Impact of Ending $600 Federal Unemployment Supplement

34 Replies

With the end of the federal supplemental unemployment benefits ($600 per week) in July, will we see huge increases in missed rent payments in Sept?

While many here have anecdotally reported that they are collecting rents at above 90-95% since April, I wonder if there is a potential problem on the horizon.  There has been no move to extend those benefits to people who have remained unemployed or have just lost their jobs.  In addition, the PPP will be exhausted either at the end of June or in July for most businesses which could mean another round of layoffs.

I'm pretty concerned that with no federal assistance, things might get more ugly.  Any word on an extension?

My thought is the way  people are going out, open businesses and send them back to work!  Seriously though the house has passed it and it includes those $600 payments and a 12 month moratorium on evictions.  I don't see it passing the senate in this form. They have had it for a few weeks. I think this future legislation may not focus as much on individual relief as systemic programs. There is some recognition that the $600 across the board will hurt recovery if people make more not working then working but the house version includes the $600.  

@Colleen F.

Hopefully, the 12 month moratorium on evictions is a non-starter, but as people are out & about with businesses opening, the virus is starting to ravage those who are having lots of social interactions. That also appears to mean a pause or reversal on openings.

I’d like to see a stimulus package that continues to assist those whose jobs are impacted by the disease, but continues to allow landlords the opportunity to manage their properties fairly & with autonomy.

@Brad Gibson

This extra $600 needs to end it was super unfair. I had guys trying to get fired because they would make more sitting at home collecting the unemployment and the extra $600. This whole thing made no sense what’s so ever and it made people lazy and messed up many small businesses because people didn’t wanna come back to work when they were able to.

Imagine all the people that worked the people off got paid more in many circumstances then they still got the $1200. Extra $200-$300 would of been fair to balance out what they normally made and when they were able to go back to work they had to would of been more fair.

The bill that the House of Representatives passed (HEROS Act) had no Republican involvement, so it never had any chance of passing the Senate. There is a ton to work out between the parties and they are not talking. Based on statements made by Republicans, they do not support continuing the $600 per week payments. There are many people who are making more money on unemployment, so they are refusing to go back to work. Republicans are asking for a bonus if people get off unemployment and go back to work. I think both parties agree on further stimulus money, whether that is $1200 or some other amount is yet to be seen. 

Payments continue through July, so if people are using the extra $600 to pay rent, it will not affect rent until September. Odds are good there will be another stimulus by then. They have to do something before elections.

@Brad Gibson Totally agree with you. I haven't been paid since February for reasons unrelated to COVID. Yet I am not allowed to evict my tenant. I am being screwed and just need to have my case heard. If they pass a 12 month moratorium on evictions I may as well give my house to the bank and just walk away at this rate. 

Originally posted by @Robert S. :

@Brad Gibson

This extra $600 needs to end it was super unfair. I had guys trying to get fired because they would make more sitting at home collecting the unemployment and the extra $600. This whole thing made no sense what’s so ever and it made people lazy and messed up many small businesses because people didn’t wanna come back to work when they were able to.

Imagine all the people that worked the people off got paid more in many circumstances then they still got the $1200. Extra $200-$300 would of been fair to balance out what they normally made and when they were able to go back to work they had to would of been more fair.

Pretty easy fix.  You max their benefits at what they would have earned if working full time & then check with employer to see if they've been offered their old job. 

Unemployment in my state always checks with the employer to confirm separation before paying benefits.  Every two weeks, ping the employer and ask a simple question: "Has this employee been offered their job back?"

If so, benefits end.  If not, then benefits continue.  Easy peasy, lemon squeezy.

Plus it continues a program that is very needed instead of an all or nothing solution.  It seems the R's want to end all support for working person.  D's want to ensure a universal income.  WTF?  There is a practical solution in the middle.

 

Rent collections in the 90%+ range is a bit more than anecdotal. NHMC (National Multifamily Housing Council) is showing rent collections of 91.7%, 93.3%, and 94.2% in April, May & June 2020 across 11 million apartments

Source: NMHC

However, I do think the end of the $600 unemployment as well as the PPP loans is going to have a major impact on these figures going forward

My 2 cents is that some form of unemployment assistance is going to continue going forward. With record unemployment and in an election year, it will be tough to pitch to your voters that you cut off their assistance during this time

Originally posted by @Michael A. :

@Brad Gibson Totally agree with you. I haven't been paid since February for reasons unrelated to COVID. Yet I am not allowed to evict my tenant. I am being screwed and just need to have my case heard. If they pass a 12 month moratorium on evictions I may as well give my house to the bank and just walk away at this rate. 

