California Markets Need More Unemployment Assistance

California residents need more unemployment assistance. A new survey from Clever Real Estate shows that six major metros in California are unlivable on the current unemployment insurance. Those markets include Los Angeles, Oxnard, San Diego, San Francisco, San Jose and Oakland. In some of these markets, residents couldn’t even live in a studio apartment on the current unemployment coverage, and would need an additional $1,100 per month.

“California in general is really expensive—the state’s cost of living is 150% of average—but the unemployment insurance is pretty middle-of-the-road. Therefore, many people on unemployment insurance in California can’t afford even a studio apartment on state-funded benefits,” Francesca Ortegren, a data scientist at Clever Real Estate, tells GlobeSt.com. “Additional unemployment insurance could go a long way to helping people pay for necessities.”

During the beginning of the pandemic, unemployment benefits through the CARES act provided $600 per week in addition to state benefits. That benefit expired at the end of July, and has been replaced by a temporary $300 weekly additional benefit. Still, this is not enough for California residents. “While the additional $300 weekly lost wages assistance could help offset some costs, it’s still not enough to cover a 2-bedroom apartment in most SoCal areas: LA at $-471, Oxnard at $-376, and San Diego at $-504 still come in short while those in the Riverside area are in the black at $335,” says Ortegren.

Instead, California needs to find a permanent increase in unemployment that will support the cost of living in the state. “A permanent increase in unemployment insurance benefits would certainly help during these unprecedented times. But it’s not clear whether these funds are available long term,” says Ortegren. “Currently, the $300 lost wages assistance are being funded through FEMA, which likely wouldn’t be able to fund unemployment insurance benefits during a non-emergency. The additional disagreement in social policy amongst the left and right would likely make a decision difficult to come by.”

The survey didn’t explore landlord support for additional unemployment benefits, but it seems like landlords would be supportive of increased benefits, which would directly help residents make rent payments. “We haven’t looked into this specifically, but I’d assume that landlords are supportive because it increases the likelihood that their tenants will be able to pay their rent,” explains Ortegren. “Without the additional unemployment insurance, many renters are struggling to pay, which puts landlords in a tough spot while eviction moratoriums are still in place in many states.”

This dynamic could fuel more migration out of the state to more affordable markets. “The pandemic has led to some interesting shifts in the way companies do business, so it’s quite possible that we’ll see people leaving large, unaffordable areas to live where cost of living is lower, especially those who can keep their jobs but work remotely,” says Ortegren.

However, many people might not have the financial capability to move out of the state, even to a more affordable market. “People who have lost their jobs are in a tight spot financially and, therefore, likely don’t have the money to move considering many rentals require deposits and two months’ rent up front,” says Ortegren. “This could lead to a larger disparity in wealth depending on how long the pandemic and widespread unemployment lasts. That’s especially true for places like SoCal where the cost of living is high and is unlikely to drop drastically.”