5/12 Update: House Democrats included the proposal for $100 billion of rental assistance funds to the next stimulus bill. The House will vote on the bill on Friday, May 15th.
The COVID-19 crisis has exposed and deepened cracks in America’s social safety nets, with over 33 million workers filing for unemployment in the past seven weeks. In response, Congress will consider a comprehensive CARES 2.0 stimulus package to follow last month’s $2.2 trillion CARES Act. Democrats have proposed numerous solutions; among them are six bills that could influence protections for renters and workers in the next stimulus package.
The proposals fall into three categories:
- Rental assistance
- Paycheck protection
- A federal basic income
Such far-reaching concepts would have had no traction 10 years ago in the fallout of the last economic crash, but they are now front and center, highlighting the strong progressive presence in the House that’s pushing the Democratic Party to consider bold ideas that prioritize workers, low-income people, renters, and other vulnerable groups.
Solution One: Rental Assistance
Expand rental assistance
Representative Denny Heck (D-Washington) has partnered with Maxine Waters (D-California) and Senator Sherrod Brown (D-Ohio) to propose $100 billion toward the Emergency Solutions Grants (ESG) program to support renters experiencing or at risk of homelessness. This funding would be a massive expansion of the program, which received only $280 million in 2019.
The Emergency Rental Assistance and Rental Market Stabilization Act would expand the definition of people at risk of homelessness to include those earning up to 80 percent of the area median income (AMI), from the current 30 percent cutoff. But to make sure most funds go to those most in need, states and local governments must use 40 percent of funds to support renters at 30 percent of AMI or below, and at least 70 percent to support those at 50 percent of AMI or below.
Assistance would last for up to two years, including up to six months of back rent and late fees, and would be capped at 120 percent of Fair Market Rent. The Department of Housing and Urban Development (HUD) would have a week to allocate at least half of the funds, and 45 days to allocate the rest. State and local governments would then have a month to disburse payments, which would go directly to housing providers.
Upon introduction, 133 representatives and 24 Senators pledged to cosponsor the bill. A slew of affordable housing and homeless advocates back this proposal, including the Disaster Housing Recovery Coalition, an alliance of over 850 organizations led by the National Low-Income Housing Coalition. Groups such as the Council for Affordable and Rural Housing, National Affordable Housing Management Association, National Apartment Association, National Association of Home Builders, National Association of Realtors, National Multifamily Housing Council, and many more signed onto a letter demanding that Congress pass emergency rental relief.
The $100 billion figure aligns with NLIHC’s estimates of the need ($76 billion to $99.5 billion per year) as well as Sightline’s estimates. But since the complete economic consequences of the crisis are not yet known, these estimates may not fully reflect future needs.
What is known is that the federal government has far more resources to support people than do states. To illustrate, Washington State recently expanded its Low-Income Home Energy Assistance program to cover $1,000 in rent and $500 in energy assistance to people at 125 percent of the poverty line and below, serving approximately 5,000 families—in a state with 7.8 million residents.
Cancel rents and mortgages
The Emergency Rent and Mortgage Cancellation Act, a proposal by Representative Ilhan Omar (D-Minnesota), would cancel rent and mortgage payments for primary homes, including payments made in April, until one month after the national emergency ends.
In effect, though, this amounts to another form of rent and mortgage assistance, because it would also provide financial support to landlords and lenders to cover missed payments. The onus to seek government relief would be on landlords and lenders, who are typically more financially stable, rather than on renters, who tend to be far less wealthy.
The legislation enjoys widespread support among national progressive groups, including Action Center on Race and the Economy, People’s Action, PolicyLink, as well as local organizations like Washington Community Action Network. Pramila Jayapal, the Seattle area’s congressional representative, joined Representatives Alexandria Ocasio-Cortez (D-New York), Ayanna Pressley (D-Massachusetts), and Rashida Tlaib (D-Michigan) in sponsoring Omar’s legislation.
The bill would set up two funds under HUD from which landlords and mortgage lenders can apply for support. HUD would give priority to nonprofits and other landlords with few assets.
To qualify, landlords must adhere to fair housing practices for five years, including common ones such as pursuing only just-cause eviction and banning discrimination based on source of income, criminal history, sexual orientation, and gender identity or expression. They must also pursue more far-reaching policies like banning rent increases and agreeing to rent vacant dwellings to households that qualify for tenant-based rental assistance programs like Section 8 vouchers.
For lenders, the bill requires annual reporting to HUD on the race, age, ethnicity, credit scores, and zip codes of borrowers as well as interest rates and other loan pricing features. They must also report their outreach and referral practices. These measures would give the federal government national data on who can currently access mortgages and shed light on how lender outreach may neglect communities of color and low-income people.
Omar’s bill also lays the foundation for a program to increase subsidized housing and give tenants democratic control over management. It introduces a fund to help nonprofits, public housing authorities, community land trusts (CLTs), cooperatives, and state and local governments acquire private rental properties and gives them a first right to purchase for 60 days. Buyer acquisition assistance would come in exchange for ensuring fair housing requirements and establishing democratic control of the units by the tenants. If funded thoroughly over time, the bill could move thousands of market-rate units into America’s affordable housing stock and help dramatically scale up the community-owned, democratically-controlled, permanently affordable CLT housing model.
