Alice isn’t 5’ 6.” Her smile doesn’t light up a room. That’s because Alice is a report. As reports go, ALICE is impressive in its scope and details. Over time, its widening use could change the national landscape by helping us understand the struggles that hard-working Americans face and acting on what we learn.
ALICE stands for Asset Limited, Income Constrained, Employed. ALICE subjects are the working poor who lack a monetary cushion for unexpected events and are one crisis away from falling into poverty. If ALICE families could be stabilized, our communities and the economy would stabilize.
25% of Michigan families fall in the income range of ALICE and 15% of families are below the Federal Poverty Line. Taken together, 40% of Michigan families are seriously, financially burdened. A common national statistic floated in the media is that 40% of Americans have $400 or less of readily available cash to use against emergencies. The 10-year outlook looks even worse. The bull market is losing steam and low-wage jobs are projected to outpace high-wage job creation. Costs are rising faster than the rate of inflation and government support.
ALICE started in a single county, Morris County, New Jersey in 2009. Data reporting for all counties in New Jersey became available in 2012. In 2017, with the help of its United Way champions (450 of them), data for each county became available in 15 states. Michigan is one of those states.
While many statistics are reported in ALICE, three indices are particularly important in moving people out of poverty—1) affordable housing, 2) job opportunities, and 3) community resources.
The Federal Poverty Line (FPL) is a terrible benchmark. It deserves its own blog post to explain why. But, for now, know that the FPL for a family of four is $24,250. Imagine your household living on $24,250 a year. The ALICE Household Survival Budget (the bare minimum) is $56,064. This survival budget requires a $28.04 hourly wage, using 40 hours per week at 50 weeks per year. If two family members work, two jobs of $14.02 would be required.
Are high-wage jobs plentiful?
62% of jobs pay less than $20 and hour
Two-thirds of those jobs pay less than $15 an hour
Using the inadequate Federal Poverty Line, the current U.S. population and the past percentage of U.S. poor (15%), we come up with a figure of 43M – 48M that represent the number of Americans living in poverty. But if we use 40% for our calculation, 130M represent how many Americans are struggling. If 43M doesn’t scream a national emergency, does 130,000,000?
40% of Michigan’s 3,857,706 households can’t afford basic needs. When the number is broken down by race, systemic racism is exposed. More white families are poor because the white population is the largest group, but the percentage of poor families is higher when using skin color:
35% of white households qualify as ALICE, but
62% of black households do, with
54% of Hispanic households qualifying as ALICE
Observe how different institutions calculate budgets for a family of four (in Calhoun County, Michigan in 2015):
$24,250 Federal Poverty Line
$53,208 ALICE survival budget
$58,830 MIT Living Wage Calculator (MA Institute of Technology)
$62,673 EPI Family Budget Calculator (Economic Policy Institute)
$97,512 ALICE stability budget
ALICE’s stability budget is an upgrade from its much lower survival budget in the following ways:
Housing – higher mortgage payment for safer house, fewer repairs
Child care – upgraded to licensed
Food – USDA moderate food plan
Transportation – having a car lease
Health care – the family’s cost of employer-sponsored program
Savings – 10% of budget (crucial for stability, but often drained, non-existent)
Misc. – 10% of the first 5 necessities
ALICE underscores the obvious need for programmatic and policy solutions. It is data rich and grounded in reality. It’s an important instrument that convinces us that we can no longer look the other way. We’ve got to tackle the causes of poverty and low wages are a significant factor. The economy must work for everyone, not just the top 1%. Doesn’t everyone deserve a real shot at the American Dream?