The 2021 ALICE Report found 38% of households still struggled to make ends meet in 2019 prior to the onset of the coronavirus pandemic.
The Michigan Association of United Ways (MAUW) on March 16 released its latest study on the condition of Michigan’s working families, also known as ALICE households — asset limited, income constrained, employed. The 2021 ALICE Report found 38% of households still faced financial hardships in 2019 before COVID-19 hit, and the pandemic has only made matters worse, exposing compounded economic fragility, widespread hardship and growing disparities — particularly by race and ethnicity.
The percentage of those categorized as ALICE households remained relatively unchanged from the 39% of households identified in the previous report and significantly up from pre-recession levels — 32% in 2007 (Note: both data points have been updated using the 2021 report’s enhanced methodology).
Of Michigan’s 3,963,558 households, 504,237 (13%) earned below the federal poverty level in 2019, and another 1,004,047 (25%) were under the ALICE threshold. According to a data point new to this year’s report, an additional 10% of households in Michigan were on the cusp of the ALICE threshold in 2019, with 236,620 households just one income bracket away.
“By showing how many Michigan households were struggling in 2019, the 2021 ALICE Report provides the backstory for why the COVID-19 crisis is having such a devastating economic impact,” said Mike Larson, CEO of MAUW. “This data shows the ALICE population was completely unprepared to weather a storm like the one we have faced the past year, and those we have relied on the most — essential workers — were often receiving the least.”
According to the report, 70% of infrastructure jobs in Michigan paid less than $20 an hour in 2019, and 63% of nurturers — those in health care, education and caregiving — made less than $20 an hour. The report also found households that are Hispanic, Black and single female-headed with children are more likely to fall under the ALICE threshold by significant margins.
“Every day and especially in times of crisis, we rely on countless essential workers to keep us going,” said Gov. Gretchen Whitmer. “These frontline heroes show up day after day, allowing the rest of us to stay home and stay safe, but as (the) 2021 Michigan ALICE Report shows, many of them are in need of our support. We must serve all Michiganders in need, especially those who keep us all going, with initiatives that invest in their health, education and financial security. I am proud of the programs I have proposed to uplift working families like Futures for Frontliners and Michigan Reconnect and my administration’s historic investments in expanding access to child care assistance.”
The report includes enhanced methodology, including new sources for more household-specific data, to adjust to the reality of changing needs.
The ALICE Essentials Index is a newly included measure of the change over time in the costs of essential household goods and services. It can be used as a companion to the Bureau of Labor Statistics’ Consumer Price Index (CPI), which covers all goods and services that families at all income levels purchase regularly. From 2007 to 2019, the cost of household essentials (housing, child care, food, transportation, health care and technology) increased faster than the cost of other goods and services. During that same time period, the cost of living, based on the ALICE Essentials Index, has increased by 3.4% for ALICE households in comparison to the 1.8% increase in the CPI.
“Consumers Energy believes it’s critical to ensure all Michigan residents have a chance to succeed,” said Carolyn Bloodworth, secretary/treasurer of the Consumers Energy Foundation. “We are proud to continue to support the development of the ALICE Report — a critical tool for providing the data and information needed for policymakers and organizations in Michigan to make informed decisions impacting our most vulnerable populations. Together, we can create sustainable communities that are able to thrive well into the future.”
The Senior Survival Budget, another new data point, more accurately represents household costs for people age 65 and over, including housing, technology, transportation, food and health insurance premiums. The average ALICE Household Survival Budget in Michigan was $23,400 for a single adult, $26,244 for a single senior and $64,116 for a family of four in 2019 — significantly more than the federal poverty level of $12,490 for a single adult and $25,750 for a family of four.
The report concludes with an analysis of the economic benefits if all households had income above the ALICE threshold — an estimated $98 billion added to the Michigan GDP.
“We have the information we need to improve the lives of Michigan residents. Now it’s time to do the hard work of improving outcomes for ALICE,” Larson said.
Every two years, United for ALICE undertakes a full review of the ALICE methodology to ensure the results are transparent, replicable and current in order to accurately reflect how much income families need to live and work in the modern economy.
The addition of new data sources included in this year’s report resulted in a slight shift in the report methodology. As a result, updates to previous years’ data are included in this report to allow for an accurate year-over-year comparison. In 2019, more than 40 external experts — drawn from the Research Advisory Committees across the United for ALICE partner states — participated in the review process.
A full description of the methodology and sources is available at unitedforalice.org/methodology.