COVID-19 Economic Pain Just Getting Started

COVID-19 Economic Pain Just Getting Started

( – Millions of Americans are about to feel the pain resulting from the COVID-19 pandemic’s consequences. Both the virus itself and the reaction to it are causing an immense amount of damage to the US economy. As governors unnecessarily locked down the country for nearly 3 months, 40 million people filed for unemployment benefits.

Unfortunately, that doesn’t tell the whole story. Millions applied for unemployment but were denied those benefits for a variety of reasons. For them, they have no money coming in and can’t pay rent or mortgage.

Renter and Mortgage Crisis

In March, Congress passed the CARES Act. While it provided a one-time $1,200 direct payment to help people get through the crisis, it wasn’t enough to cover one month of expenses for most individuals or families. The one significant benefit the law provided was a moratorium on rental evictions and foreclosures. Unfortunately, at the end of July, those restrictions will be lifted.

What’s happening now could be a reflection of the past. In 2007 and 2008, the Great Recession was primarily driven by mortgage foreclosures.

This time, renters are directly in the firing line as well. They have far fewer options to help them compared to homeowners. What could happen in just weeks will be devastating if new protections are not put in place to help renters.

According to the COVID-19 Eviction Defense Project, 26 million people might be at risk of being evicted by September. Those at most risk are minorities, low-income earners, and undocumented renters. Before the pandemic, their concerns were getting landlords to make repairs. Now, it’s trying to figure out how to stay in their homes.

African American Community Highly Vulnerable

While landlords cannot currently evict a tenant, renters still owe the rent they have not paid. In most cases, the bill will come due all at once as soon as the eviction protections are lifted. According to a US Census Bureau report, in the last week of May, 40% of African American tenants said they could not make their next payment. Combine that with rising unemployment in the Black community, as well as unrest around social justice issues, mass evictions could cause more strife.

Limited Solutions

Without legislation from either states or the federal government, renters have limited choices. In some municipalities, counties, and states, there are emergency aid resources. However, due to the enormity of the evolving situation, there may not be enough of those to go around.

Other solutions would require the federal and state governments to provide housing aid to hard-hit communities to keep residents in their homes and landlords solvent. US Treasury Secretary Steven Mnuchin recognized these issues in an interview on Thursday morning, June 11. He said that workers need help and that another rescue will be needed while acknowledging the closing of the economy was a significant mistake.

As the fallout from COVID-19 is realized over the days, months, and years ahead, the pain Americans feel is just getting started. Let’s hope the economy is fully opened soon and that people can begin to rebuild their lives.

By Don Purdum, Freelance Contributor

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