 You hit the nail on the head when you said, "just need to have my case heard". This is called due process and it is a constitutional right. Why not let the fact fall where they land? If a judge feels the tenant is in true hardship and decides to extend their stay a month or two, based on facts, that is different than letting anyone just take advantage. I think most landlords just want their day in court and want to be treated fairly. Nobody is asking to take advantage of people in bad situations, we just want the scammers to be held responsible.

Additional $600 made no sense to me to begin with. Every state has a range using their internal formula, and provide unemployment benefits based on what the employee used to make. The federal level benefits should simply reflect that state level payment figure in same percentage, not a high fixed amount that provides zero incentives for all min. wage earners to go back to work. It puts a false sense of security.

I think losing the $600/wk won't be as big of a factor as when the state level funding runs out. Most states only provide benefits 12-26 weeks, and under the CARES act they're being given an additional 13 weeks. So about 25-39 weeks from approx. late March to May when tens of millions filed for unemployment. This puts us at benefits ending altogether (unless they pass something new) starting September through December. 

I would be more worried about Q4 rents when tenants don't have a job, their old employer is out of business/lockdown, and unemployment $$ has been exhausted. It'll be interesting to see how they extend state benefits, increase federal level benefits, send more stimulus checks, etc.

Originally posted by @Brad Gibson :
Originally posted by @Robert S.:

@Brad Gibson

This extra $600 needs to end it was super unfair. I had guys trying to get fired because they would make more sitting at home collecting the unemployment and the extra $600. This whole thing made no sense what’s so ever and it made people lazy and messed up many small businesses because people didn’t wanna come back to work when they were able to.

Imagine all the people that worked the people off got paid more in many circumstances then they still got the $1200. Extra $200-$300 would of been fair to balance out what they normally made and when they were able to go back to work they had to would of been more fair.

Pretty easy fix.  You max their benefits at what they would have earned if working full time & then check with employer to see if they've been offered their old job. 

Unemployment in my state always checks with the employer to confirm separation before paying benefits.  Every two weeks, ping the employer and ask a simple question: "Has this employee been offered their job back?"

If so, benefits end.  If not, then benefits continue.  Easy peasy, lemon squeezy.

Plus it continues a program that is very needed instead of an all or nothing solution.  It seems the R's want to end all support for working person.  D's want to ensure a universal income.  WTF?  There is a practical solution in the middle.

 

 It sounds easy, but the unemployment system is overwhelmed in most every state. They don't even have time to process claims, let alone verify anything. Many employees being offered their job are saying "I don't feel safe". Those are the magic words that keep you on unemployment, even if your employer needs you at work. Neither party is saying get rid of unemployment, just drop the bonus $600 and go back to the standard amount. Unemployment doesn't pay very well intentionally. When unemployment pays as well (or better) than employment, people choose to not work. I know business owners who told me they need people, but nobody wants to work. I have one tenant working overtime because they are short staffed, while his coworkers sit at home on assistance. That doesn't seem right and I don't see how that is a political issue at all. 

@Joe Splitrock I am glad to know that I'm not alone in thinking this. That's all I've been saying this entire time. The vast majority of people are in a tough spot and deserve protection from being displaced due to the unique climate that COVID has put us in. However, there should absolutely have been (and should be) a clear solution to paying landlords for the rent their tenants are unable to pay if the government refused to allow them to go to court to reclaim their own property. 

My situation has NOTHING to due with the pandemic. So why can't I have my day in court? I'd be in the 5% of landlords who are just being taken advantage of, and the judge would clearly see that. 

The fact that we are even having a discussion about the $600/week extra benefits points to very deep problems in the economy that until July will be masked by stimulus packages.

Hard facts are the US was not ready for this pandemic. When it showed up, the government made an estimated 1Q of safety net for common citizens assuming that Covid-19 spikes and then subsided like how it did in China or Korea.

That’s how it should have been but alas that’s far from how things are ending up. Cases are rising as we speak in 36 states and Dr. Fauci is talking about 100k cases a day!

That does not augur well for the economy. I think people are underestimating the magnitude of the problem. Unemployment will stay high and not having $600 per week will push people to cut spending further resulting in an even broader economic slowdown.

Will rents get paid? I think they will but expect a lot more non payments. I also think the failure to stabilize will result in a tsunami of mortgage defaults and foreclosures.

Originally posted by @Joe Splitrock :
Originally posted by @Brad Gibson:
Originally posted by @Robert S.:

@Brad Gibson

This extra $600 needs to end it was super unfair. I had guys trying to get fired because they would make more sitting at home collecting the unemployment and the extra $600. This whole thing made no sense what’s so ever and it made people lazy and messed up many small businesses because people didn’t wanna come back to work when they were able to.

