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Weighing the costs

Just before Thanksgiving, the media reported breathlessly that Americans are deeply pessimistic about the economy. Based on an early November Gallup poll, the coverage largely ignored the relatively small nationwide sampling (815 adults) and Gallup’s own analysis, which indicated that the worry level (26 percent said the economy was a top concern) was high for the pandemic period but historically low compared to similar surveys dating back to 1991. No one mentioned that the same poll participants reported that, on average, they planned to spend more on holiday gifts this year than in 2019 and 2020. Inflation and unemployment were cited as specific concerns, but less than one percent of respondents mentioned income inequality.

Poverty in the U.S. is deeply underestimated. Researchers tend to blame the Census Bureau’s 1960s-era formula for calculating the Official Poverty Measure (OPM), which establishes an annual poverty threshold based on a minimum food diet devised in 1963. The federal poverty threshold is three times the present-day cost of that minimum food diet, adjusted for family size. Critics find numerous flaws in this formula: its “one-size-fits-all” approach doesn’t reflect regional differences or new economic realities. It excludes taxes, work expenses, child care and out-of-pocket medical expenses, and it ignores the dramatic rise in the cost of housing relative to other expenses, including food.

That’s where ALICE comes in. Developed by the United Way, ALICE (“Asset Limited, Income Constrained, Employed”) uses local and regional economic data to capture a more accurate picture of families in extreme financial hardship who do not meet the federal poverty standard. The United for ALICE program partners with 24 states, including New York and Pennsylvania, producing detailed reports indexed for each county. The ALICE Household Survival Budget is based on lowest-cost options for the ALICE Essentials Index, an updated list of basic necessities that includes housing, child care, food, transportation, health care and a smartphone plan, plus taxes and a small contingency. This methodology reveals that over the past decade costs in the ALICE Essentials Index have increased almost twice as fast as the federal Consumer Price Index, confirming that the costs of basic necessities like housing and health care have soared, leaving income-stressed families much worse off.

In 2018 the federal poverty level for both Pennsylvania and New York was just $12,140 for a single adult and $25,100 for a family of four. But the average 2018 ALICE household survival budget for Pennsylvania was $23,544 for a single adult and $69,648 for a family of four. In New York, the ALICE household survival budget for residents living outside of New York City was $27,312 for a single adult and $78,156 for a family of four. In the Upper Delaware, 37 percent of households in Pike County, 41 percent in Wayne County, 45 percent in Delaware County, NY; 40 percent in Orange County and 46 percent in Sullivan County are living below the ALICE threshold. Nationwide, according to ALICE, 42 percent of households are unable to make ends meet. Half of the senior citizens in the U.S. are ALICE, as are one in four families with children.

COVID has made things much worse. The 2021 ALICE study “The Pandemic Divide” showed that ALICE households were far more vulnerable financially, physically and emotionally. Those deemed to be essential workers were more likely to be low-paid and working without adequate PPE. Those deemed non-essential were more likely to be laid off from hardest-hit, lowest paying industries like hospitality, tourism and food service. They were less able to telecommute or find alternative work since they are also statistically less likely to have access to or be able to afford internet, and they were less likely to have adequate health insurance, paid sick leave, or contingency funds to see them through. Already stressed by chronic financial strains, they were more likely to suffer mental health issues related to the pandemic.

We think about poverty more at Christmas, and our charities work heroically to provide income-challenged families with some extras—adequate fuel, a decent holiday meal and toys for the children. That’s a wonderful thing and a tribute to the basic generosity of Americans. But too many of our neighbors are living in financial desperation all the time. “Out of Reach,” a 2021 report by Mid-Hudson-based Pattern for Progress, found that the large and longstanding gap between wages and rental housing costs in the region has increased dramatically during the pandemic, and working families are being squeezed out of the rental market altogether as owners pursue more lucrative short-term rentals. There is something systemically wrong when our economy leaves so many families out in the cold. You can view this dilemma through the lens of economic development or moral necessity—either way, we need to listen to ALICE.

Related links:

https://www.irp.wisc.edu/poverty-faqs/

https://www.unitedforalice.org/covid2019

https://news.gallup.com/poll/357617/economic-concerns-hit-pandemic-high-low-historically.aspx

https://news.gallup.com/poll/357653/holiday-shopping-getting-started-brisk.aspx

https://bit.ly/31kO0Cq