The Covid-19 pandemic has uncovered multiple fault lines and fractures within American society: health care inadequacy and pay inequality two of the most glaring.
Concerns have been growing for month over the possibility that millions of Americans are in danger of becoming homeless, a result of long-term job loss, the expiration of unemployment benefits and the end of a nationwide moratorium on evictions.
Even as most of us look forward to the merciful end of 2020, millions of people are fretting about a new danger come January 1: homelessness.
The Washington Post newspaper reports that millions of Americans who lost their jobs during the pandemic are now thousands of dollars behind on rent and utility bills. Nearly 12 million renters will owe an average of $5,850 in back rent and utilities by January, the paper says. In November some 9 million renters said they were behind on rent, according to a Census Bureau survey.
The paper reports that numbers 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 Federal Reserve Bank of Philadelphia found that 1.3 million such households are now an average of $5,400 in debt on rent and utilities after those people lost their jobs due to the pandemic.
In late March, Congress authorized more than $2 trillion in relief for U.S. households and others affected by the pandemic. Although the cash infusion helped millions, people with limited savings or wealth were more likely to suffer anyway, according to research from the St. Louis branch of the Federal Reserve.
Researchers found the most important predictor of serious delinquency is whether a family has at least two months’ worth of income in the form of liquid assets, such as cash and checking and savings accounts. If they don’t, they are about 300% more likely to become seriously delinquent than those who have at least that much. That’s right: 300%.
For those who are more likely to have a serious delinquency, the researchers also found:
These families have too much debt relative to income. Another important factor associated with serious delinquency is whether a family’s debts exceeded 40% of their income. If their debts were over that threshold, they were about 200% more likely than others to be seriously delinquent.
They aren’t healthy. Families reporting “fair” or “poor” health were nearly 60% more likely than those describing “good” or “excellent” health to report a serious delinquency, the authors found.
They’re supporting family or friends. Families providing financial support to relatives or friends were 41% more likely to fall at least two months behind on payments. In addition, each child in the family increased the likelihood of a serious delinquency by 17%.
They own vehicles. Those who own vehicles were 35% more likely to report serious delinquency, possibly because of the vehicle loans.
The precarious nature of living paycheck to paycheck has been a troubling aspect of American culture for decades. Back in the 1980s, in reporting I did on a housing assistance program in Columbus, Ohio, I learned that most people were only a paycheck away from having serious financial difficulties. The recent research done by the Philadelphia and St. Louis Fed branches, as well as reporting by the Washington Post, suggest that we haven’t moved very far since then.
The immediate need is for Congress to extend unemployment benefits and targeted stimulus relief. The task for the incoming Biden administration will be to address many of the weaknesses that have lurked for years beneath the veneer of American prosperity. It’s taken a pandemic to fully reveal the unsustainable flaws in health care and income inequality.
With millions of people on the brink of losing their homes, the need to act couldn’t be clearer. Will our leaders respond to this latest crisis that threatens still more long-term disruption to American lives?