Renters Owe $7.2 Billion in Unpaid Rent as Stimulus Negotiations Drag On
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Americans are struggling right now due to COVID-19, and they need more help from Washington, D.C.
In fact, a new study from the Federal Reserve underscores the dire situation faced by millions of people. As renters struggle, lawmakers drag their feet on finding a compromise on new coronavirus relief legislation.
Americans need more stimulus money to pay the rent
A report by the Federal Reserve Bank of Philadelphia raises concerns about renters' ability to keep up with their rent. The study uses a sample of 32 million renter households in the U.S. with at least one person working. Of those, around 23.5%, or 7.5 million, likely experienced unemployment between March and August of 2020 due to coronavirus.
This has profound consequences. The research estimates that 1.34 million renter households will owe around $7.2 billion in unpaid rent by December of this year. These households are home to 2.8 million adults and 1.1 million children. Averaged out across each household, the Fed estimates those who are behind on rent payments could each owe around $5,400 to their landlords.
The Federal Reserve had to make some assumptions due to limited data:
- It used a nationally representative sample to estimate income and rent and looked at unemployment levels by state.
- It simulated job losses to forecast how many people wouldn't be able to pay.
- It assumed 90% of households received Economic Impact Payments (better known as stimulus checks) and around 50% of unemployed workers didn't get unemployment benefits.
The research also demonstrated that relief provided by the CARES Act -- including expanded unemployment and stimulus checks -- has kept millions from falling behind on rent. In fact, without this CARES Act relief, around 3.4 million unemployed renter households would likely owe around $18 billion in unpaid rent by December of 2020, according to the Fed's data.
Moreover, the Fed stated unequivocally that "many renter households are likely in need of additional support beyond what has been made available so far." And it cautioned that while eviction moratoriums have so far kept many delinquent renters from being evicted, the problem hasn't gone away. Those who have fallen behind on rent will still have to pay it when the moratorium expires -- or face eviction.
Relief for renters lies in the hands of Congress
Unfortunately, lawmakers have not been responsive to the needs of these Americans. Instead, they've been involved in back-and-forth negotiations since March. So far they have not passed another coronavirus relief bill despite calls to do so from centrist lawmakers, CEOs, and leading economists.
The president has wavered between insisting on a large deal and telling negotiators to do nothing until after the election. And Democrats and Republicans have both attempted to pass their own relief legislation that has no chance of actually becoming law.
It's been more than six months since Americans have had any relief. And the good news is key negotiators have indicated they're closer to a deal. Even so, it's far from certain another stimulus bill will make its way to the president's desk anytime soon.
In the meantime, millions of Americans are looking at empty bank accounts and wondering where next month's rent will come from.
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