Prior to the COVID-19 outbreak in the United States, the average American held more than $30,000 in debt, and 38% reported having less than $1,000 in emergency funds, according to a recent survey by Clever. Moreover, a study by CareerBuilder found that 80% of workers live paycheck to paycheck, including 10% of six-figure earners.
The unemployment rate skyrocketed to 14.3% in April and still remains near 11%. Widespread job losses, without much recovery over the last five months means most Americans already burned through their minimal savings.
All of this begs the question: How are Americans managing to pay their rent?
The answer might lie in unemployment insurance: Millions of Americans have turned to unemployment insurance to help cover basic costs, with more than 1 million new claims each week since mid-March.
While not meant to be a long-term solution, underwhelming unemployment insurance benefits could leave many Americans in financial distress, especially during a pandemic that may result in many unable to find jobs for long periods of time.
The dismal truth is that unemployment insurance doesn’t cover living expenses for most people.
Each state establishes the amount of unemployment insurance individuals will receive, typically based on their earnings prior to unemployment and number of dependents. The amount allotted to any given person receiving unemployment insurance (UI) and how those values are determined varies widely by state.
Because each state has a set minimum and maximum weekly UI allotment, we used the midpoint (average between the minimum and maximum values) for each state in our analyses. Note that we refer to this as the “average UI” throughout the study, but that does not imply the average amount of UI allotted in the state but rather the average of the minimum and maximum values for each state.
Unemployment insurance (UI) doesn’t cover minimal rent, food, and transportation costs in 75 of the 109 metros we analyzed, even with the additional funds.
In fact, the average UI isn’t even enough to cover studio apartment rent when you cut out food and transportation expenses in 25 metro areas.
Nearly all of those metros reside in California (20%) and Florida (36%) — both of which have strong representation on our “worst metros” lists — along with other southern states (40%).
Here’s what else you’ll find in this study:
- The CARES Act Supplements Unemployment Insurance
- Lost Wages Assistance Still Might Not Be Enough
- Metro Insights
- National Insights
- Regional Insights
- Metros Where UI Doesn’t Cover Expenses
- Metros Where Unemployment Insurance Covers Basic Expenses
- Regional Trends
The CARES Act Supplements Unemployment Insurance
There has been much debate surrounding unemployment insurance — particularly whether it’s enough to cover living expenses.
That debate and the economic burden of millions of jobs lost during the pandemic spurred support from the federal government via the CARES Act earlier this year, which included a one-time stimulus check for all Americans, eviction and foreclosure moratoriums, deferred mortgage payments, and an additional $600 weekly unemployment insurance for those on unemployment.
The CARES Act’s moratorium on evictions for government-backed rentals, including nearly 50% of all multifamily units, expired in late July, leaving millions of Americans at risk for eviction in the next month, especially with less help by way of unemployment insurance, as more than 60% of renters report having lost at least one householder income as a result of COVID-19.
Some states and local municipalities have established their own renter-protection ordinances that extend beyond that of the CARES Act orders. New York, for instance, extended its moratorium on evictions through the end of September, and Illinois established Emergency Rental Assistance programs that grants up to $5,000 toward rent for eligible renters. But many states have not included additional provisions.
What’s more, 20% of renters the Census surveyed in July said they rely on unemployment insurance benefit payments to cover necessary expenses. Many also cover expenses through credit cards (25%), borrowing from friends and family (22%), and stimulus payments (24%).
Fewer than 5% stated they have used money saved from deferred or forgiven payments to meet spending needs, suggesting that deferred rent payments and provisions from the CARES Act still aren’t allowing renters to save.
Lost Wages Assistance Still Might Not Be Enough
That additional federally funded $600 per week also expired on July 31, putting many renters in an unfortunate place. Although employment has crept back up the past couple of weeks, there are still millions of unemployed Americans who can’t find jobs or are unable to work during the pandemic.
