A new report by Harvard University’s Joint Center for Housing Studies (JCHS), “Making the Rent: Household Spending Strategies During the COVID-19 Pandemic,” examines how households have managed their finances and rental payments in response to income-loss during the pandemic. Among households that lost income, households with extremely low incomes, households of color, and households with children were more likely to fall behind on rent compared to high-income households, white households, and households without children. Among low-income households and households of color that lost income during the pandemic, those that fell behind on rent were more likely than those that did not fall behind to borrow from friends and family to make ends meet.
Researchers pulled data from U.S. Census Bureau Household Pulse Surveys conducted between mid-August 2020 and late March 2021 to identify patterns in rental payments across a variety of household characteristics, including race and ethnicity, income level, and presence of children.
Researchers found that renters that lost income during the pandemic used a variety of tactics to pay for household expenses. High-income households tended to rely on regular income, credit, and savings, while low-income households relied on Supplemental Nutrition Assistance Program (SNAP) resources and funds borrowed from friends and family. Only a minority of households that lost income during the pandemic fell behind on their rental payments. Households with incomes of less than $25,000, households of color, and households with children that faced income loss during the pandemic were more likely to fall behind on rent.
Among low-income households and renters of color who faced income loss, those who were behind on rent were more likely to use SNAP than those who were not behind on rent, in part reflecting the low income and financial precarity necessary for households to qualify for SNAP. Access to SNAP enabled households to scrape rent together if they had exhausted other funds or to buy food if they were behind on rent. Among low-income households and households of color that had lost income, those that were behind on rent were more likely to borrow from friends and family than those who were not behind on rent, suggesting that rental debt and income loss in affected households can impact surrounding communities. Of households with incomes of less than $25,000 that had lost income, 36% of households that were not behind on rent borrowed from friends and family compared to 57% of households that were behind on rent.
The findings suggest that while emergency rental assistance is of crucial importance for households that have lost income and fallen behind on rent, policies focusing on rental arrears may not address the full impact of lost income among renters. Even if they did not fall behind on rent, renters who lost income during the pandemic likely still experienced financial hardships that had economic consequences for their wider communities. The authors argue that broad-based cash-assistance programs may better mitigate the negative impacts of lost income among renters and their communities.
The findings presented in the JCHS report update and expand on previous research by NLIHC (see Memo, 7/26/2021) and by JCHS (see Memo, 4/19/2021).
The report is available at: https://bit.ly/3gigfWS