Large job losses may lead to housing payment challenges
Unemployment analysis finds that the number of initial unemployment insurance claims from April was equal to 16.6 percent of the total workforce in New England. The analysis of the pandemic’s impact on housing estimates that, due to the wide-scale job loss, 36 percent of the region’s renters and 18 percent of its homeowners are at risk of not being able to pay their rent or mortgage. This equates to $1.5 billion in monthly payments. However, state and federal unemployment insurance expansions and direct payments to households through the CARES Act are likely to bolster households’ ability to meet monthly housing payments.
Each of the New England states has seen a dramatic surge in claims on unemployment insurance. As a share of the labor force, the average number of claims for a New England state was higher than the U.S. average. Across the region, initial claims spiked in the second half of March, and as of April, they were much higher than they were at the worst point of the Great Recession. Furthermore, in contrast to the way the number of unemployment claims rose steadily over a 12-month period during the Great Recession, they quickly soared due to the COVID-19 outbreak and the ensuing policy actions.
Service sector hit hardest, unlike during Great Recession
The New England states that report industry-level breakdowns of weekly unemployment claims show that the majority of initial claims came from the services sector.This presents another contrast with the Great Recession, when unemployment claims were spread more evenly among the different sectors in the New England states. In Massachusetts, 53 percent of claims in April 2020 came from the services sector, compared with 36 percent in the Great Recession.