The lack of additional funds above state-provided unemployment insurance leaves many renters earning very little, as the maximum amount of unemployment insurance in 21 states equates to less than the federal minimum wage hourly rate (assuming a 40-hour work week).
An employee in Mississippi, for example, who works at minimum wage for 40 hours would earn about $290 before taxes, while the maximum unemployment insurance for a Mississippi resident is $235 per week.
The Trump administration has procured another relief package that could provide (up to) an additional $400 in funds to those on unemployment.
The executive memorandum requires states to cover 25% of the $400 and, unlike the CARES Act provisions, doesn’t apply to everyone who receives unemployment insurance. Instead, only those who already receive at least $100 in unemployment benefits qualify.
Moreover, states face some obstacles to receiving the funds, such as changes to computer systems, legal considerations, and the ability to cover the additional $100.
Most states have applied for or declined funds. South Dakota refused the funds. Thus far, few confirmed its funding for an additional $100 on top of the $300 federal funds. (Note: The below table is updated regularly and, therefore, may be more up-to-date than this paragraph which is as of August 24).
Unfortunately, an additional Lost Wages Assistance (LWA) may not help many people who have lost their jobs as the average:
- Average UI doesn’t cover basic expenses in 69% of major metros.
- Across all states, the average minimum weekly unemployment insurance (UI) is $69.73, and the average maximum weekly UI is $502.58.
- However, averages don’t tell the whole story, as individual states determine UI: Weekly unemployment insurance ranges from $5 in Alaska to $1,234 in Massachusetts.
- The average metro fair market rent for a studio apartment is about $791 per month, $1,004 for a one-bedroom, $1,234 for a two-bedroom, $1,651 for a three-bedroom, and $1,938.19 for a four-bedroom apartment.
- The typical metro resident in the US spends about $510 on food and $115 on transportation (not including personal vehicles) each month.
- Minimum UI doesn’t even cover typical food costs in 83% of metros.
- Average UI payments in Northeastern metros are the highest at $1,738.32 (monthly), followed by the Midwest ($1,311.18), West ($1,249.65), and South ($870.81).
- Northeastern unemployment benefits are twice as high as those in the South.
- Typical studio apartment rent is $602 in the Midwest, $736 in the South, $879 in the Northeast, and $964 in the West.
- On average, only those in the South and Midwest can afford a studio apartment, food, and transportation costs with average UI.
- People in 65% of Northeastern metros can afford a studio apartment on UI, compared to only those in 42% of Midwestern, 25% of Western, and 15% of Southern metros.
- Southern metro residents are less likely to be able to afford a studio apartment on UI not because cost of living is high but because UI in this region is astoundingly low (less than $900 per month).
- Only 43% of metros in the Midwest have affordable one-bedroom apartments on UI, followed by 35% of Northeastern, 12% of Western, and 7% of Southern metros.
- A two-bedroom apartment isn’t an option for an individual on unemployment insurance in any Southern metro.
- Nearly no residents of the metros in the South (0%), West (4%), and Northeast (10%) can afford a three-bedroom apartment (compared to 21% in the Midwest) on midpoint unemployment benefits.
- The only region with any metros where people on UI can afford a four-bedroom apartment is the Northeast (10% of metros).
- Rent for a studio apartment varies by location, from $469 in Toledo, OH, to $2,066 in San Francisco; two bedrooms range from $736 in McAllen, TX, to $3,429 in San Francisco.
- In the 10 least affordable metros, people are a minimum of $1,100 away from being able to afford a 2-bedroom apartment on traditional unemployment insurance.
- Ohio metros (Toledo, Dayton, Cleveland, Akron, and Cincinnati) made the top of our lists for most affordable living on UI for both studio and two-bedroom apartments.
- California metros (San Francisco, San Jose, Oakland, and San Diego) were consistently unaffordable on unemployment insurance, as a result of minimal UI and high costs of living.
- Florida metros (Miami area) also found their way to the least affordable lists for studio and two bedroom apartments, largely due to dismal UI benefits.
