Newly Unemployed Service Workers Owe More Than $1.7 Billion a Month in Housing Payments

Federal and state aid are helping to plug gaps in the short term

- Service-sector employees who lost their jobs as a result of the coronavirus pandemic owe more than $1.7 billion a month in housing payments, 70% of which is rent.

- More than a quarter of the total housing payments due from U.S. food service workers is owed by those who are newly unemployed during the coronavirus pandemic.

- Some manufacturing-heavy states, including Ohio and Michigan, are feeling the impact of heavy job loss, and unemployment is even hitting healthcare workers in states such as Georgia, Washington and Oregon.

- About 20% of renters did not pay any rent in the first week of May. That's higher than last spring, but down from 22% in April, a possible signal that government aid and the reopening of some businesses is easing short-term financial burdens.

News provided by

Zillow

Jun 10, 2020, 08:00 ET

SEATTLE, June 10, 2020 /PRNewswire/ -- More than $1.7 billion in rent and mortgage payments is owed each month by U.S. service-sector workers currently receiving unemployment benefits as a result of the coronavirus pandemicⁱ -- payments that could be in jeopardy if expanded local and federal unemployment assistance fades or workers remain without incomes longer than expected.

Service-sector workers (including the food, arts, entertainment, recreation and retail industries) are perhaps feeling the greatest financial impact from COVID-19 as many shops and restaurants reduced operations or shut their doors completely. An estimated $1.7 billion in rent and mortgage payments is owed each month by service-sector workers who received unemployment benefits in April as a result of COVID-19, according to a new Zillow® analysis.

About 70% of that total ($1.2 billion) is from renters, illustrating the unprecedented scale of what is at risk in the rental market. That's nearly 3% of the total monthly rent paid in the U.S., even before accounting for newly unemployed renters in all other industries -- Zillow estimates service-sector workers comprise a little more than a third of those who have lost their jobs as a result of the coronavirus pandemic. Previous Zillow research has shown renters in the food and retail industries already struggled with cost burdens before the pandemic, making it difficult for those who fall behind to catch back up.

"As we're watching resilient buyers return to the for-sale market and more renters able to pay on time in May than in April, it's important to remember that much of the confidence that led to that improvement rests on massive government aid," said Zillow Senior Principal Economist Skylar Olsen. "By supporting the more than 40 million Americans who have filed for unemployment benefits, that package is not only easing financial hardships but also safeguarding the housing market from widespread evictions and foreclosures that could have devastating effects. That safety net has an end date, so if employment does not bounce back as hoped this summer the housing recovery could be impeded, especially for renters who aren't insulated by the equity owners hold in their homes."

Safety nets including unemployment benefits, the CARES Act stimulus checks and temporary renter protections have eased tensions for many households for the short-term, at least. But with state reserves stretched, stimulus checks covering only a portion of the typical monthly rent or mortgage payment in many states, and many workers who don't qualify for benefits, a large share of housing payments could be missed eventually if government assistance expires or jobs don't return to pre-pandemic levels -- likely pushing some into housing insecurity.

Skyrocketing unemployment caused about 22% of renters to not pay any of their rent during the first week of April, up from about 18% last spring. That fell to 20% in Mayⁱⁱ, a possible signal that government aid and the reopening of some businesses is helping to lessen financial stress. More assistance could be on the way in the form of the HEROES Act, but the long-term picture is unclear.

It's not only service-sector workers that are experiencing mass unemployment during the coronavirus pandemic. Some states with economies reliant on manufacturing are also feeling the impact of heavy unemployment. In Ohio, where manufacturing makes up the largest share of the state's GDPⁱⁱⁱ, 53% of housing payments owed by manufacturing workers are from those whose jobs have been affected by COVID-19. In Michigan, that share is 27%.

Even workers in essential industries that have been largely allowed to continue operations are not immune from unemployment. Many states halted non-emergency medical procedures, such as dental work and routine medical checkups, pushing some healthcare workers to file for unemployment benefits. In both Washington and Oregon, two states among the first to issue stay-at-home orders and limit business operations, healthcare workers receiving unemployment payments made up about 12.5% of the total housing payments owed by workers in that industry in April. That share is even higher in Georgia (19%), Rhode Island (18%) and New Hampshire (13.5%).

