Millions of Americans unemployed, months behind on rent

RENTERS PROTEST: Tenants of the Woodner on 16th Street NW in Washington, D.C., protest unsafe living conditions during the coronavirus crisis and ask for rent to be canceled on May 28. Katherine Frey/The Washington Post

WASHINGTON - Millions of Americans who lost their jobs during the pandemic have fallen thousands of dollars behind on rent and utility bills, a warning sign that people are running out of money for basic needs.

Nearly 12 million renters will owe an average of $5,850 in back rent and utilities by January, Moody's Analytics warns. Last month, 9 million renters said they were behind on rent, according to a Census Bureau survey.

Economists say the data underscores the deepening financial disaster for many families as the pandemic continues to shut off work opportunities, lending new urgency to negotiations over a second round of stimulus that could reinstate federal unemployment insurance and rental assistance, among other forms of aid.

On Monday, lawmakers were working to release an outline of the latest $908 billion bill, which has some bipartisan support. The deal would restart $300 in weekly federal unemployment in January running through April, although details are still being worked out, congressional aides said.

The stakes are high for some 20 million Americans receiving some kind of unemployment aid, who have seen weekly checks dwindle since August, making it harder to pay bills. About 12 million unemployed are slated to have their benefits cut off entirely at the end of the year unless lawmakers act before then.

With coronavirus cases at all-time highs, the economic recovery has stalled and job opportunities remain scarce. Only 245,000 jobs came back in November, the slowest pace since the recovery began. Restaurants and retailers cut jobs, and more small businesses are closing, data show.

The numbers of those behind on rent and utilities were especially high for families with children, with 21% falling behind on rent, and among families of color. About 29% of Black families and 17% of Hispanic renters were behind, the Census Bureau reported. A separate analysis by the Federal Reserve Bank of Philadelphia, looking at people who had jobs before the pandemic, found 1.3 million such households are now an average of $5,400 in debt on rent and utilities, after those people had lost jobs and their family's income plunged.

"The tidal wave is coming. It's going to be really horrible for people," said Charlie Harak, a senior attorney at the National Consumer Law Center. "The number of people who are now 90 days behind and the dollars they are behind are growing quite significantly."

Nashville, Tenn., mother Nikki Cornwell is $4,000 behind on rent and fears she will be evicted right after Christmas. Her water was shut off on Monday. Her landlord filed the paperwork already, and her court date is set for Jan. 5 - just after the federal eviction moratorium is set to expire.

Cornwell, 36, lost her job in March at a factory that packages tea. She was getting $275 a week in unemployment, but that just ended. She has pawned jewelry and her son's beloved PlayStation to pay for food.

"This is like a Charles Dickens novel," said Mark Wolfe, executive director of the National Energy Assistance Directors' Association. "It's an evolving story of how people at the bottom are suffering."

Many unemployed Americans were able to delay paying rent this fall under eviction moratoriums. But those protections end soon, and landlords and utilities are eager to get paid, because they have their own bills and taxes to pay. Economists warn low-income families won't be able to suddenly pay back three to six months of rent at once.

The federal eviction moratorium is slated to end on Dec. 31, even as coronavirus cases spike and the economic recovery fizzles. Researchers at the Philadelphia Fed say even their conservative forecast warns evictions will spike 50% higher next year.

Landords also seek relief

Landlords and utilities increasingly worry they will have to eat this debt. Meanwhile, struggling families like the Selewskis fear no one will rent to them again after an eviction in which they were so far behind on rent. Bad credit can hurt families for years.

Amid those pressures, renters and landlords are urging Congress to approve bigger unemployment payments and another round of $1,200 stimulus checks, which would go a long way toward helping alleviate the debt burden on the unemployed. Many families say they fell behind on bills this fall after the extra $600-a-week unemployment payments ended in late July.

"The longer employment stays suppressed, and people stay out of work, it will make it even harder to catch up on the debt and dig yourself out of that hole," said Davin Reed, community development economic adviser at the Federal Reserve Bank of Philadelphia.

So far, however, Republican and Democratic leaders in Congress remain far apart on a stimulus deal. A bipartisan compromise unveiled last week includes $25 billion for rental housing assistance, but a package released by Senate Majority Leader Mitch McConnell, R-Ky., did not include any money for housing or utilities.

Mark Zandi, chief economist at Moody's Analytics, said, "There's nothing scarier than losing your home, especially in January with a pandemic out of control. That would be overwhelming."

Zandi predicts as much as $70 billion in unpaid debt by January, a painful amount that renters, landlords and utility companies will have to sort out. But he thinks the bigger damage to the economy could come from Americans watching people get evicted in early 2021 - a sign the federal government no longer cares. 

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