Despite Connecticut’s modest economic growth, the number of families struggling to cover basic household costs has increased since 2010, according to the United Way’s ALICE report released Sunday.
The report attempts to identify households living above the poverty level, but still falling short of the basic cost of living. ALICE stands for Asset Limited Income Constrained Employed, which the report defines as income below $70,788 for a family of four and $22,656 for a single person.
“The federal poverty rate is commonly regarded as inadequate for measuring the true scope of financial hardship in this country,” United Way of Western Connecticut CEO Kim Morgan said. “The ALICE report shows that the federal poverty rate is woefully inadequate to support an individual, let alone a family.”
Despite having leveled off since 2012, the number of financially insecure families in Connecticut is still growing.
“The number of households below the poverty line and the ALICE threshold is continuing to increase at a time when I think we were all starting to expect to see things getting better,” United Way ALICE Project Director Stephanie Hoopes Halpin said.
Despite recent news that the median income has increased and poverty has declined around the country, Connecticut households in poverty increased 1 percent from 2012 to 2014 and households below the ALICE threshold grew 2 percent. Thirty-eight percent of all households in Connecticut fell into one of these groups.
“It’s important to recognize that medians are not always representative of large populations, especially in a case where there’s a wide range of income. It doesn’t alleviate the fact that there is still a large percentage of Connecticut that is suffering,” Halpin said.
She also noted that the ALICE report numbers only cover 2012 through 2014, and most of the median income gains took place in 2015. (The Census Bureau’s 2015 report showed only a nominal drop in the poverty level in Connecticut, however.)
While the report showed that ALICE households exist in every town and city, some areas fared better than others. Only about 30 percent of households fell below the ALICE threshold in Stamford, while Hartford had the highest rate at 75 percent.
Minority households were also disproportionately represented. Fifty-seven percent lived below the ALICE threshold, whereas only 31 percent of whites did.
Age also had an effect on financially struggling households.
“One of the largest chunks of ALICE households are seniors,” Halpin said, in part because Social Security brings people above the poverty line but below true financial stability. She said Connecticut’s aging population will likely affect the numbers of ALICE households.
Families with children have separate challenges. Childcare was the single largest expense for ALICE families. Health care costs also increased dramatically due to the report’s conclusion that ALICE households would not be able to afford private plans through Connecticut’s insurance exchange. Instead, they would have to pay the penalty for not having insurance, along with the out of pocket costs for health care.
Households below the ALICE threshold often fall into a difficult spot where they have significant financial needs, but don’t qualify for many government assistance programs. The report states that “in Connecticut, benefits are targeted towards the poorest families, and as earnings rise, many families are no longer eligible even though they are struggling.”
Recent budget cuts haven’t helped the situation. Government and charitable assistance fell by over $1 billion dollars between 2012 and 2014, cutting many ALICE households off from the support they need, according to the report.
There is some good news for Connecticut: high-paying jobs increased and more than half of jobs in state pay more than $20 an hour.
The number of jobs paying between $20 and $40 an hour wasn’t significantly impacted by the recession and jobs paying more than $40 an hour nearly doubled from 2007 to 2014, according to the report. Low-wage jobs paying less than $20 an hour dropped by 15 percent over that period.
At the same time, the cost of Connecticut’s basic household budget increased 14 percent, which the report states keeps pace with inflation and is actually lower than other states.
“I think Connecticut is in one of the best positions of the states we’ve studied to address these problems,” United Way of Connecticut CEO Richard Porth said. “We already have a significant number of decent paying jobs and we have a chance to help more people climb the ladder.”