One of the reasons the COVID-19 pandemic has hit Michigan so hard financially is that many residents were not in a stable economic situation to begin with.
That’s the conclusion that United Way of Michigan officials drew when reviewing ALICE’s latest financial report. ALICE is a term United Way agencies use to describe households whose employment income does not keep up with the cost of living. The expression stands for “Asset Limited, Income Constrained, Employed”.
A presentation video was given this week via the Michigan Association of United Way Facebook page for the recently released report, which analyzes data for 2019. Due to updated analyzes, United Way considers this year’s report to be “the most comprehensive description of needs in Michigan to date.” Coinciding with the state’s report, United Way of Monroe / Lenawee Counties also released a statement and commentary.
One of the uses of this research has been to measure the impact of the Great Recession.
“Sadly, we’ve seen an uneven economic recovery across Michigan,… and those we rely on the most have been paid the least,” said Connie Carroll, United Way Executive Director of Monroe / Lenawee Counties. his written remarks.
Given the timing of this data, United Way officials will also use ALICE’s research as a benchmark to determine the financial situation of Michigan residents before the COVID-19 pandemic hits Michigan.
“While we haven’t seen the numbers for 2020 yet, we know they won’t be good,” Michigan Gov. Gretchen Whitmer said when the report was released.
“Low wages, reduced working hours and depleted savings, combined with the rising cost of living, meant that nearly four in 10 households were struggling to cope in 2019 – and this ‘was before the pandemic hit, “Mike Larson, president and CEO of Michigan Association of United Ways, said in his remarks. “Because of long-standing inequality, these numbers were even worse for black, Hispanic and single-parent households.”
The ALICE report considers actual household income relative to the adjusted cost of living for county and metropolitan areas. This is where the financial gap can be seen.
The unemployment rate has been good for some of the years in this study, but it doesn’t give the full picture. This latest report shows that 58% of all jobs in Michigan were paid less than $ 20 an hour in 2019; and “an increase in the number of contract and on-demand jobs leads to less financial stability”.
Michigan university graduates have also taken on more debt to pay for higher education in recent years.
Overall, the cost of basic necessities increased by 3.4% per year from 2007 to 2019; while the inflation rate during this period was 1.8%. To put the data into annual salary ranges, a single Michigan adult needed an annual salary of about $ 23,400 in 2019 or $ 11.70 an hour “just to afford the basics.” A family of four in Michigan needed an annual salary of about $ 64,100, or $ 32.06 an hour.
Household expenses in this research include rent, food, auto insurance, cost per mile for a small to medium-sized car, cost of an employer-sponsored health insurance plan, and any taxes. on local income. There are also adjustments for senior households, where direct health care costs are likely to be higher.
Trends in the two counties under local United Way jurisdiction have not changed much in recent years. In fact, the 2019 statistics closely mirror the current statewide numbers:
- In Monroe County, there were 10% of households at or below the poverty line, 24% in the ALICE range, and 66% above the ALICE line.
- In Lenawee County, there were 13% of households at or below the poverty line, 25% in the ALICE range, and 62% above the ALICE line.
- In the state of Michigan, there were 13% of households at or below the poverty line, 25% in the ALICE range, and 62% above the ALICE line.
As explained on the state’s United Way website and through case studies featured in the video program, the consequences of insufficient family income reverberate beyond one family to the entire community.
The issue of housing stability also contributes significantly to work and school attendance.
“The greater the gap between income and expenditure, the more extreme the decisions and the greater the risks to a family’s immediate health, security and financial stability,” the agency’s report said. “Choices in one area invariably affect choices in other areas.”
The long term goal of this research is to provide insight, as government agencies, nonprofits, businesses, and families / friends of those affected aim to find solutions that work for a given community.
“Ultimately, if ALICE households can become financially stable, state economies across the country will be stronger and communities more vibrant, improving lives not only for ALICE, but for everyone,” the report says. .
To find charts for all counties in Michigan, as well as other states where this project is active, go to UnitedForALICE.org.