Study: More Michiganders struggle to afford basic needs

Family poverty

Suggestions for policymakers looking to help the working poor in Michigan could include increasing access to high-quality child care, investing in K-12 education, removing barriers to employment and increasing the Earned Income Tax Credit, according to the Michigan Association of United Ways.

Changes in poverty, working poor

Michigan’s economic recovery has been uneven. Poverty is down in many places but the percentage of the working poor has continued to rise. Click on a county to see the changes from 2015 to 2017.

Source: Michigan Association of United Ways

More Michiganders, especially seniors, are struggling to afford basic needs, from food and housing to child care and transportation.

That’s the conclusion of a new report from the Michigan Association of United Ways, released Wednesday, that aims to identify the barriers the working poor — which the group identifies as ALICE, for “asset-limited, income-constrained, employed” — face in making ends meet.

This year’s report, using data from 2017, suggests there may be a silver lining amid the clouds: While 29 percent of Michigan’s 3.9 million households are considered to be ALICE, up from 25 percent two years earlier, a smaller percentage of households are living in poverty (14 percent, from 15 percent two years ago).

That’s promising, said Mike Larson, president and CEO of the Michigan Association of United Ways. Michigan’s unemployment rate is low, signaling more people are working, and it’s likely that households once in poverty now earn enough to be considered among the working poor.

Even so, they’re still in tough financial shape, Larson said. And the ALICE population is growing, too, because some households that previously had gotten by lost ground, due in part to stagnant wages and a rising costs of living, according to the report.

“ALICE plays a huge role in our economy,” Larson said. “They’re key to the success of our state, and so we need to focus and do everything that we can to lift them up and make them successful.”

Michigan’s first ALICE report was released in September 2014 and updated in 2017. The study attempts to quantify how many of the state’s households struggle to cover the costs of basic needs and recommends strategies for policymakers to help them become more financially secure.

Who’s ALICE in Michigan?

Among the report’s findings:

  • The increase in Michigan’s ALICE households can be attributed in large part to those headed by seniors 65 and older, the report said. As of 2017, more than four in 10 senior households, 41 percent, could be considered ALICE. That’s up by 17 percent from 2010. These residents are living and, in many cases, working longer.
  • ALICE households led by Michiganders ages 45 to 64 increased by 6 percent from 2010 to 2017, according to the report, indicating “a surprising drop in income for those in their prime earning years.”
  • While the number of millennial households that can be counted as ALICE is flat or declining, many young adults can’t afford to live by themselves, according to the report. They’re also delaying marriage and parenthood.
  • Single or cohabiting adults younger than 65, without minor children at home, are both the largest household type in the state and the largest number of ALICE households (44 percent of them in 2017).

ALICE is defined as earning more than the federal poverty limit — which, in 2017, was $12,060 for a single person and $24,600 for a four-person family — but not enough to afford financial security.

The amount an average ALICE household in Michigan would need to earn at a minimum to afford basic needs, known in the report as the “household survival budget,” in 2017 was $21,036 annually for a single adult, or $10.52 an hour. That budget rose to $61,272 each year for a four-person family with an infant and a preschooler, or $30.64 an hour. Those figures are up from $18,192 and $56,064, respectively, in 2015.

To be financially stable, this year’s ALICE study says that same single adult would need to earn $34,524 annually, or $17.26 per hour. Perhaps more controversially, the study concludes that a family of four with a baby and a preschooler would need to earn $114,372 a year, or $57.19 per hour.

The “stability budget,” as it’s called, accounts for “stability over time, as well as a reasonable quality of life, and peace of mind,” said Nancy Lindman, the Michigan Association of United Ways’ director of public policy and partnerships.

That stability measure would include safe housing in need of few repairs, licensed and accredited child care, a food budget based on the U.S. Department of Agriculture’s Moderate Food Plan that allows for one meal at a restaurant each month, a vehicle lease and employer-sponsored health insurance, Lindman said. Families above the ALICE income threshold are also more likely to be able to save money, which ALICE families generally are unable to do.

Employment trends influencing the ALICE population include a Michigan job market that is heavily skewed toward low-wage work that pays less than $20 per hour, according to the report. Most of the state’s job growth is in positions that pay hourly wages ranging from $9.43 to $15.91, according to the report, citing U.S. Bureau of Labor Statistics data.

Although unemployment remains low in Michigan — 4.6 percent in 2017, unadjusted for seasonal changes in employment, according to state data — more Michiganders were underemployed, meaning they wanted to work full time but often couldn’t find it. And expansion of the “gig economy” and contract work can create more financial instability, the report states.

