United Way ALICE Report Reveals Financial Struggles
Many families in Michigan continue to have financial problems, according to United Way – and were in disrepair even before the pandemic began.
The agency publishes its “ALICE” report – an overview that shows every two years how we are doing, where we are going and which difficulties we are most concerned with. Seth Johnson is the CEO of the United Way of Northwest Michigan. He says the report shows, “Where are we going, how are we doing and what is our region like for those who have financial problems?”
ALICE is an acronym: It stands for “Asset Limited, Income Constrained, Employed”. The ALICE threshold is a formula that indicates the number of households that earn more than federal poverty but less than the county’s cost of living.
Mike Larson is President and CEO of the Michigan Association of United Ways. He points to the data before the coronavirus pandemic, but paints a bleak picture. “The data shows that the ALICE population was completely unprepared to weather a storm like last year.”
Johnson adds, “This is 2019 data, pre-COVID data. What we can say, however, is … these numbers are pretty striking for our pre-pandemic region. “
ALICE shows that wages cannot keep up with the cost of basic household items like housing, childcare, food, transportation and health care. Johnson says, “The consumer price index rose 1.8% over the past year. The ALICE Essential Index rose 3.4% last year. As a result, it is becoming increasingly difficult for our ALICE families to make ends meet as the price of these important items is rising faster and faster. “
“Everything a family has to buy in a month, and we translate that into a formula that gives us how much they need to make in a month to meet all of those basic needs? That is about 250% percent of the basic poverty of the federal government. “
Johnson says, “35% of households in our region have financial problems and cannot meet basic household needs every month. That’s a lot of people who are a flat tire away from an emergency and have really tough decisions to make: do we pay rent, do we pay our utility bills? Do we buy birthday gifts? “
In the Grand Traverse region, 35% represent 25,000 households. And the situation is the worst in the Leelanau district: 37% are ALICE households – the national average is 25%. “Our ALICE population in Leelanau County grew 17% in two years. That means we need to look at what is going on in Leelanau County and how we can better serve families and households who have financial problems. “
According to the United Way, the federal poverty line is not necessarily a good indicator of economic struggles. Families struggling according to the ALICE formula can reach 2½ times the federal poverty line – and still have problems. Johnson says there is “a big difference between the federal poverty line and the ALICE number … the federal poverty line is a bit out of date. ALICE provides a better indicator of how many people in our region have financial problems. “
Affordable housing continues to be a challenge – many families spend 60 to 70% of their income on rent or mortgage. “Affordable housing is a big deal, so we can give households the option to receive 30% of the monthly housing budget instead of 60-70% in some ways.”
Even the governor agreed with the ALICE report – saying the numbers for key workers are even worse. Governor Gretchen Whitmer said, “Low wages, shorter hours, and depleted savings combined with a higher cost of living have resulted in an uneven economic recovery in Michigan. The worst for our front line workers. “
Social Services continue to work with United Way to help wherever they can. Ruth Blick of the Traverse City Salvation Army says, “There was always a need. The effects of the pandemic are still being felt and will continue to be felt in families. Three of the needs that we are most asked about right now are rental assistance, utility assistance, and medical assistance. “
Blick adds: “Our requests for emergency aid continue to increase. These are bigger bills. Whether medical or rentable. Or utilities. The people are back. And it tries to keep your head above water. “
Click here to view the ALICE report.