping those who lost jobs.
However, many renters were cost burdened before the crisis and face increased health risks because of housing insecurity. Our second method estimates the cost of ensuring all households have a rent-to-income ratio no higher than 30 percent. The second method, alleviating rent burden for all, serves a much larger population, as it is not limited to those who recently lost a job. Additionally, this metric moves households from rent burden to affordability, which means an additional subsidy for the many households who were already rent burdened before the pandemic. This method is less sensitive to unemployment benefits, as the majority of households receiving assistance are not receiving unemployment benefits.
Building upon an earlier brief, our analysis now includes the cost of providing rental assistance in all 50 states. We show these two estimates in terms of aggregate cost and cost per household. For both methods, we estimate costs with state unemployment benefits, with federal unemployment benefits (the CARES Act $600 weekly supplement), and without unemployment benefits. In this blog post, we highlight this analysis by comparing three states: Florida, Michigan, and Idaho (view data for all 50 states plus DC in this PDF).
Florida had one of the highest rates of rental cost burden among residents before the current economic crisis. Without state or federal unemployment insurance, we estimate it would cost more than $1 billion per month in rental assistance to alleviate rent burden for all of Florida’s estimated 2.6 million renter households, 55 percent of whom were cost burdened before COVID-19-related unemployment. It would cost $330 million per month to return the 500,000 renter households who lost their jobs in recent months to their precrisis levels of rent burden, again without unemployment assistance.
Renter households in Michigan were hit particularly hard by the current economic downturn because many of the state’s renters worked in the food services and transportation industries, both of which were especially susceptible to recent employment shocks. In Michigan, we estimate nearly 31 percent of renter households experienced at least one job loss in the past few months. Without state or federal unemployment insurance, it would cost $380 million per month in rental assistance to alleviate rent burden for Michigan’s estimated 1.1 million renter households and $187 million per month to return the 350,000 renter households who lost their jobs in recent months to their precrisis rent burden.
If renter households in Florida had an exceptionally high cost burden before the crisis and renter households in Michigan lost their jobs at high rates, what does this mean for states with lower housing cost burdens and fewer job losses? Idaho’s share of cost-burdened renter households was less than the national average before the crisis, and recent US Census Bureau data show only 15 percent of households in Idaho haven’t been able to pay rent or have little or no confidence in their ability to pay going forward.
Because Idaho is a small state, its topline figures on the monthly cost of assistance are also smaller. Without state or federal unemployment insurance, we estimate it would cost $48 million per month in rental assistance to alleviate rent burden for Idaho’s estimated 187,000 renter households, 45 percent of whom were previously cost burdened, and $15 million per month to return the 37,000 renter households who lost their jobs in recent months to their precrisis rent burden.
Our analysis reveals the widespread need for rental assistance, both because of hardship stemming from COVID-19 and gaps in assistance that existed before the crisis began, and can inform Congress’s deliberations for how to extend or expand rental assistance. Though estimates vary across states, renters in every state need additional assistance to prevent the worst outcomes. With the expiration of the CARES Act unemployment assistance on July 31, renters in every state will need additional support, and this support could help prevent widening racial and economic disparities.
Al, age 59, sits outside his house in Miami, Florida, on April 19, 2020. Al was fired form his job last month due to the Coronavirus pandemic. "I have had no job for 31 days now. I got myself tested and have no virus. I haven't paid my last month rent and if I don't pay for one more month I could be homeless in few weeks," he said. (Photo by CHANDAN KHANNA/AFP via Getty Images)