A proliferation of low-wage and hourly jobs with few or no benefits, depleted savings and rising household costs in Michigan paved the way for a state where nearly four in 10 workers were struggling to make ends meet going into the COVID-19 pandemic, the Michigan Association of United Ways reported today.
The association on Tuesday morning released its 2021 ALICE report, a 58-page study of the approximately 1.5 million Michiganders who were financially struggling in 2019, including a large portion of those we have come to know as essential workers, just before the pandemic hit. ALICE stands for “Asset Limited, Income Constrained, Employed,” or those who are working and live above the federal poverty line but are not earning enough to be able to afford such basic needs as housing, rent, food and childcare.
“By showing how many Michigan households were struggling in 2019, the 2021 ALICE report provides the backstory for why the COVID-19 crisis is having such a devastating economic impact,” Michigan Association of United Ways President and CEO Mike Larson said during a Tuesday press conference announcing the results of the report. “The data shows the ALICE population was completely unprepared to weather a storm like the one we have faced this past year, and those we have relied on the most, essential workers, were often receiving the least.”
According to the report, 1,004,047 people — 25% of the state’s population — were living above the federal poverty level but were still struggling to pay for basic needs in 2019. An additional 10% of Michigan households were on the cusp of the ALICE threshold in 2019, meaning something like a trip to the emergency room without health insurance or a major car repair could result in financial disaster. Thirteen percent of Michigan’s population, or 504,237 individuals, lived below the federal poverty level in 2019.
The report also highlights stark racial and gender inequities in the state. Black, Latino and households led by single women with children are significantly more likely to fall under the ALICE threshold. According to the Michigan Association of United Ways, 73% of households headed by single women, 60% of Black households and 48% of Hispanic households in the state were struggling to make ends meet in 2019. This compares to 34% of white households.
“We all know who falls into the category of ALICE,” Larson said. “… They’re the households where hardworking Michiganders still have to make tough choices about basic necessities, whether it’s deciding between quality childcare or paying the rent and picking up groceries,” Larson said.
“These decisions have long-term consequences, not only for ALICE but all of us,” he added.
Justin Brown, of Ludington, explained during Tuesday’s press conference that while he has a job working for a manufacturer that makes filing cabinets, he has run into financial trouble during the pandemic but isn’t able to access food assistance because his income is too high to qualify.
“I don’t make enough money to make ends meet all the time,” Brown said. “I fall into that category, which is so frustrating.”
“With the pandemic, fuel prices and the cost of food going back up, it’s hard,” Brown said.
The “average ALICE household survival budget,” essentially the amount it costs to pay for basic needs, was $23,400 for a single adult and $64,114 for a family of four in Michigan, the report noted. An individual making minimum wage ($9.65) in Michigan is estimated to earn an annual wage of $20,000, based on 52 standard 40-hour work weeks. The federal poverty level is $12,490 for a single adult and $25,750 for a family of four.
Fueled by the growth of low-wage jobs that often provide little job security and few or no benefits and the rising costs of housing, childcare, food, transportation, and more, the percentage of households that fall into the ALICE category rose from 19% in 2007 to 25% in 2019, according to the report. During that same time period, Michigan households living in poverty climbed from 13% in 2007 to a high of 16% in 2012 and returned to 13% in 2019.
A record number of Michigan workers, 58%, were paid by the hour in 2019, and 58% of the state’s jobs paid less than $20 an hour, the report said. This kind of a wage would, if worked full-time and year-round, provide a maximum annual salary of $40,000, or about $24,000 less than what a family needs to merely survive, let alone pay for items outside of basic needs, the Michigan Association of United Ways emphasized.
Many of the jobs that aren’t providing wages needed to afford basic needs include those that have been considered “essential” during the pandemic, Gov. Gretchen Whitmer noted during Tuesday’s press conference. According to the report, 70% of infrastructure jobs in Michigan paid less than $20 an hour in 2019, and 63% of “nurturer” jobs — such as those in health care, education and care giving — made less than $20 an hour.
“When faced with the unthinkable — a devastating virus, a historic economic downturn — we learned more about the people we rely on,” Whitmer said. “In times of adversity, we look to the helpers: the nurses, teachers, bus drivers, retail workers, skilled workers who keep us all going. The frontline workers showed up so many of us could stay home. They’re the ones we turned to when times got tough. And yet, as this year’s 2021 Michigan ALICE report shows, many of those same helpers are in desperate need of our support.”
Advocates involved with the ALICE report said on Tuesday that a statewide coalition of government officials, policy makers, business owners, nonprofits, and others will need to work together to address, and ultimately dismantle, the challenges faced by those living below both the ALICE and federal poverty thresholds.
“The fact is, all businesses should be concerned about the ALICE community,” said Carolyn Bloodworth, the secretary/treasurer of the Consumers Energy Foundation. “Economic instability among our state’s residents impacts all of us.”
The Consumers Energy Foundation financially supported the report’s research, which was done in collaboration with experts across Michigan. The 2021 document is the Michigan Association of United Ways’ fourth ALICE report.
The Michigan Poverty Task Force recently used data from the ALICE report to issue a detailed call for 35 policy recommendations aimed at lifting millions of state residents from economic hardship. Among the recommendations are raising the cap for child care subsidies so ALICE households can qualify for them, as well as increasing affordable housing for low-income families, ending asset tests for food assistance, and more.
The Michigan Association of United Ways noted that improving the lives of ALICE families would benefit not only those individuals but the entire state economy. About $97.9 billion would be added to the Michigan GDP if all of Michigan’s ALICE families in 2019 were lifted above the ALICE threshold, according to the report.