Is my employer allowed to do this to me?

Don't know what kind of job it is. Either he is trying to get you to quit or he just doesn't have any ignments. I'd stay on his payroll and find another job to do with the spare time. That way you can gradually see if he rebounds or you lead to another direction. Just don't tell him. Also if you have to put your stuff in storage and move in with a friend or family member.