Employment and housing markets hurting from pandemic
On July 25, the federal moratorium on evictions officially expired, and about a week later so did the $600 per week federal unemployment add-on benefit. As measures aimed at curbing the economic fallout of the pandemic expire, lockdowns persist, and states, cities and citizens scramble to figure out what comes next. In Nome, this summer saw some of the highest unemployment rates in decades, and the rental and real estate markets continue to feel the pressure.
Since April, the federal government has supported a $600 per week add-on for anyone receiving unemployment benefits. According to a recent report from the Alaska Department of Labor and Workforce Development, the federal add-on accounted for more than $87 million in benefits paid to Alaskans during the month of June, the most recent month with available data. That’s more than double the total amount paid by regular unemployment benefits.
In the Nome Census Area, 531 people filed for unemployment in June, receiving about $447,000 in regular unemployment benefits and $920,000 in the federal add-on. If no federal program replaces it, that’s an abrupt loss of approximately two thirds of the benefits paid to residents of the region.
“That’s a fair chunk of money to come out of households,” said Dan Robinson, a state economist and co-author of a Dept. of Labor and Workforce Development report. “If nothing replaces it in the next week or two, because the dollar amounts are big enough, then we may see things like additional job loss,” Such a significant reduction in available cash will probably lead to a decrease in spending, he said, which will ripple throughout the economy.
Meanwhile, unemployment in the region is higher than it’s been in decades. June saw a record 16 percent unemployment rate for the Nome Census Area, which has generally had unemployment hover between eight and 14 percent for the last 20 years. May also saw an unusually high rate of 14.8 percent, and there is little indication anything is about to change.
Small business relief funding through the federal Paycheck Protection Program, AK CARES grants through the state, and small business relief from the City of Nome all aim to alleviate pressure on businesses and get people back to work, but Paul Kosto, Executive Director at the Nome Chamber of Commerce, has doubts. “I’m not sure that unemployment is going to change because of these monies,” he said. “I think the employers that have the ability to put people back to work have already done that.”
Robinson, the co-author of the economic report, did express confidence that some program would be enacted to replace the loss of the add-on, and steps have been taken in that direction. On Monday, President Trump signed a series of executive orders that would extend the add-on at a reduced rate of $400 per week, with $300 coming from the federal government and $100 out of state coffers. How exactly the program will be implemented though, as well as the legality of the move, is still unclear.
The Department of Labor’s report also found more rental vacancies statewide than in previous years, a pattern consistent with the general trend of the past decade that may or may not be affected by COVID-19. While the report’s survey does not include Nome, anecdotal evidence suggests that the city is seeing a similar pattern.
Jessica Farley rents out a few properties in town and said that finding a renter for one of her units in April was extremely difficult. “April was crazy, I saw more apartments available for rent in Nome than I had ever seen,” she said. “You don’t usually see one landlord advertising four or five different options, but that’s what we were seeing.”
She attributed the rise in vacancies to the absence of seasonal workers coming into Nome for construction and other summer projects. “The big unit that I have I would typically rent out on Airbnb or to a construction company, but because so many projects were cancelled that just wasn’t an option,” she said.
Melissa K. Ford, broker and owner of Nome Sweet Homes, said she also had trouble filling vacancies early in the pandemic. “We had two vacancies and it took me six weeks to fill them, not because people didn’t need homes, but because of the risk of in-person contact,” she said. Later in the summer, as people became more accustomed to socially distanced meetings, she said finding renters and buyers got easier.
Now, the issue is less a lack of demand and more a lack of supply. “Before in the summer we would see a lot of people coming and going,” she said. “Summer is when families like to move.” But as people cancel their moving plans and opt to ride out the pandemic where they are, fewer homes are coming onto the market.
In a normal year, Nome Sweet Homes has about 44 transactions, Ford said. This year, they’ve only had 27, and the busy summer season is already coming to an end. “We’re anticipating, based on the numbers we have at this point, about half of what we saw last year,” she said. “So myself and the other agents with me are all tightening the belt.”
The moratorium on evictions has also affected some other landlords in the city that Ford has talked to, but she said the bigger issue standing in the way of evictions is the backed-up court system. With the court still lacking a courtroom, it’s extremely difficult to get any civil case in front of a judge, she said.
Ford’s biggest losses, though, are coming from her B&B, which completely crashed when the tourists stopped coming.
Judy Martinson, who also runs a hotel and some seasonal rentals, said her business has also been hit extremely hard. She said she appreciated the relief funds coming from the city, but that she would not really be back on her feet until the tourists started coming back.
“I’ve been in business long enough in this town – over 40 some years – to know when there’s a problem and when there’s not,” she said. “And I don’t want to be a doomsayer – I would love for a vaccine to come out and everybody to return to normal – but I don’t think it’s going to return that quick.”