State	Service-Sector Industries: Sum of Housing Payments Owed by Newly Unemployed*	Service-Sector Industries: Share of Total Housing Payments Owed by Newly Unemployed	Service-Sector Industries: Share of Newly Unemployed Housing Payments Owed by Renters	Service-Sector Industries: Share of Newly Unemployed Housing Payments Owed by Homeowners
United States	$1,725,970,116	15.7%	69.6%	30.4%
Alabama	$9,097,534	10.2%	72.9%	27.1%
Alaska	N/A	N/A	N/A	N/A
Arizona	$22,935,967	9.4%	71.1%	28.9%
Arkansas	$6,243,198	9.6%	64.5%	35.5%
California	$189,941,699	10.0%	69.5%	30.5%
Colorado	$38,518,705	13.4%	72.2%	27.8%
Delaware	$2,156,883	11.9%	63.3%	36.7%
Florida	$84,717,112	9.3%	72.0%	28.0%
Georgia	$73,234,065	22.5%	73.7%	26.3%
Hawaii	$16,645,238	21.1%	68.2%	31.8%
Idaho	$7,433,563	15.2%	66.4%	33.6%
Illinois	$61,397,684	15.6%	67.4%	32.6%
Indiana	$14,493,975	10.4%	72.8%	27.2%
Iowa	N/A	N/A	N/A	N/A
Kansas	$7,199,621	12.8%	72.7%	27.3%
Louisiana	$35,339,357	28.9%	81.5%	18.5%
Maine	$3,418,385	12.0%	41.1%	58.9%
Maryland	$25,724,469	11.2%	67.2%	32.8%
Massachusetts	$76,980,941	26.7%	69.7%	30.3%
Michigan	$45,852,970	19.5%	60.0%	40.0%
Minnesota	$44,483,136	22.2%	56.7%	43.3%
Mississippi	$9,280,735	19.0%	81.7%	18.3%
Missouri	$24,012,225	15.4%	65.5%	34.5%
Montana	$7,536,130	24.6%	64.6%	35.4%
Nebraska	$5,732,365	13.3%	67.5%	32.5%
Nevada	$55,630,719	24.6%	61.0%	39.0%
New Hampshire	$4,896,311	9.0%	55.3%	44.7%
New Jersey	$75,801,832	21.0%	65.7%	34.3%
New Mexico	$9,578,883	20.2%	75.5%	24.5%
New York	$254,067,420	30.1%	78.6%	21.4%
North Carolina	$49,010,194	16.9%	70.1%	29.9%
North Dakota	$901,416	7.5%	54.5%	45.5%
Ohio	$22,227,882	7.6%	71.3%	28.7%
Oklahoma	$10,041,075	11.0%	72.3%	27.7%
Oregon	$43,042,808	24.2%	70.0%	30.0%
Pennsylvania	$58,932,798	18.9%	64.8%	35.2%
Rhode Island	$12,012,433	28.6%	63.6%	36.4%
South Dakota	$887,198	6.3%	52.4%	47.6%
Tennessee	$28,842,472	16.2%	69.4%	30.6%
Texas	$93,795,280	11.1%	75.6%	24.4%
Utah	$8,016,932	9.1%	67.4%	32.6%
Vermont	N/A	N/A	N/A	N/A
Virginia	$22,597,514	8.1%	71.1%	28.9%
Washington	$76,612,944	20.4%	65.5%	34.5%
West Virginia	$4,525,272	16.3%	74.5%	25.5%
Wisconsin	$29,127,443	18.6%	62.2%	37.8%
Wyoming	N/A	N/A	N/A	N/A

*Includes totals for Accommodation and Food Services, Arts, Entertainment and Recreation, and Retail Trade industries. Data is unavailable for some industries in some states due to small sample sizes.

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ⁱ The data in this analysis represents unemployment claims, not initial filings, and minor industries are excluded due to ACS sample sizes. The population examined is only those that qualify for benefits in major industries, and thus represents a conservative estimate. The "service sector" includes the Accommodation and Food Services, Arts, Entertainment and Recreation, and Retail Trade industries, as defined by the North American Industry Classification System. Data was not available for Connecticut, Kentucky and South Carolina at the time of publication, so these states are not included in the analysis.

ⁱⁱ Source: National Multifamily Housing Council, Rent Payment Tracker

ⁱⁱⁱ Source: Ohio Development Services Agency, Economic Overview

SOURCE Zillow