Who Is Most Affected by the Economic Downturn in the DC Region?
Because of a coding error, our May 4 findings about the region's housing cost–burdened households were incorrect. The share of households with housing cost burdens is higher than we estimated, but the potential increase due to post-COVID earnings losses is lower. About 35 percent (not 29 percent) of households were housing cost burdened before COVID-19, and an additional 26 percent (not 64 percent) are likely to become housing cost burdened. About 15 percent (not 11 percent) of households were severely cost burdened, and an additional 28 percent (not 79 percent) are projected to become severely cost burdened. This blog post and the linked data set were corrected on May 13, 2020. The original chart with the incorrect findings can be found here (PNG).
Across the US, workers in industries most affected by the COVID-19 pandemic have filed record numbers of unemployment claims. People working in businesses that rely on consumers to come and spend in place, such as restaurants, bars, and movie theaters, and those in the tourism and travel industries have been the hardest hit so far.
The Washington, DC, region is not immune. Unlike the Great Recession, the federal government presence will provide no insulation from the pandemic’s negative economic consequences.
In the first four weeks of the crisis, more than 767,000 unemployment insurance claims (PDF) were filed in DC, Maryland, and Virginia. And economic forecasts indicate that, like elsewhere, the region’s situation will worsen before it starts to improve, and the recovery will be slow.
Understanding who is most affected is critical to designing and putting in place local policy and program responses, both in the short and long term, to support workers and their families.
What do we know about the most affected workers and industries?
Although data on who’s affected are limited right now, identifying the workers employed in the most affected industries can provide insights into who may be suffering and the potential consequences of income losses.
Using American Community Survey data obtained from IPUMS USA, Urban–Greater DC looked at the characteristics of workers and households in the Greater Washington region, which includes the jurisdictions in the Metropolitan Washington Council of Governments region. (Download the data files.)
About 357,800 workers are in industries most directly affected by the COVID-19 pandemic—about 11 percent of all workers in the region. For this analysis, affected industries include food and drink establishments, air and rail transportation, tourism and travel, and arts and recreation. People working in the food and drink sector make up half of the affected workers. Total annual earnings for people working in affected industries was $10.9 billion in 2018 dollars—about 6 percent of total earnings for all workers in the region.
The most common jobs among people working in affected industries are cooks and food preparation workers (13 percent), servers (11 percent), cashiers (6 percent), and food service managers (5 percent). These tend to be lower-wage jobs that often do not provide extensive benefits.
Compared with workers in other industries, people working in COVID-19-affected industries in Greater Washington are more likely to be younger than 31, and they’re even more likely to be younger than 21. They are more likely to be Latino and slightly more likely to be Black, and they’re more likely to live in households with low incomes.
In addition, people working in affected industries are more likely to work part time or less than the entire year and are less likely to have a four-year college degree or higher level of education.
What could this mean for the region’s renters and homeowners?
A key concern is the pandemic’s impact on housing and people’s ability to continue to pay rent or make mortgage payments.
Before the crisis, Urban Institute research documented the challenges the region faced in meeting the population’s affordable housing needs. The income put at risk by the ongoing economic downturn only exacerbates that situation, further challenging the region’s ability to preserve and produce enough affordable housing and protect vulnerable renters and homeowners.
More than one-third of area households with people working in COVID-19-affected industries were housing cost burdened, meaning they spent 30 percent or more of their income on housing. One in 7 (15 percent) were severely cost burdened, meaning they spent half their income or more. Black, Latino, and Asian workers were more likely to have housing cost burdens than non-Latino white workers in these same industries.
The potential loss of income from earnings in COVID-19-affected industries could dramatically worsen the situation for these workers and their families. If all these earnings were lost, nearly every household with a worker in a COVID-19-affected industry could be cost burdened, with the share increasing to as high as 61 percent.
What are the potential policy solutions?
The above represents a worst-case scenario. Although losses may be severe, not all workers in these industries will lose all their earnings. Many may experience a reduction in earnings, such as from reduced hours. Others may find new work in other sectors. And, as my colleagues have pointed out, the current expansion of unemployment benefits and assistance from the Coronavirus Aid, Relief, and Economic Security Act is mitigating some earnings losses in the short term. Eviction moratoria and mortgage forbearance are also providing a momentary stopgap against displacement.
But these temporary provisions are not reaching everyone in need and will end at some point. To avert a housing catastrophe in the Greater Washington region and other metropolitan areas, we need to start planning for the next phase of interventions as we move from the immediate crisis to recovery.
- Expanding rental assistance. Many are calling for an expansion of rental assistance, including housing choice vouchers and project-based subsidies, as a longer-term safety net for those in need. Expanding and strengthening these programs can direct resources more effectively to those with immediate and ongoing housing needs.
- Helping vulnerable homeowners. Although already allowed, housing vouchers are rarely used to help low-income homeowners. Along with property tax abatements, expanding the use of vouchers for vulnerable homeowners could prevent this population from losing their homes.
- Repositioning businesses and workers. At the national and local levels, we need to develop strategies to keep businesses alive during the crisis and help them and their workers adapt to the new realities of the postcrisis recovery. Restaurants will likely need to adapt their workplace environments and rules to accommodate COVID-19 containment policies, such as a greater reliance on take-out and delivery business models and stricter health and safety requirements for operations. We will also need to invest in worker training and skills.
- Addressing workforce inequities. As noted, people of color are more likely to be represented in lower-wage jobs and have housing cost burdens. Centuries of discrimination–which persist today through racist policies and practices—have led to people of color bearing the brunt of the crisis. We now understand clearly how crucial people working in food service, travel, and entertainment industries are to our lives and the regional economy. We should begin creating a more equitable regional workforce by properly compensating and supporting people working those crucial jobs with greater wage equity, health care, and other basic benefits.