Rent Strikes, the Pandemic, and Economic Uncertainty
Since March, activists and tenants’ unions have called for pandemic rent strikes in cities around the United States. In the wake of the economic uncertainty that continues to plague the country, these calls will likely continue to increase in strength, with implications for the multifamily industry.
What are rent strikes? A history and explanation
The COVID-19 pandemic has led to high unemployment, volatile markets, and depressed spending by consumers. Economists and media figures have tentatively dubbed this economic adversity the “Coronavirus recession”. Despite some reversal in June, unemployment remains high. Lost wages and employment insecurity have led to calls for the first significant wave of “rent strikes” in a century.
During a rent strike, a pre-organized tenants’ union or a newly organized group of renters create a list of demands. The group then withholds some or all rent, hoping that this act will force their landlord, local authorities, or both parties to meet their demands. This list typically includes concessions such as lower rents and capital improvements to a property.
Rent strikes in the United States began in the 1830s. Tenant farmers used the tactic to lobby for the patroon system’s dissolution, which was a relic of the Dutch colonial presence. Those protests occurred in rural portions of the northeast and most similar action since has happened in cities. Around the turn of the century, organizers called for rent strikes in the tenements in cities like New York and Chicago. These efforts continued off and on until WWII. During the war, laws permanently enshrined rent control for all New Yorkers, which led to the city’s rent control system. The New York City rent control system has, in turn, served as a model for other cities and states.
Calls for Rent Strikes Today
During the pandemic, demands have forgone simple rent reductions or temporary annulments. The activist networks that brought new rent control laws to Oregon, New York, and California last year have further energized these efforts. Organizers have spent the last few months calling with uncharacteristic boldness for the cancellation of rent for the pandemic’s duration, without the requirement that tenants someday pay for those months. In the interest of gaining supporters, small, in-person protests have occurred, in some cases using the hashtag #CancelRent.
Strikes have begun in cities, including New York, Philadelphia, and calls continue in San Francisco. In response to these actions, landlords have told activists to blame property taxes for high costs and to demand reforms from city governments. Some landlords have referred to the strikes as opportunistic attempts to reform the housing industry. Tenants’ unions assert their members’ genuine inability to pay as reason enough to strike.
The Ongoing Pandemic and Implications for Rent Strikes
Despite optimism toward the end of June that the pandemic might not intensify further, hospitalizations and infections have risen. Some jurisdictions, facing rising caseloads, may go back into lock-down. Steve Mnuchin has announced the additional weekly $600 in unemployment benefits provided since March would expire at the end of July. Some companies have ended “hero pay” for workers struggling with volume and risking exposure to the virus at distribution centers and retail locations. Economic whiplash has forced some business owners to permanently shutter, rather than continue without knowing when they can safely—and permanently—reopen.
With these events ongoing or set to take place, some fear an upcoming wave of evictions. Of course, the federal government may fill the widening gap between rents and wages, but that relief may not come quickly, perhaps not until after the November election. If either direct financial support for renters or legal assistance such as the eviction moratorium proposed by Senator Elizabeth Warren does not emerge, more will likely resort to rent strikes to make themselves heard and underscore their demands.
To forestall rent strikes, some solutions explored earlier in the pandemic may reemerge. Landlords can negotiate directly with tenants, as one did in Minneapolis, making individual decisions about deferral and reductions. At scale, companies will struggle to implement such a fix, but others exist. Avanath Capital, which owns some 10,000 units, reduced rents in April by 10% across the board, rather than tediously means test each tenant.
Whether these strategies or others work for individual firms depends on portfolio size and health. In the short term, negotiation and potential strategy shifts may be less meaningful than a second relief bill. Early discussions indicate it will likely include direct relief. Such aid will help allay economic uncertainty in the short term, and may lead to fewer calls for action.
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