Why the Poor Stay Poor in America - Are You An ALICE?
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“ALICE” is an acronym for Asset Limited, Income Constrained, Employed, and represents the growing number of families who are unable to afford the basics of housing, child care, food, transportation, health care, and technology…The ALICE research quantifies and describes the number [four in ten] of households that are struggling financially…[and] raises awareness about a huge but hidden segment of our community that is struggling to afford basic necessities.” I’ve read a few recent articles about the increasing ALICE population, thinking it was a new acronym for a new group of people struggling to make financial ends meet. But as the nonprofit organization, “United for Alice” explains, the United Way of Northern New Jersey started to research this group and coined the acronym in 2009 — ALICE certainly existed well before then, but they were not recognized as a group struggling with poverty — it was just called life. The organization developed the metrics for defining the ALICE population, their research includes nearly 3000 counties in the United States and their outreach has brought together stakeholders in hundreds of communities to help this struggling population, otherwise known as the working poor. The people who qualify as ALICE earn more than the poverty threshold for their family size and location, and because they “earn too much”, sometimes just a hundred dollars or so beyond the cutoff, they receive no government assistance: no food stamps, no medicaid health insurance, no rental or home buying assistance and no help with utility payments. But they are the workers who hold our communities together:
I was an ALICE for over a decade starting in about 2009, when I couldn’t seem to get a full-time job, the financial crisis limited my borrowing ability (specifically, borrowing the equity from my house—not smart!), I racked up credit card debt that I couldn’t pay down and earned just a few thousand dollars a year too much to qualify for government aid. Today, approximately 42% of the 129 million households in the country — that’s 54 million households—either meet or fall below the ALICE requirements. These figuress include the 13% percent living in poverty who do qualify for financial help. These numbers are staggering: 54 million households don’t even live paycheck-to-paycheck, they cannot “make ends meet” at the end of the month. There are many reasons why more working people today qualify as ALICE, and why the numbers have steadily increased from 2010, but the two major causes are the skyrocketing cost of necessary goods and services, including food, particularly from 2021-2023, and the fact that wages for most jobs have not kept pace with inflation during this same timeframe. Workers are making less and spending more — they don’t have the cash from a good paying job, or assets like a home, car and/or family money, they’ve charged more than ever on credit cards, and those charges come with incredibly high interest rates. Oh, and the more you charge on credit cards the lower your credit score tumbles, and your interest rates on new credit will be even higher. Did I mention that poverty is a trap, keeping over one third of families in our country financially struggling and perpetually stressed? But perhaps the biggest reason for the increase in the numbers of people who fall within the ALICE parameters: The poverty levels established by the government are updated each January according to the current Consumer Price Index, but the formulas used to calculate these levels haven’t changed in over half a century.
I’ll provide one example from the current federal poverty guidelines: For a family of one, the poverty level for 2024 is $15,060 per year. This means that if your W-2’s or other earned income statements show you earned, say, $16,000 in a single year, you would not qualify to receive federal assistance like food stamps, or in most states, Medicaid health insurance or any other type of government money. To help lift the approximately 13% of our people out of poverty and to help the additional 29% of ALICE households who are struggling to pay their bills each month, our elected officials must make the policy choice to substantially raise the poverty levels and recalibrate the formulas used to calculate these levels across the board. What good does earning $15,060 a year do for a single person, for example, in today’s economy? ______________________________________ Should our government raise the poverty levels so more people qualify for financial aid? Should the formulas used to calculate these levels be updated? Let me know your thoughts in the Comment Section below. All ideas are welcome. As always… You’re on the free list for The Poverty Trap: Why the Poor Stay Poor In America. All posts are free for now, but if you’d like to join the crowd, please support my work by becoming a paid subscriber. |
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