Millions of Americans have lost their jobs in the course of the COVID-19 pandemic, and with cases surging throughout the country, it's clear that it may be a while before the economy truly gets to open back up and recover. Thankfully, late March's CARES Act provided quick relief for those who wound up out of work through no fault of their own in the form of boosted unemployment.
Under the CARES Act, jobless Americans were entitled to a $600 boost on top of their weekly unemployment benefit. Thanks to that boost, many were able to replace their lost paychecks in full, thereby allowing them to keep up with their bills. But the CARES Act only called for that $600 boost through July 31, and last week, lawmakers let it expire.
While a second COVID-19 relief bill will likely include boosted unemployment, out-of-work Americans may be facing a substantial hit to their income. That's bad news for them, but it's also bad news for the countless landlords who may now be in for a string of delinquencies as jobless folks struggle to keep up with their rent.
What's happening with unemployment?
In late July, Republican lawmakers introduced the HEALS Act, which, like the CARES Act, seeks to boost unemployment. The key difference, however, is that the HEALS Act is only looking to boost unemployment by $200 a week through September, after which those benefits would switch over to a system that allows jobless workers to replace 70% of their former wages. Clearly, any boost is better than nothing, especially at a time like this. But cutting that $600 weekly boost down to $200 could have serious consequences for the economy as a whole.
If jobless Americans see their unemployment income slashed, they won't continue to pump money back into the economy as they may have been doing over the past few months. Quite the contrary -- many will start falling behind on basic bills in the absence of that extra money. And chances are, one bill they'll seek to put off as long as possible is rent. That's very bad news for landlords -- especially mom and pop landlords who are already struggling themselves during the pandemic.
In April of 2020, an estimated one out of every three Americans did not pay rent. And in a U.S. Census Bureau survey conducted from July 2 to July 7, 2020, nearly 43 million Americans missed their rent or mortgage payment last month.
Meanwhile, eviction bans were put in place to prevent a homelessness crisis, and while those moratoriums may have worked to protect tenants, they've certainly done landlords a major disservice. And again, it's mom and pop landlords -- the ones who often rely on rent payments as their own primary source of income -- who are really suffering here. And unfortunately, if unemployment benefits are slashed, that suffering could intensify as rent delinquencies rise.
The silver lining here is that reduced unemployment is not a done deal. The HEALS Act has not yet been passed into law, and the aforementioned $200 unemployment boost has been a point of contention in the Senate that's caused lawmakers to reach an impasse. But lawmakers also need to move quickly on a relief bill now that the $600 weekly unemployment boost has officially expired, and if the HEALS Act does wind up going through, it could put unemployed workers -- and the landlords who rent to them -- in a very undesirable spot for the remainder of 2020.