These two rental assistance proposals would help cover or eliminate rent, stabilizing vulnerable tenants during a time of economic upheaval. But how will tenants who lost income pay other living costs? That takes us to the next set of proposals.
Solution Two: Paycheck Protection
A paycheck protection program grants employers money to keep paying their employees. It goes a step beyond covering rent or other specific living costs by ensuring that employers can retain or rehire workers. People continue receiving paychecks and benefits, and they have jobs to go back to after the shutdown lifts. Further, since a vast majority of Americans receive health insurance through their employers, they likely keep their insurance and aren’t discouraged from seeking medical care, which can be deadly in the current pandemic.
The CARES Act provided $350 billion for paycheck protection to small businesses that lost revenue due to COVID-19 shutdowns. The initial funding, via forgivable loans through the Small Business Administration (SBA), ran out within two weeks; Congress approved another $380 billion.
Two bills would further expand paycheck protection.
Universal Paycheck Guarantee
In the House, Representative Jayapal introduced the Paycheck Guarantee Act, under which the federal government would cover salaries of up to $100,000 for three months. Aid would be retroactive to the beginning of the crisis and renew monthly until consumer demand recovers to pre-crisis levels. The bill also includes aid to help “essential” businesses cover rent and other expenses.
In exchange, employers must adhere to exemplary labor practices throughout the relief period and for three years afterward, including:
- preserving collective bargaining agreements;
- maintaining full employment through the national emergency;
- prohibiting share repurchases, dividend increases, and executive bonuses.
For companies with revenues exceeding $500 million, the board of directors must also include one worker representative.
Paycheck Security for Laid-off Workers
On the Senate side, Senators Bernie Sanders (I-Vermont), Doug Jones (D-Alabama), Mark Warner (D-Virginia), and Richard Blumenthal (D-Connecticut) introduced the Paycheck Security Act, which would cover for six months up to $90,000 of salaries for each laid-off and furloughed worker with employers who have lost at least 20 percent of their revenue.
It would also provide 20 percent of normal revenue to cover fixed operating costs such as rent, utilities, insurance, and maintenance. Only employers with less than 18 months of payroll in cash would qualify. In exchange, employers must agree to:
- maintain pay and benefits;
- offer to rehire laid-off workers for the same compensation;
- maintain collective bargaining agreements;
- limit CEO pay to 50 times the median wage for employees;
- cease stock buybacks and payment of dividends and management fees.
Solution Three: Federal Basic Income
One in five American workers filed for unemployment over the past seven weeks. One in five low-income renters report not having at least $400 in emergency savings. And low-income renters are also more likely to hold the service jobs that have evaporated during the crisis. A federal basic income would give low-income people, as well as many others, a safety net of monthly cash assistance to help weather financial storms.
A federal basic income would give low-income people, as well as many others, a safety net of monthly cash assistance to help weather financial storms.
A Means-Tested Basic Income
Prior to the CARES Act, Representative Maxine Waters shared a comprehensive relief package proposal, which included granting every American (making less than $75,000 annually) $2,000 a month plus $1,000 for each child. Building on this proposal, Representatives Ro Khanna (D-California) and Tim Ryan (D-Ohio) introduced the Emergency Money for the People Act, which would provide $2,000 a month to those age 16 and older making less than $130,000 a year, plus $500 each for up to three children. It would allow people to apply using their current income level if it is lower than what they reported for 2019. For those with annual incomes exceeding $130,000, the assistance would drop by five percentage points for every $1,000 over that threshold.
Aid would last for at least six months, after which it would end if the ratio of employment to population exceeds 60 percent; otherwise, it would end after a year. The bill goes further than the CARES Act’s one-time cash assistance check, not only by granting ongoing monthly payments, but also by expanding eligibility to legal residents as well as non-citizens who have been in the country since the emergency began.
Universal Basic Income
Representatives Tlaib and Jayapal introduced a similar basic income proposal, the Automatic Boost to Communities (ABC) Act, which would give $2,000 a month to every person until a year after the government declares the national emergency over (or the unemployment rate falls to two percentage points above the average rate between December 2019 and February 2020, or the three-month average unemployment rate falls for two months), and then another $1,000 a month for a year after that.
Unlike the proposal from Khanna and Ryan, the ABC Act is a universal basic income program, so it wouldn’t cut off eligibility at a certain income level, and every American would receive the benefit. It would disburse funds through a prepaid debit card, so those without bank accounts could receive help as well.
What will Congress do with these proposals?
To meet the needs of Americans during this unprecedented economic crisis, Democrats have presented a range of innovative ideas to ease burdens on renters and mortgage borrowers, protect workers, increase subsidized housing, and redistribute some wealth toward low- and middle-income Americans.
While Democratic leadership hasn’t formally endorsed any of these proposals, House Speaker Nancy Pelosi (D-California) recently spoke favorably of a guaranteed basic income. Meanwhile, a powerful coalition of nationwide housing organizations backs the rental assistance bill by Brown, Heck, and Waters. The Democrats’ vocal and burgeoning progressive wing is coalescing around Omar’s rent cancellation legislation. And Jayapal, in the House, and Blumenthal, Jones, Sanders, and Warner, in the Senate, are working together on their paycheck protection proposals. But with the Senate and the White House still Republican-controlled, it’s unclear whether Americans will see the fruits of these proposals anytime soon—or, at least, before 2021.
