A quarter no longer pays the full rent. So far, the New Yorkers were still reasonably protected in their apartments. That will change soon.
Cancel the Rent – the sign on the window on the fourth floor of the apartment building on Edgecombe Avenue in Harlem, New York. When it showed up in early April, the coronavirus was still new in the United States and unemployment had just started to rise to unprecedented levels.
Almost 4.5 million people in the country have now been infected with the virus, more than 150,000 have died as a result, and over 50 million have registered as unemployed due to the pandemic. In the past week alone, 1.43 million new unemployed have been added. That’s more people than in the worst moments of the Great Depression of the 1930s.
The word “rent strike” is now emblazoned on buttons on shirts and on stickers on bumpers, in New York, but also elsewhere in the country. 25 percent of tenants are no longer paying their full rent. According to estimates by the company Stout Risius Ross, which advises New York on financial matters, 46 percent of tenants in the city will no longer be able to pay in the foreseeable future.
“I have to choose between eating and renting,” says a young woman in front of the Brooklyn housing court. “Neither is possible.” After the pandemic closure, the court had already started tenancy lawsuits in June.
But until August 20, there is still a moratorium that protects most New York tenants from evictions. Governor Andrew Cuomo had imposed it. The Democrat, a dependable partner of the New York real estate lobby for many years, had to give in under the combined pressure of pandemic victims and new leftists who moved into the state senate in 2018 and temporarily create an additional piece of tenant protection.
Cuomo has extended the ultimatum for the third time. It means that tenants who have lost their income due to the pandemic and are unable to pay cannot be put on the streets for the time being. But their rent payments are only postponed. Some New Yorkers are already sitting on rent debts of more than $10,000 that they have to pay if they do not want to be cleared after the moratorium expires.
New York is a tenant city – in contrast to the cities of apartment owners elsewhere in the country: with 1.2 million tenants and some of the most influential property owners in the country. The supply of housing was less than the demand, they drove the rents ever higher. Since the beginning of the millennium, rents in New York City have increased by more than 30 percent, while wages have stagnated – at least at the bottom – at the same time.
On August 1st, the situation of tenants in New York and in the rest of the country worsened again. On Friday, the temporary financial aid that Congress approved in March under the Cares Law for Victims of the Pandemic expired. The most important of these: $600 a week to top up the meager unemployment benefits of $333 a week on average.
The majority Democratic House of Representatives had already put together a new aid package in May. It would extend aid and introduce additional services – including nationwide tenant protection before evictions. But the majority Republican Senate could not make a decision for 73 days. Only this week he presented a radically shrunk version of his own for new aids.
Among other things, this would mean that the benefits for the unemployed are reduced to just $200 a week. A few weeks later, the flat-rate additional benefits for unemployment benefits are to expire completely. The Republicans then only want to grant the unemployed 70 percent of their last wages. For the large number of corona unemployed people who previously worked in the hospitality and retail sectors for the minimum wage, this means falling into poverty.
The House of Representatives package would cost $3 trillion, the Senate Republican package would cost $1 trillion.
There are hardly any vacancies on the job market at the moment. And as a result of more than 65,000 new infections every day in the United States, there are fewer and fewer. Many companies have closed for the second time and have once again made their employees unemployed.
But Senate Republican chief Mitch McConnell believes that $600 a week prevented unemployed people from returning to the labor market. The Republicans do not show understanding for the concerns of tenants without income.
Your government in Washington may consist of people who have made money from real estate speculation; from President Donald Trump to son-in-law Jared Kushner to Treasury Secretary Steven Mnuchin, who specialized in evictions at the head of Bank OneWest after the 2008 recession.
Heidi Shierholz, economist at the Economic Policy Institute, calls the cancellation of the $600 a “terrible mistake” that would affect not only the unemployed, but also those around them. “At least five million jobs across the US depend on this stimulus,” she warns.
Even less unemployed will be able to pay rent in New York after cuts in government grants. Rents in New York are higher both in social housing and on the “free” market than elsewhere. An average New York apartment rental this summer, according to real estate agents, is $3,392, 3.51 percent less than last year.
The coming months will be cruel for the approximately 110 million tenants in the United States. Sam Gilman of the “Covid-19 Eviction Defense Project” considers more than 20 percent of all tenants in the United States to be at risk of eviction. The Aspen Institute think tank estimates that in September, when one state after another will remove its eviction protection, 23 million people in the country could be evacuated from their homes. Up to four million people could lose their homes in California, two million in Texas, and 1.5 million each in Florida and New York.
Even before the pandemic, many tenants in the United States, and particularly in expensive locations such as New York, San Francisco and Seattle, paid ruinously high rents that consumed more than 30 percent of their income. With the threat of eviction, most of them will begin a downward spiral in which children lose their school and adults lose their social environment. And as a result, the creditworthiness is lost, without which it is difficult in the United States to get a new apartment at all.
The minorities – particularly African Americans and Latinos – are disproportionately affected by unemployment and homelessness, as was already the case with the infection with the coronavirus and with police violence.
In October, the pandemic-approved breakdown in student debt repayments ends. The 45 million people affected will then have to pay again – even if they continue to be unemployed. Nobody expects unemployment to decline rapidly. Both the Federal Reserve and private banks expect unemployment to remain in double digits at least next year.
The homeowners are also not very cooperative. The association’s spokesman threatens both tenants and politicians that the decline in rental income will lead to the neglect of living space and the elimination of taxes.
The first “rent strike” in decades gives some hope that they can create further laws to protect tenants. Several young leftists in the Senate in Albany have been elected after campaigning against real estate speculation and the real estate lobby in New York. They are now proposing that banks compensate for the losses caused by the loss of rents and the loss of taxes.