38 percent of Charlevoix County households are struggling to get by financially says United Way ALICE Report

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By Benjamin Gohs

News Editor

A new report just released by the United Way gives a detailed picture of the working poor in Charlevoix County and across the state.

Claiming to dig deeper than purportedly outdated federal poverty statistics, the ALICE (Asset Limited, Income Constrained, Employed) Report suggests nearly 1.54 million Michigan households are struggling to survive.

“A decade-long economic decline capped by the Great Recession hit Michigan’s communities with hurricane force, hobbling the auto industry, bruising wages and destabilizing families statewide,” stated Scott Dzurka, President and CEO of the Michigan Association of United Ways in the report. “No one has been hit harder by that gale than ALICE … those among us who are working, often at more than one job, yet still falling behind.”

He added, “What we learned about ALICE in the process of creating this report is startling: today, 40 percent of Michigan households earn too little to provide for basic needs, and nearly two-thirds of jobs statewide pay less than $20 per hour.”

In Charlevoix County, which has a population of 25,978 for a total of 10,191 households, the median household income is $44,756, compared to the state average of $46,859.
The unemployment rate here, at the time of the study, was 10.7 percent while the state average was 9.1 percent.

The number of those living in poverty in Charlevoix County is estimated at 13 percent—1,283 households—and those falling in the ALICE range is 25 percent, for a total of 2,572 households. The report shows 62 percent of the households in the county to be above ALICE.

Michigan is one of six states—California, Connecticut, Florida, Indiana and New Jersey—which receive ALICE Reports.

The ALICE threshold, a new measure, is intended to be a more realistic standard developed from the Household Survival Budget, a second measure that estimates the minimal cost of the five basic necessities: housing, child care, food, transportation and health care.

When ends don’t meet

“Most jobs in Michigan do not pay enough to allow families to afford the most basic household budget,” the report states… “All counties in Michigan have more than 27 percent of households living below the ALICE Threshold. In addition, most towns (73 percent) have more than 30 percent of households living below the ALICE Threshold.”

Michigan became less affordable from 2007 to 2012, with costs of basic housing, child care, transportation, food and health care in Michigan increasing by 9 percent.

Consequences of ALICE

Across the state there are almost twice as many renters with income below the ALICE Threshold as there are rental units they can afford.

Meanwhile, where ALICE households can afford the mortgage, they do not have the down payment or do not qualify for a mortgage.

“The whole community suffers when ALICE has insufficient income,” states the report. “When ALICE children are not ready for school, they add a burden to the educational system. When ALICE households cannot afford preventative health care, they are more likely to place future burdens on the health care system, increasing insurance premiums for all. When ALICE workers cannot afford an emergency, let alone invest in their neighborhood, communities may experience instability, higher taxes or a decline in economic growth.”

The decreased opportunities combined with increasing costs have led to a decreasing population.

“Higher income is especially important for families with children because of their greater budget costs. Without job opportunities in the state, one option is to move,” the report states. “From 2007 to 2012, the number of married-couple families with children in Michigan fell by 14 percent, the number of single female-headed households with children decreased by 5 percent, and single male-headed households with children decreased by 2 percent.”

ALICE household makeup

The age group 25 to 64 years old is the largest segment of ALICE households.

“As in Michigan’s overall population, more than 77 percent of the state’s ALICE households are White. However, due to wage discrepancies that disproportionately affect certain groups, it is not surprising to find female-headed households, Blacks, Hispanics, people living with a disability and recent unskilled immigrants over-represented in the population living below the ALICE Threshold.”

Realistic poverty figures

“The official U.S. poverty rate was developed in 1965, has not been updated since 1974, and is not adjusted to reflect cost of living differences across the U.S.,” the report states…. “Michigan has 605,210 households below the Federal Poverty Level (FPL) but also has 930,503 ALICE households, which have income above the FPL but below the ALICE Threshold.”

Survival vs. stability

A bare-minimum budget does not allow for any savings, leaving a household vulnerable to unexpected expenses.

“Using the thriftiest official standards … the average annual Household Survival Budget for a Michigan family of four is $50,345, and for a single adult it is $16,818,” states the report. “These numbers vary by county, but all highlight the inadequacy of the 2012 U.S. poverty designation of $23,050 for a family and $11,170 for a single adult as an economic survival standard in Michigan.”

Going further than mere survival, the Household Stability Budget shows the amount of income needed for an economically viable household. In Michigan, that figure is $92,409 per year for a family of four, an 84 percent increase over the Household Survival Budget.

A closer look at income

ALICE measures cover the years 2007, 2010 and 2012 to view the start and finish of the most recent recession and activity since its official end.

Income disparity in Michigan means there is both great wealth and significant economic hardship.

“The top 20 percent of Michigan’s population earns half of all income earned in the state, while the bottom 20 percent earns only 3 percent,” the report states.

While 25 percent of Michigan households are asset poor, 39 percent do not have sufficient liquid net worth to subsist at the Federal Poverty Level for three months without income.

“Michigan is the only state in the country whose population declined over the last decade… While Michigan’s poverty rate is only one percentage point above the U.S. Rate … the median annual income suggests a greater difference,” the report states. “At $46,859, it is 10 percent below the U.S. median of $51,371. However, because neither of these measures considers the actual cost of living in Michigan or the wage rate of jobs in the state, they do not fully capture the number of households facing economic hardship.”

The future of the working poor

Both nationally and statewide, low-paying jobs will continue to be plentiful and dominant in the market.

“The Michigan economy is now more dependent on low-paying service jobs than on higher-skilled and higher-paying jobs,” the report states. “Sixty-three percent of all jobs in Michigan pay less than $20 per hour ($40,000 per year if full-time). Occupations with projected job growth have low wages and require minimal education. The most projected new jobs openings are in service jobs with wages below $15 per hour and requiring a high school education or less.”
It further states, “These jobs—including health care workers, retail salespeople, construction laborers, food preparation workers and motor vehicle operators—are projected to grow at double or triple the rate of medium- and high -skilled jobs over the next decade across Michigan.”
The economic outlook for senior citizens is equally as grim, as Michigan’s higher-than-average aging population will continue to feel the sting of the retirement plans and long-term savings they lost during the most recent recession.

Obvious yet elusive solution

According to the report, an improvement in income opportunities would enable ALICE households to afford basic necessities, build savings and become financially independent but even short-term help can prevent a minor financial emergency from becoming a crisis.

“For example, providing a month’s worth of food for a family may enable a father to repair his car’s transmission and get to work,” the report states. “If a family’s primary earner cannot get to work, he might lose wages or even his job. Without regular income, the family cannot afford rent or mortgage payments and risks becoming homeless.”

However, reducing the number of ALICE households requires significant increases in wages of current jobs and/or in the number of better jobs.