As income stagnates, millions of Americans are struggling to make ends meet.
Some 50.8 million households or 43% of households can’t afford a basic monthly budget for housing, food, transportation, child care, health care and a monthly smartphone bill, according to an analysis of U.S. government data released this week by the United Way Alice Project, a nonprofit based in Cedar Knolls, N.J. that aims to highlight the number of people who live in poverty.
The project uses standardized measurements to calculate the “bare bones” household budget in each county in each state. It maintains that the federal poverty level — currently $25,100 for a family of four — doesn’t accurately illustrate the number of people living in poverty because it doesn’t take into account the dramatically different costs of living across the U.S.
“For too long, the magnitude of financial instability in this country has been understated and obscured by misleading averages and outdated poverty calculations,” said John Franklin, chief executive of the United Way Alice Project. “It is morally unacceptable and economically unsustainable for our country to have so many hardworking families living paycheck to paycheck.”
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The project coined the term Alice to shed light on working families often overlooked by other economic measures. It stands for “asset low, income constrained, employed.” The project says Alice workers are the forgotten people: Child care workers, home health aides and retail workers in low-paying jobs and have difficulty saving money and are one paycheck away from the street.
In 2017, 44% of people in the U.S. said they could not cover an unexpected $400 emergency expense or would rely on borrowing or selling something to do so, down from 46% the year before, according to a separate report released last year by the U.S. Federal Reserve, which surveyed more than 6,600 adults. The ability to withstand financial disruptions is a “key consideration,” it said.
The government’s 2018 federal poverty level income numbers are used to calculate eligibility for Medicaid and the Children’s Health Insurance Program (CHIP). Those levels currently range from $12,140 for individuals to $42,380 for a family of eight. But some cities and suburbs — from New York to San Francisco — are far more expensive to live in than others.