Imagine all the people that worked the people off got paid more in many circumstances then they still got the $1200. Extra $200-$300 would of been fair to balance out what they normally made and when they were able to go back to work they had to would of been more fair.

Pretty easy fix.  You max their benefits at what they would have earned if working full time & then check with employer to see if they've been offered their old job. 

Unemployment in my state always checks with the employer to confirm separation before paying benefits.  Every two weeks, ping the employer and ask a simple question: "Has this employee been offered their job back?"

If so, benefits end.  If not, then benefits continue.  Easy peasy, lemon squeezy.

Plus it continues a program that is very needed instead of an all or nothing solution.  It seems the R's want to end all support for working person.  D's want to ensure a universal income.  WTF?  There is a practical solution in the middle.

 

 It sounds easy, but the unemployment system is overwhelmed in most every state. They don't even have time to process claims, let alone verify anything. Many employees being offered their job are saying "I don't feel safe". Those are the magic words that keep you on unemployment, even if your employer needs you at work. Neither party is saying get rid of unemployment, just drop the bonus $600 and go back to the standard amount. Unemployment doesn't pay very well intentionally. When unemployment pays as well (or better) than employment, people choose to not work. I know business owners who told me they need people, but nobody wants to work. I have one tenant working overtime because they are short staffed, while his coworkers sit at home on assistance. That doesn't seem right and I don't see how that is a political issue at all. 

I know the system is overwhelmed, but it isn't really that difficult.  If the employer says they've offered the employee their job back, then benefits cease.  It is electronic and straight forward. 

I realize that unemployment is $200 to $300 per week (capped at $500 in Texas for high wage earners...$100 per week for minimum wage earners) as a measure to encourage folks to go back to work, but for many...there is no place to go back to currently.  For a wage earner who made $1,000 to $1,500 per week prior to Covid, going down to $200 per week means non-payment of rent and eviction.  For a minimum wage earner, to drop from $290 per week to $100 also means eviction.

You'd rather cut the federal supplemental benefits than just implement a fairly quick check to see if employment has been offered?  Seems worth the trouble to me.

Originally posted by @Brad Gibson :
Originally posted by @Joe Splitrock:
Originally posted by @Brad Gibson:
Originally posted by @Robert S.:

@Brad Gibson

This extra $600 needs to end it was super unfair. I had guys trying to get fired because they would make more sitting at home collecting the unemployment and the extra $600. This whole thing made no sense what’s so ever and it made people lazy and messed up many small businesses because people didn’t wanna come back to work when they were able to.

Imagine all the people that worked the people off got paid more in many circumstances then they still got the $1200. Extra $200-$300 would of been fair to balance out what they normally made and when they were able to go back to work they had to would of been more fair.

Pretty easy fix.  You max their benefits at what they would have earned if working full time & then check with employer to see if they've been offered their old job. 

Unemployment in my state always checks with the employer to confirm separation before paying benefits.  Every two weeks, ping the employer and ask a simple question: "Has this employee been offered their job back?"

If so, benefits end.  If not, then benefits continue.  Easy peasy, lemon squeezy.

Plus it continues a program that is very needed instead of an all or nothing solution.  It seems the R's want to end all support for working person.  D's want to ensure a universal income.  WTF?  There is a practical solution in the middle.

 

 It sounds easy, but the unemployment system is overwhelmed in most every state. They don't even have time to process claims, let alone verify anything. Many employees being offered their job are saying "I don't feel safe". Those are the magic words that keep you on unemployment, even if your employer needs you at work. Neither party is saying get rid of unemployment, just drop the bonus $600 and go back to the standard amount. Unemployment doesn't pay very well intentionally. When unemployment pays as well (or better) than employment, people choose to not work. I know business owners who told me they need people, but nobody wants to work. I have one tenant working overtime because they are short staffed, while his coworkers sit at home on assistance. That doesn't seem right and I don't see how that is a political issue at all. 

I know the system is overwhelmed, but it isn't really that difficult.  If the employer says they've offered the employee their job back, then benefits cease.  It is electronic and straight forward. 

I realize that unemployment is $200 to $300 per week (capped at $500 in Texas for high wage earners...$100 per week for minimum wage earners) as a measure to encourage folks to go back to work, but for many...there is no place to go back to currently.  For a wage earner who made $1,000 to $1,500 per week prior to Covid, going down to $200 per week means non-payment of rent and eviction.  For a minimum wage earner, to drop from $290 per week to $100 also means eviction.

You'd rather cut the federal supplemental benefits than just implement a fairly quick check to see if employment has been offered?  Seems worth the trouble to me.

 I am just being practical. I don't see many states enforcing this. They already ignore federal laws they don't agree with and states have a self interest in getting more money to their residents. States administer the programs, so there is no way for the Federal Government to enforce this. 

