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State United Way Releases 2018 ALICE Update

Published: September 15, 2018 at 07:00 am

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Visit and activate an online simulator at makingtoughchoices.org to experience the financial challenges that ALICE households in Connecticut face. United Way defines ALICE households as Asset Limited Income Constrained Employed.
— image courtesy United Way

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Annie Scully, a Research Analyst and Community Outreach Coordinator for United Way of Connecticut, told The Newtown Bee that the agency’s 2018 ALICE update affirms that 40 percent of state households cannot afford to pay for basic necessities, including housing, food, child care, health care, technology, and transportation.
— image courtesy United Way

ROCKY HILL — Having learned that four out of ten families in Connecticut continue to struggle to pay for basic needs, United Ways across the state are working to implement strategies to help nudge these families toward more stable financial security.

According to Annie Scully, a Research Analyst and Community Outreach Coordinator for United Way of Connecticut, the agency’s 2018 ALICE update affirms that 40 percent of state households cannot afford to pay for basic necessities, including housing, food, child care, health care, technology, and transportation. United Way defines ALICE households as Asset Limited Income Constrained Employed.

“Since we released the report, we believe a lot more people are becoming aware and paying attention to ALICE and the struggles families are facing,” she said. “This report really puts a face on the hardship and investigates why 40 percent of state households are struggling.”

While that is a sobering statistic, Ms Scully added that among those four in ten families, 30 percent are still living above the federal poverty line.

“Many believe that benchmark is inadequate for measuring the true financial scope of hardship,” she said.

United Ways in Connecticut and 17 other states are promoting the ALICE initiative to place a spotlight on a large population of residents who are working but have difficulty affording a basic Household Survival Budget.

The latest ALICE Report update uses data from a variety of sources, including the US Census and the American Community Survey, to quantify the number of households in Connecticut’s workforce that are struggling financially.

Technology Added On

Ms Scully, who spoke with The Newtown Bee about the latest revelations in the 2018 update, said the report takes a deeper look at growing financial challenges that require more and more working and middle class families to make tough choices every day as they manage their household budget.

“New to our Household Survival Budget this year is the cost of technology,” Ms Scully said. “That includes the cost of a smart phone, which we know is really essential to get by in a modern economy. For so many of these households, the internet connection they have via their cellphone may be one of, if not the only, connection to the outside world.”

The new ALICE Report update clarifies the following points:

*Despite working hard, 30 percent (404,035) of Connecticut households have earnings above the federal poverty line but under a basic cost-of-living threshold.

*Combined with those in poverty, 40 percent (538,529) of Connecticut households cannot afford the basics of housing, food, health care, child care, technology, and transportation.

*It costs nearly $78,000 per year for a family of four with one infant and one toddler to pay for the basic needs in what United Way is defining as a Household Survival Budget.

*The report maps out where ALICE families live, demonstrating that ALICE lives in every city and town in Connecticut. In every city and town in the state, at least ten percent of households fall under the ALICE criteria.

*Just over half, or 55 percent, of jobs in Connecticut pay $20 per hour or more, which is among the highest in the country — but only one of the top 20 occupations in Connecticut (in terms of number of jobs) pays enough to support the ALICE Household Survival Budget.

*In Connecticut, almost half of households do not have the savings to cover three months of living expenses, risking a real financial spiral in the event of a typical family emergency (illness, car breakdown, appliance replacement, etc.).

“Our Household Survival Budget breaks down a basic budget for a single adult and for a family of four,” Ms Scully said. “We know those young families are struggling, especially with housing and child care every month. We know that this typical family pays 44 percent of a basic Household Survival Budget in housing and child care costs alone. Almost 26 percent of that goes to affording child care.

“So we’re not talking about saving; we’re not talking about planning a modest vacation or planning for future college costs — we’re talking about just the basics to get by for one month,” Ms Scully said. “It’s scary to think that almost half the households in Connecticut don’t have enough in savings to cover three months of living expenses.”

‘Spiraling Into Poverty’

That means nearly half of state families facing a sudden job loss, medical emergency, or major car repair are at risk for “spiraling into poverty,” in an incredibly narrow window of time, she added.

In addition, the new ALICE Report reveals the following trends affecting ALICE:

*Differences in financial security by age, race, and ethnicity persist, creating challenges for ALICE families.

*The growth in the “gig” economy and on-demand employment is shifting more financial risk to workers and ALICE households.

*ALICE families are more vulnerable to an unexpected emergency because it is becoming more difficult to save and build assets.

*The changing composition of households are part of the ALICE story.

*The wealth-health gap in America leads to health insecurity.

Speaking about the growing “gig” workforce, Ms Scully noted the extreme inconsistencies and fluctuations in income these individuals may face on a day-to-day and month-to-month basis.

“I think it was Uber that coined the phrase ‘the side hustle,’ and it’s true for a lot of families that they have a traditional day job, they’re driving Uber or working other second jobs across the state to fill those gaps and make ends meet,” she said. “That’s why having a cellphone is so important, because they depend on those phones to maintain their jobs.”

Looking for glimmers of light to brighten the generally bleak details, Ms Scully said The ALICE Report recommends both short-term and long-term strategies to help ALICE families and strengthen our communities.

SaverLife Connecticut

Ms Scully said Connecticut’s United Ways are responding to provide a hand up for ALICE households through a number of these short-term and long-term strategies that include helping working families start and build a lifelong habit of saving.

She said United Ways are launching an initiative called “SaverLife Connecticut,” which combines a goal-based savings incentive program, digital financial coaching, and online resources.

At the same time, she said, United Ways are urging ALICE households to take advantage of tax preparation at VITA sites, where eligible families can secure tax credits (EITC, CTC) and begin saving, and through financial education and budget coaching.

At the statehouse and in Washington, Ms Scully said United Ways are advocating for long-term policy solutions that can lead to more financial security for ALICE. This is being accomplished by engaging with businesses, government agencies, other nonprofits, the faith-based community, civic leaders, and anyone who wants to work toward individual and community-wide solutions that lead to more financial security for ALICE households.

Ms Scully recommends state residents visit and activate an online simulator at makingtoughchoices.org to experience the financial challenges that ALICE households in Connecticut face.

The Connecticut ALICE Report was funded by the 16 Connecticut United Ways. To download the completed 2018 Connecticut ALICE report visit alice.ctunitedway.org.

 

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