- An additional $300 per week in federally funded Lost Wages Assistance would make living in a studio apartment affordable for people in every metro on our list except San Francisco and San Jose.
Metros Where UI Doesn’t Cover Expenses
The amount of money people spend varies city by city, but the driving factor is housing. We broke affordability down into whether an individual receiving unemployment benefits could afford food and transportation plus either a two-bedroom apartment (most common) or a studio apartment (smallest and typically the cheapest).
States that had high representation in the least affordable metros are discussed further at the end of this section.
Two-Bedroom Apartments Aren’t Affordable in These Metros
People in the 10 least affordable metros spend more than $3,900 for a two-bedroom apartment, food, and transportation each month but only receive about $1,084 in UI.
In the bottom 10 metros, people are a minimum of $1,100 away from being able to afford a 2-bedroom apartment on traditional unemployment insurance, so even the additional $300 federally funded lost wages assistance wouldn’t leave most in a position to afford a two-bedroom apartment.
Bottom 10 Metros Where Residents Can’t Afford a Two-Bedroom Apartment on UI
- San Francisco, CA
- San Jose, CA
- Oakland, CA
- Urban Honolulu, HI
- San Diego-Carlsbad, CA
- Los Angeles, CA
- New York, NY
- Miami, FL
- Oxnard, CA
- Washington, DC
Unemployment Insurance Doesn’t Cover Studio Apartments in These Metros
Even with cheaper overall rent prices for studio apartments, unemployment insurance doesn’t cover food, transportation, and rent in 73 of the 109 metros we analyzed.
The average studio apartment rents for around $1,400 per month in the 10 least-affordable metros, with monthly costs (including transportation, food, and rent) totaling about $2,600.
Unfortunately, the average monthly unemployment insurance rate in those metros is only $1,000, requiring people to procure an additional $1,600 to be able to afford a studio apartment on their own.
Bottom 10 Metros Where Residents Can’t Afford a Studio Apartment on UI
- San Francisco, CA
- San Jose, CA
- Washington, DC
- Oakland, CA
- New York, NY
- Miami, FL
- Urban Honolulu, HI
- San Diego, CA
- Fort Lauderdale, FL
- West Palm Beach, FL
An additional $300 per week in federally funded Lost Wages Assistance would make living in a studio apartment affordable for people in every metro on our list except San Francisco and San Jose.
California metros make up six of the least-affordable metros for a two-bedroom apartment and four of the least-affordable metros for a studio apartment.
The state’s unemployment insurance ranges from $40 to $450 per week. The maximum value of $450 weekly applies only to those who earned at least $11,674.01 in the highest quarter of their four-quarter base period, which equates to about $900 per week in earnings.
The relatively low maximum UI in California puts the state right in the middle of the range of maximum UI across the country, which is surprising considering the state’s cost of living is 150% that of the U.S., and the median one-person household income is about $38,580 — or $3,215 per month.
According to a Census survey conducted between July 16 and 21, unemployed California residents were 3x as likely to report being “not at all confident” in their ability to pay August rent than were employed respondents.
Moreover, 25% of respondents reported they used UI to help pay for necessities the previous week, meaning many renters are likely to suffer financially with the loss of CARES Act provisions.
With many concerned about their ability to pay upcoming rent, experts estimate that homelessness in California will increase by up to 20% as a result of COVID-19-related financial struggles, according to a Los Angeles Times report.
California is currently attempting to take additional measures to ensure the safety of renters and landlords via the proposed Assembly Bill 1436, which would extend the eviction moratorium and allow renters a 12-month buffer to repay any missed payments during the pandemic emergency period. The bill status is “in committee” as of August 19.
Local governments have additional measures in place to help offset the financial burden of the pandemic. San Francisco, for instance, has a moratorium on evictions and allows for an additional six months to pay rent without additional fees for late payments in effect until the end of August. Additionally, rents for city-regulated units or rent-controlled units cannot be increased before September 30 and August 22, respectively.
