Do You Know ALICE?

In 1963, statistician and economist, Mollie Orshansky developed a formula for a threshold, still used today, as a measure of the income a household must not exceed in order to be considered “poor”.  This measurement is used to establish individuals' and families' eligibility for certain kinds of assistance and services and also is a chief point of reference used to report how many Americans are struggling financially on an annual and historical basis.

However, this formula for poverty doesn’t reflect modern expenses including taxes, childcare, and medical expenses, nor does it account for geographic differences in cost of living or changes in standard of living over time.   While it provides a measure of those living with the most extreme financial hardship, it paints an incomplete picture of those that are truly struggling.  
United Way’s ALICE® report, recently published in Maryland, allows us to put a face on the families and individuals on the Eastern Shore who live above the Federal Poverty Level (FPL), but struggle on a daily basis to make ends meet, and are not able to afford a basic cost-of-living budget. 

ALICE stands for Asset Limited, Income Constrained, Employed.

We all know ALICE, and in most cases, many of us have been there at some point in our lives.  ALICE takes care of our children and our aging parents, prepares and serves our food, and rings us up in the checkout line.  Over 1.75 million of Maryland’s jobs have pay rates that puts those workers in the ALICE category.

On the Lower Eastern Shore, an average of 40.5% of households fall below the ALICE threshold and can’t afford the cost of living, not earning enough to afford basic necessities.  The report demonstrates that the budget needed for these ALICE households just to “survive” is more than twice the FPL.

In Maryland, the FPL for a single adult is $11,670 (2014), however an average annual budget of $23,568 is required to meet very basic needs for a short term. A four-person family requires an average survival budget of $61,224, far above the FPL of $23,850.

The survival budget includes basic, bare-bones allocations for housing, childcare, transportation, healthcare, food and taxes.  There is also a small amount allotted to a miscellaneous category to be used for overflow in the aforementioned areas.  It does not allot for a cell phone, dining out, entertainment or any type of recreational spending.   Because the survival budget doesn’t include any room for savings, ALICE families are one car repair, medical issue or emergency away from financial crisis.  

On the Eastern Shore, there is a significant amount of aid provided by government and non-government entities to supplement low income families, but there is still a gap, as ALICE households have incomes above the low thresholds set to qualify for many programs.   Thus, ALICE households find it is virtually impossible to break the cycle and move toward stability.

While the report doesn’t offer specific solutions, its power rests in the data that provides a framework, language and tools for policymakers, program providers and stakeholders to understand and address the economic challenges of the Eastern Shore’s growing ALICE population.  It also reaffirms United Way of the Lower Eastern Shore’s focus on Educational, Financial Stability and Health programming, providing families and individuals the means and opportunities to transition toward stability.

To view the full ALICE report, including data for the Lower Eastern Shore counties, visit www.unitedway4us.org/ALICE.

Maryland Average Monthly Survival Budget
•    Housing (Single Adult) $807 (Household of 4) $1,123
•    Child Care (Single Adult) $- (Household of 4) $1,214
•    Food (Single Adult) $202 (Household of 4) $612
•    Transportation (Single Adult) $364 (Household of 4) $722
•    Health Care (Single Adult) $138 (Household of 4) $552
•    Miscellaneous (Single Adult) $179 (Household of 4) $464
•    Taxes (Single Adult) $274 (Household of 4) $415

Monthly Total (Single Adult) $1,964 (Household of 4) $5,102

ANNUAL TOTAL (Single Adult) $23,568 (Household of 4) $61,224