(NEW YORK) — On March 8, the U.S. Bureau of Labor Statistics reported that the nation’s jobless rate had fallen to 3.5%, the lowest since 1969, and bartenders like 29-year-old Desirée Duff of New York had no reason to doubt that the near future looked economically bright, with St. Patrick’s Day and March Madness just around the corner.
Just eight days later, Duff and tens of thousands of U.S. workers found themselves unemployed due to the global coronavirus pandemic, extremely worried about how they’re going to pay rent or bills or buy food.
“In an ideal world, I would still love to pay my rent on time while this is going on, but I am extremely worried about that,” said Duff, who lost her job on Monday after city officials ordered all bars and restaurants to close in a drastic move to combat the spread of COVID-19, which has killed thousands worldwide. “I heard that landlords can’t evict you for two or three months, but even then I’m still going to owe all that rent money, and how am I supposed to get it? It’s madness. I understand that landlords have a mortgage to pay, but I don’t know. It’s all so crazy.”
As skyrocketing unemployment across America threatens to plummet the country into a new housing crisis, which industry experts said could potentially be worse than the Great Recession, when 10 million families lost their homes from 2006 to 2014, financial institutions and government leaders are working to prevent that.
President Donald Trump on Wednesday announced that the U.S. Department of Housing and Urban Development will suspend all home foreclosures and evictions through the end of April.
Major cities such as New York, Los Angeles, Seattle and Chicago have instituted moratoriums on evictions, and the White House has proposed a $1 trillion stimulus package that includes the authorization of two $250 billion rounds of direct payments to individual taxpayers, with the first set to be issued April 6. Another wave of payments would be distributed beginning May 18.
“We’re going to have to see how it evolves, but the financial crisis we had before is avoidable as long as we are smart about how we deal with people who are unable to make their payments,” David Dworkin, president and CEO of the National Housing Conference, told ABC News. “We don’t want to create a second housing crisis on top of the health care crisis that we have.”
Anecdotal unemployment numbers since Monday have been staggering, as bars, nightclubs, restaurants, hotels and entertainment and sports venues have closed across the country, forcing displaced workers to file for jobless benefits.
Sen. Rob Portman, R-Ohio, said new unemployment claims in his state skyrocketed to 45,000 from 6,500 last week. In Connecticut, Gov. Ned Lamont, a Democrat, confirmed that 10,000 people in his state applied for unemployment on Tuesday alone, double the number from a week ago.
On Monday, there were 19,884 new unemployment claims filed in Massachusetts, more than for the entire month of February, according to Labor and Workforce Development in Massachusetts.
In New York and New Jersey, so many people attempted to file for unemployment that the online systems for submitting applications crashed in both states.
The New York Department of Labor announced in a statement on Tuesday that it was “experiencing an unprecedented increase in the volume of calls and web traffic for Unemployment Insurance claims.” By noon Tuesday, the agency had received 21,000 calls, compared with 2,000 a week earlier, and its website had logged 110,000 visits.
“We saw a record number of unemployment insurance applications,” New Jersey Gov. Phil Murphy, a Democrat, said.
In a meeting on Tuesday with Republican Senators, U.S. Treasury Secretary Steven Mnuchin warned that if drastic measures aren’t taken immediately the coronavirus pandemic could push U.S. unemployment to 20%, a level not broached since the 1933 Great Depression record of 24.9%, ABC News has confirmed.
On Wednesday, the Senate overwhelmingly voted to adopt the multi-billion-dollar House-passed Families First Coronavirus Response Act, which expands free coronavirus testing to include people who are uninsured, provides paid sick and medical leave for some workers and increases unemployment insurance and food assistance programs.
Meanwhile, Democrats and Republicans continued to hash out details on the White House’s proposed $1 trillion economic stimulus package.
Duff said she began attempting to file for unemployment on Monday and found the overwhelmed system exasperating.
“I talked to a robot for a good 30 minutes answering questions. He had the slowest voice ever,” she told ABC News. “I got excited because I heard him say he was going to put me through to a claim specialist, and then I heard him say that everybody was busy and to call again another day. I was like, ‘Wow, this is very frustrating.’ Their system was not prepared for this. Our government was not prepared for this. It’s a lot.”
Julie Verratti, co-owner of Denizens Brewing Co. in Silver Springs, Maryland, said she had the “heartbreaking task” of putting 30 of her 45 employees on furlough this week.
“I’m infuriated that the unemployment is only going to be 80% of what they make. It should be 100%, quite frankly,” Verratti told ABC News. “It’s just atrocious what people are going through right now. I don’t think the state governments are ready to handle the impact of people coming to them right now. This is going to be an onslaught.”
Verratti ticked off a list of things she believes the federal and state governments should get moving on, including immediately instituting a moratorium on all commercial debts, commercial mortgages and commercial rents.
“What that will do is it will retain cash in small businesses’ hands so they’re able to pay their employees longer,” Verratti said. “You’ve got businesses across the entire country right now looking at having to pay rent on the first, to pay their bank note on the first. This is less than two weeks from now, and they’re also thinking, ‘How do I pay my employees when revenue has just been completely cut off?'”
“I know that the government is talking about sending checks to people, which is great,” she continued. “They also need to make sure that they are retaining cash for people that they already have. We are starring down the barrel of a recession like we’ve never seen before, and I would even argue that it might be worse than the Great Depression, and I’m not being hyperbolic when I’m speaking right now.”
Dworkin, of the National Housing Conference, a non-profit that has been developing solutions for affordable housing since 1931, applauded the move by HUD to temporarily suspend all home foreclosures and evictions, and called on the Trump administration to institute a streamlined housing voucher program to support renters who lost their jobs amid the pandemic.
“We need to immediately streamline and reform the housing voucher program so it can provide support to all those who are impacted by this crisis, and allow landlords to take the vouchers without bureaucratic red tape or regulatory risk for as long as the national interest requires,” Dworkin said. “Vouchers should be available online and available to renters who lost their jobs as a result of the outbreak of COVID-19.”
He said the Federal Home Loan Mortgage Corporation, also known as Freddie Mac, and the Federal National Mortgage Association, commonly known as Fannie Mae, are encouraging homeowners to contact their mortgage service providers immediately if they’re in financial straits.
“For homeowners, Fannie Mae and Freddie Mac have already made clear that all you have to do is call your servicer, the phone number that you send your payment to every month, and tell them that because of coronavirus you are unable to pay your mortgage,” Dworkin told ABC News. “It may be because you lost your job, it maybe because you’re sick. It doesn’t matter. They’re not asking for proof. They’re just saying if you can’t pay your mortgage because of COVID-19 let us know, and we will defer your mortgage payments for as long as six months.”
He said the actions displayed so far by federal and state governments, and the financial institutions, are a testament to lessons learned from the previous economic meltdown.
“During the 2008 crisis, we really failed to help the homeowners who were in trouble through no fault of their own. They didn’t get bad mortgages, they had bad timing and bad luck, and when they lost their jobs they had run out of equity because housing values were going down,” Dworkin said. “About 10 million people lost their homes, and we could have saved 5 million of them if we had been more proactive like they were in the Great Depression.”
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