Three Florida cities, Miami, Fort Lauderdale, and West Palm Beach, are among the 10 least-affordable metros for a studio apartment. Miami is also the eighth-least affordable metro for a two-bedroom apartment.
The state’s unemployment insurance ranges from $32 to $275 per week (or $139 to $1,192 per month) — hardly enough to cover the cost of a studio apartment and expenses for the month, which averages around $1,600 in Miami, Fort Lauderdale, and West Palm Beach.
Unlike California, Florida’s mandates to help renters during the pandemic are narrow. More specifically, the state extended an eviction moratorium until September 1 in early August, but the mandate only applies to some renters. According to the Orlando Sentinel, the new order “suspends just the ‘final action at the conclusion of an eviction proceeding’ and [is] solely for tenants who have been ‘adversely affected by the COVID-19 emergency.’”
The local governments in Miami, Fort Lauderdale, and West Palm Beach do not have separate provisions protecting renters from eviction or rent payments. So the looser terms of the new statewide order has many concerned with the possibility of an influx of evictions in the coming months.
Those fears are likely founded: Even during the moratorium set on evictions throughout the summer, landlords were continuing to file evictions with their local courts. Over 2,600 evictions were filed in Florida between April and June, when the moratorium was in effect.
Moreover, a July survey of more than 4 million renters in Florida showed that nearly half are unemployed, and 15% have relied on UI to cover necessary expenses.
Many renters reported that they had no confidence (16%) or slight confidence (19%) in their ability to pay August rent, putting even more people at risk of eviction come the end of the moratorium extension period.
Metros Where Unemployment Insurance Covers Basic Expenses
In this section, we discuss metros where UI benefits covered basic expenses including food, transportation, and rent (either two-bedroom apartment rent or studio apartment rent):
States that had high representation in the most affordable metros are discussed further at the end of this section.
Two-Bedroom Apartments Are Affordable in These Metros
At fair market rent, a two-bedroom apartment is affordable on top of food and transportation in only 12 metro areas on midpoint unemployment insurance. People end up spending an average of about $1,541 on food, transportation, and a two-bedroom apartment in those 12 metros while getting about $1,881 in unemployment insurance from their respective states.
Even still, people in 10 of those 12 have less than $500 left over for savings, emergencies, or other necessities such as prescriptions or doctor visits. There are just two metros where residents have nearly $1,000 left over after minimal expenses, both of which are located in Massachusetts (Springfield and Worcester), which has the highest maximum UI of any state in the U.S.
12 Metros Where Residents Can Afford a Two-Bedroom Apartment on UI
- Springfield, MA
- Worcester, MA
- Spokane, WA
- Toledo, OH
- Dayton, OH
- Cleveland, OH
- Akron, OH
- Des Moines, IA
- Cincinnati, OH
- Columbus, OH
- Scranton, PA
- Pittsburgh, PA
Metros Where Unemployment Insurance Covers a Studio Apartment
The typical monthly rent for a studio or efficiency apartment in metros across the U.S. is about $791 but varies wildly by location, from $469 in Toledo, OH, to $2,066 in San Francisco.
The affordability of smaller apartments means people in more metros can afford rent. While two-bedroom apartments are only affordable in 12 metros, unemployment insurance can cover the cost of basic expenses and a studio apartment in 35 major metros across the U.S.
In the top 10 metros, the average studio apartment costs about $687, with rent, transportation, and food expenses totaling $1,500. The midpoint UI is more than $2,100 monthly, leaving people in all of the top 10 metros with more than $500 left over to cover other expenses each month.
Top 10 Metros Where Residents Can Afford a Studio Apartment on UI
- Springfield, MA
- Worcester, MA
- Spokane, WA
- Toledo, OH
- Dayton, OH
- Cleveland, OH
- Boston, MA
- Akron, OH
- Des Moines, IA
- Cincinnati, OH
Boston is the only metro area on this list that didn’t make the most affordable two-bedroom apartment list. Its presence is likely driven by the extremely supportive UI in Massachusetts despite higher studio apartment prices for the area ($1,556 compared to $879 in the Northeast).
