Slate Money: COVID-19 – April 1, 2020

Host: Felix Salmon (Axios)
Guests: Emily Peck (HuffPost), Anna Chymanski (Breaking Views)
Episode Focus: What should you do about rent (and mortgage) payments on April 1st, 2020, in the face of the COVID-19 crisis?

Episode Overview

This special midweek episode dives into a central economic anxiety of the early COVID-19 pandemic: Should people pay their rent (or their mortgage) on April 1, 2020, given massive job losses and a rapidly shifting legal and economic landscape? The hosts discuss tenant protections, financial priorities, potential repercussions for non-payment, knock-on effects in the financial system, and their own instincts on navigating an unprecedented situation.

Key Discussion Points & Insights

1. The Dilemma of Rent Day in the Pandemic

[00:00–05:44]

• Mass Unemployment & Rent Due: Millions have suddenly lost their jobs; traditional advice to "always pay rent" is no longer straightforward.

• Eviction Moratoriums: Many states and cities have paused evictions, but protections vary.

  • Emily Peck [01:12]: "Even if you have the money for rent, I would say don't pay your rent because you need the money for food. And you’re not going to get evicted."
  • Anna Chymanski [01:32]: "Before you don't pay your rent, make sure that you are in a state where you have protections because if you don't, you can very easily be evicted…"

• Federal Protections: The stimulus includes a 120-day eviction ban for those in federally-connected housing (Section 8, etc.).

• Changing Risk Calculations:
  Felix argues the pandemic upends traditional logic:

  • Felix Salmon [02:58]: "This crisis is different from a normal case where you lose your job… The calculations have changed significantly just in a few weeks."

2. Weighing Long-Term Consequences & Unknowns

[05:00–05:44]

• Unparalleled Uncertainty: No one knows how long protections will last or how quickly circumstances might revert once the crisis abates.
  • Anna Chymanski [05:00]: "We don't know how long this is going to last… So I guess I would say that yes, people should think about this differently."
• Protecting Your Liquidity: In this context, saving money for essentials like food is a rational response—especially since future income is so unpredictable.

3. The Competing Pressures on Hard-Hit Workers

[05:44–07:02]

• "Desperate Choices" for the Unemployed:

  • Some are eyeing risky, frontline jobs at Amazon, Target, or grocery stores just to make rent—potentially endangering themselves and their families.
  • Emily Peck [05:44]: “A lot of people are now facing this choice... I could pay my rent and get at like one of these seasonal hourly jobs at a supermarket and put the health of my health and my whole family's health at risk to pay the rent. And I think that's a bad idea."

• Essential Workers' Risks: Felix notes those jobs will be filled—raising questions about who bears the health risk.

4. Mortgage Payments: A Different Kind of Decision?

[07:06–09:42]

• Mortgage vs. Rent: Mortgages are complex—paying may build equity, but in uncertain times, cash is king.

  • Anna Chymanski [07:31]: “If you can, you continue to pay your mortgage… Now if you are in a position where you know you've lost your job... you contact your bank.”

• Communication is Key: Don't just skip payments—contact landlords or banks first. Many financial institutions are sending messages offering flexibility, but lines are overwhelmed.

  • Emily Peck [08:57]: "Some of the banks, like I've gotten already emails from my bank and my mortgage lender saying like we will work with you kind of stuff…"

• Lighthearted Note:

  • Felix Salmon [09:15]: “Go into your inbox and do a search for the words 'here for you' and see how many brands have sent you emails...”

5. The Ripple Effects: Landlords, Banks, and the Financial System

[09:42–14:13]

• Cascade of Missed Payments:

  • Many landlords depend on rent payments to pay their own mortgages. A breakdown can have serious knock-on effects throughout the financial system.
  • Felix Salmon [10:09]: "A large amount of cash flow is going to stop going to landlords and banks… Those landlords are not going to be able to pay their mortgages…"
  • Anna Chymanski [11:10]: "...the mortgage market in the United States is absolutely enormous… having the Fed step in and buy mortgage backed securities is definitely helping that, but… this could have some serious effects down the line."

• If Everything Restarts Quickly?

  • Some disruption is manageable if everyone up the chain gets "forgiveness" and federal money fills the gaps—but the system isn't designed for a pause.
  • Felix Salmon [12:46]: "The financial world is based on flows and those flows are going to keep on flowing… you need to work something out."

• Speculation on an "Arrears Economy":

  • Felix Salmon [13:24]: "...can you have a functioning economy with just those sort of prior arrears just kind of sitting there in the background…? This time around again things might be different..."

6. Final Thoughts: Emergency Funds and Priorities

[14:11–end]

• Use Your Savings—If You Have Them:
  • “This is definitely an emergency. On the other hand, if you are looking at those savings and wondering how you're going to be able to, like, feed yourself... then, yeah, at that point, I think rent becomes a much lower priority.” — Felix Salmon [14:22]

Notable Quotes & Memorable Moments

• "Even if you have the money for rent, I would say don't pay your rent because you need the money for food."
  — Emily Peck [01:12]
• "Before you don't pay your rent, make sure that you are in a state where you have protections because if you don't, you can very easily be evicted."
  — Anna Chymanski [01:32]
• "The size of the known unknowns has been exploding."
  — Felix Salmon [02:58]
• "We don't know if as soon as the crisis is officially over, then all of a sudden protections are just going to go away."
  — Anna Chymanski [05:00]
• "(People are) contemplating getting some of these jobs ... Amazon, Target, Kroger, supermarkets ... and put the health of my health and my whole family's health at risk ... I think that's a bad idea."
  — Emily Peck [05:44]
• "Go into your inbox and do a search for the words 'here for you'..."
  — Felix Salmon [09:15]
• "The mortgage market in the United States is absolutely enormous and it underpins so many other things."
  — Anna Chymanski [11:10]
• "At some point I'm going to start thinking a bit more about this idea of an arrears economy... can you have a functioning economy with just those sort of prior arrears?"
  — Felix Salmon [13:24]

Key Timestamps

• 00:00–01:12 — Introductions and framing "rent day" as an existential question
• 01:12–02:58 — Eviction moratoriums, federal and local protections
• 05:44–07:02 — Desperate choices: unsafe jobs to pay rent
• 07:06–09:42 — Mortgages: banks, communication, and flexibility
• 09:42–12:46 — Ripple effects: landlords, banks, mortgage market risk
• 13:24–14:22 — The prospect and risks of a paused economy & “arrears economy”
• 14:22–end — Final advice on savings, priorities, and the realities facing listeners

Tone and Takeaways

The discussion is frank, empathetic, and pragmatic, acknowledging that the "rules" of financial life have been upended. The hosts do not give one-size-fits-all advice; instead, they urge listeners to educate themselves about local protections, communicate with landlords and lenders, and above all, prioritize survival and flexibility in an unpredictable landscape.

Bottom Line:
If you're struggling, don't feel obliged to pay rent at the cost of essential needs, but make sure you understand your specific protections and communicate with your landlord or lender. The system is highly stressed; we're all (tenants, landlords, banks, policymakers) making it up as we go along.