Originally posted by @Joe Splitrock :
Originally posted by @Brad Gibson:
Originally posted by @Joe Splitrock:
Originally posted by @Brad Gibson:
Originally posted by @Robert S.:

@Brad Gibson

This extra $600 needs to end it was super unfair. I had guys trying to get fired because they would make more sitting at home collecting the unemployment and the extra $600. This whole thing made no sense what’s so ever and it made people lazy and messed up many small businesses because people didn’t wanna come back to work when they were able to.

Imagine all the people that worked the people off got paid more in many circumstances then they still got the $1200. Extra $200-$300 would of been fair to balance out what they normally made and when they were able to go back to work they had to would of been more fair.

Pretty easy fix.  You max their benefits at what they would have earned if working full time & then check with employer to see if they've been offered their old job. 

Unemployment in my state always checks with the employer to confirm separation before paying benefits.  Every two weeks, ping the employer and ask a simple question: "Has this employee been offered their job back?"

If so, benefits end.  If not, then benefits continue.  Easy peasy, lemon squeezy.

Plus it continues a program that is very needed instead of an all or nothing solution.  It seems the R's want to end all support for working person.  D's want to ensure a universal income.  WTF?  There is a practical solution in the middle.

 

 It sounds easy, but the unemployment system is overwhelmed in most every state. They don't even have time to process claims, let alone verify anything. Many employees being offered their job are saying "I don't feel safe". Those are the magic words that keep you on unemployment, even if your employer needs you at work. Neither party is saying get rid of unemployment, just drop the bonus $600 and go back to the standard amount. Unemployment doesn't pay very well intentionally. When unemployment pays as well (or better) than employment, people choose to not work. I know business owners who told me they need people, but nobody wants to work. I have one tenant working overtime because they are short staffed, while his coworkers sit at home on assistance. That doesn't seem right and I don't see how that is a political issue at all. 

I know the system is overwhelmed, but it isn't really that difficult.  If the employer says they've offered the employee their job back, then benefits cease.  It is electronic and straight forward. 

I realize that unemployment is $200 to $300 per week (capped at $500 in Texas for high wage earners...$100 per week for minimum wage earners) as a measure to encourage folks to go back to work, but for many...there is no place to go back to currently.  For a wage earner who made $1,000 to $1,500 per week prior to Covid, going down to $200 per week means non-payment of rent and eviction.  For a minimum wage earner, to drop from $290 per week to $100 also means eviction.

You'd rather cut the federal supplemental benefits than just implement a fairly quick check to see if employment has been offered?  Seems worth the trouble to me.

 I am just being practical. I don't see many states enforcing this. They already ignore federal laws they don't agree with and states have a self interest in getting more money to their residents. States administer the programs, so there is no way for the Federal Government to enforce this. 

 Not to be purposefully obstinate...What is your solution then?  Cutting the federal supplemental benefits off to prevent some who are gaming the system and not returning to work?

When the housing and loan industry melted down the world's financial system in 2007, George W said if the choice was between being Herbert Hoover or FDR....he was damn sure going to be FDR.

The same principle applies here in my opinion.

The powers in DC have made sure that the wealthy are going to stay well by pumping up the stock market and asset prices. This helps the wealthy and the well paid corporate execs.

The unemployment benefit of $600 is similar but for the working class and the middle class.

By pulling the plug on that stimulus the working class is going to be exposed in an adverse fashion.

I really think people are underestimating what we have in front of us which is a colossal economic crisis that will dwarf the 2008 financial crisis and take many down. This one is bad folks, just ask the people who work on Broadway in NYC or in the Hollywood studios in LA or in Disney Land in Orlando, they are not misusing they benefits. They can’t go back to work. Add on top millions of service industry workers all around the country. The $600 is a need right now.

The bottom line is the government needs to defeat the virus, make people feel safe and get them back to work.

Congress passed the HEROES Act a few weeks back, I think some version of that gets through the Senate in August.  I agree, I think the $600 stimulus payment is critical to keeping things on track; I am a landlord and to this point everything is running smoothly, but I understand that cash poor consumers have a cascading effect on the economy.  

I hope the Senate comes to its senses; low interest rates do not equally benefit all consumers.

The trump administration is holding onto a lot of money to dump back into this country prior to November. Expect an August stimulus package that more than likely exceeds the original. It will possibly be aimed at producing more jobs and spending money for development. I believe the $600 unemployment was a gift and a curse. It’s unfortunate tenants aren’t paying rent because most people have access to funds whether it’s unemployment or a small business owner. The people of this country must take advantage of all these government programs. In the end, I believe the only true end game is INFLATION. This can be advantageous regarding assets, but detrimental to the common person living check to check. I hope and pray we can survive the storm as real estate investors.