Ohio has a strong presence on both lists: Half of the metros where a two-bedroom apartment is affordable and 40% of metros where a studio apartment is affordable on UI reside Ohio.
Ohio metros’ standings in the rankings is a result of the general affordability of the state and reasonable unemployment benefits.
The fair-market rent for a studio apartment in these Ohio metros is around $500, and total spending is around $1,100, while UI ranges from about $585 to $2,803 monthly.
Unemployment Insurance Is Highest in the Northeast
The amount of UI individuals are allotted depends, typically, on their earnings during a “base period” prior to applying for unemployment insurance. In most cases, people who earned more before losing their job are allotted more in UI and vice versa. But the amount ranges widely by state, from a weekly minimum of $5 in Alaska to a maximum of $1,234 in Massachusetts.
Of the 109 metros we analyzed, the highest average UI is in the Northeast and the lowest is in the South. In fact, Southerners receive less than half of Northeasterners on average, putting Southerners at a disadvantage despite the lower cost of living in many Southern states.
The southern states not only have lower unemployment benefits than other regions, but they’re also less supportive in other ways such as the number of weeks one can receive benefits.
Most (42) states allow residents to claim unemployment benefits up to 26 weeks, or half of the year. The remaining eight states range from 12 to 20 weeks, and half of those states are in the South: North Carolina (12 weeks), Florida (12 weeks), Georgia (14 weeks), and South Carolina (20 weeks).
An average of 34% of unemployed people across all states receive benefits, but the ease of getting benefits varies from state to state.
In northeastern states like Pennsylvania (55%), Massachusetts (58%), Connecticut (62%), and New Jersey (66%), more than half of unemployed residents receive unemployment benefits, compared to fewer than one-fifth in Florida (19%), Georgia (19%), Louisiana (17%), and South Carolina (15%).
Fair Market Rent Isn’t Affordable on Unemployment Insurance
A typical studio apartment rent in the 109 metros we analyzed is $602 in the Midwest, $736 in the South, $879 in the Northeast, and $964 in the West.
Although no region has exceptionally high rent prices for studio apartments on average, studios aren’t affordable with the UI available in some areas.
More specifically, the suboptimal UI available in Southern states puts many Southern renters at a huge disadvantage despite the lower cost of living in most Southern states. A studio apartment is only affordable (on top of transportation and food expenses) in 15% of the Southern metros we analyzed, compared to 65% of Northeastern, 42% of Midwestern, and 25% of Western metros.
A one-bedroom apartment is affordable in half as many Southern metros, and two-bedroom apartment rent isn’t affordable in any Southern metro.
Food and transportation costs were calculated using state per capita expenditures for food purchased for consumption off-premises, food services, and transportation services from the Bureau of Labor Statistics.
For each metro, the estimated cost of food and transportation were calculated as state per capita spending amounts as a ratio of the metro’s cost of living ratio and state’s cost of living ratio.
Put differently, a cost ratio between the “price” of a dollar in the metro compared to its respective state was calculated by dividing the metro cost of living for transportation and food by that of the state, then multiplying those values by the state per-capita spending on transportation and food, respectively. Cost of living values were gathered from Sperling’s Best Places.
Rent prices were the average of all fair market rent prices in zip codes from each area, collected from the Department of Housing and Urban Development.
Unemployment insurance minimum and maximum values for each state were collected from USAFacts. The average UI for each state was calculated as the mid-point between the maximum and minimum amounts for each state.
Affordability was calculated as weekly UI * 52 / 12 to estimate an average monthly UI value minus monthly expenses (rent, food, and transportation). This was calculated separately for studio and two-bedroom apartments (with all numbers equal except rent).
Rankings were determined by the amount of money leftover after monthly expenses.
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