Michigan’s ALICE report outlines strategies that state and local policymakers could focus on to help the working poor get through short-term economic downturns and build financial stability over time.

They include:

  • Providing access to high-quality child care
  • Investing in K-12 education
  • Removing barriers to employment so ALICE workers can stay in their jobs
  • Offering portable employment benefits that an employee can transfer from one job to another, and
  • Public and private efforts to help ALICE households get through emergency financial situations, including access to low-rate credit

Other options, Larson said, could include increasing reimbursement payments to child care providers and increasing eligibility for subsidies for more families, increasing supports for children to boost early literacy and increasing Michigan’s Earned Income Tax Credit from 6 percent to 20 percent.

“There’s no silver bullet that just fixes this,” he said. “This is a systemic issue, and it’s going to take the business community, it’s going to take education, it’s going to take state and local governments (and) nonprofits coming together to look at ways to address the issue.”

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Kevin Grand
Wed, 03/20/2019 - 5:50pm

Another article trying to play it both ways.

You cannot have the government provide everything for you and not expect to get the bill for it eventually.

That philosophy hasn't worked before (see Venezuela for latest example on its effectiveness) and there is absolutely no reason for it to in the future just because there is a new name slapped onto it.

David Andrews
Thu, 03/21/2019 - 9:02am

The trailer for this article "suggests that more people, particularly seniors, are finding it difficult to afford necessities such as housing, child care and transportation"; That was not only the first time, but also the last time that the word senior was used in this article.

I don't expect this from a publication that is trying to convince us that they are a fair reporting of state-wide news with no political biases. A publication that is currently asking us to become paying members: "please use some of your fixed income pension to pay for the publication" they beg us three to four times a week. I was at the point of investigating the cost of becoming a member, but now, I must step back and ask myself if this is what I want to spend my money on.

Did you know you can borrow a dollar many time, but you can only spend a dollar once?

Fri, 03/22/2019 - 12:07pm

Michigan really has not bounced back 100% since the recession in 2008!
It is difficult for seniors whom are retired or on disability! Their stipend never increases and many have to decide between food, bills and medicine; paying what they can when they can (juggling bill payments). Some I am sure have considered moving yet their families are here. What a quagmire!

Fri, 03/22/2019 - 3:40pm

Most of the country hasn't rebounded from the Crash. The median American household wealth today is still $40,000 less than it was in 2007

Sat, 03/23/2019 - 11:06am

You should say since 2000. Do you think life would be better in another state? I'd be surprised.

Sat, 03/23/2019 - 11:30am

The problem with these types of studies is that they create their own definitions, standards vocabularies, methodologies and they are carried out by organizations who have an interest in showing a dire situation. And to no one's surprise they always do generate bad news! Good news doesn't get attention or help with fund raising. Stop it.

Fri, 03/29/2019 - 11:03am

Maybe there is a few things that do form a 'silver bullet.'
I wonder what the level of education is for those who are above the ALICE level, I wonder what the 'frugality quotient' [money saved divided by money earned, annually and cumulatively], I wonder what the background/training on ever day money management is.
These may not seem like a 'silver bullet.' but what if they are the tools learned early are the reason why everyone in struggling in the ALICE category.
The United Way directly supports many programs helping people survive who are in the ALICE category, there are so many committed to making these programs work and help people, even United Way's efforts to identify and help the people in the ALICE category is valuable. What I wonder if it time to start trying to learn how people that have lifted themselves our of the ALICE category have lessons from there path to success that could help others to enhance the impact of the programs focusing on those in the ALICE category.
Would people gain more from hearing about how success happens than how dire the situations are?
I have had the opportunity to talk with people implementing programs helping people this article is focused on, the people at 211 [which serve all people no matter their financial status] are exceptional, not only in their knowledge of the agencies they may refer people to but how they can help callers find a good match for their need and receive guidance on how to present their needs, and the organization is discipline to stay current and manage for the future, I have talked with some in west Michigan that gave or programs for stabilizing house for people and these people not only have such strong empathy they ensure the program's housing assistance is both properly used and that the people are effectively benefiting from it, I our community there is a special program for helping battered families that is staff by people with a compassion that is balanced by a knowledge and experience of helping these families both with their immediate needs and with longer term stability. And each of these have had stories of success and how it has been made to happen, There is much to gain from those successes.