A few years ago, United Way conducted a national survey to get a more precise measure of financial hardship than the one maintained by Washington. Within the survey’s results you can find a good explanation for the wide popularity of President Joe Biden’s $1.9 trillion American Rescue Plan.
Using data from each state and specific counties — the minimum costs of housing, child care, health care, food, taxes and transportation — United Way determined the number of households headed by people with jobs but not enough income to support their families. The survey called them ALICE households, for “asset limited, income constrained, employed.” The short version is “working poor.”
In Maryland, one of the wealthiest states in the nation, about 40% of households are considered ALICE households, those headed by low-wage workers who cannot meet the real cost of living of the county, town or city where they reside. (In Baltimore, 55% of all households met the ALICE definition in 2018.)
The United Way survey of America paints a far more realistic landscape than the federal government does with its laughable standards for determining poverty rates. Maryland’s 9% rate, for instance, is based on a family of four with an annual income of less than $26,500. By contrast, the average ALICE survival budget for Maryland came out at $87,156 for a family of four. More specifically, it was $77,000 in Harford, Baltimore and Carroll counties, $94,000 in Howard, $88,000 in Anne Arundel and $72,000 in Baltimore.
It’s hard to imagine anyone arguing that those numbers are too high.
We have had four decades of rising income inequality and, until recent years, stagnant wages and only modest growth in household income. At the same time, we’ve seen an obnoxious concentration of wealth and the repeated cutting of taxes for corporations and the rich.
The economic extremes pulled further apart during the pandemic. There are likely more ALICE households than there were a year ago, says Franklyn Baker, the president and chief executive officer of United Way of Central Maryland. Meanwhile, many of the nation’s billionaires and millionaires became even richer despite the recessionary effects of the health crisis. (In December, 24/7 Wall Street estimated that the country’s 614 billionaires increased their wealth by more than $930 billion after the start of the pandemic.)
So, while some think it startling that Biden’s big relief package could find support among a majority of Americans at a time of stark political division — in some polls, as many as seven out of 10 of us support the deficit spending — I see it as the culmination of an epoch of disparity.
Aside from a recognition of the obvious — that the nation needs big disaster relief — long-simmering resentment of wealth concentration and the 2017 Republican tax cuts undergird Biden’s rescue package.
The polls suggest that even a good number of Republicans, presumably supporters of Biden’s awful predecessor, recognize the myth of trickle-down economics. And I’m sure they knew that well before (and without even reading) December’s report from the London School of Economics that found cutting taxes on the rich leads to higher income inequality while having no significant effect on economic growth or unemployment. (That study covered 50 years of tax policy in 18 countries, including ours.)
So Americans support Biden’s plan because it shifts benefits to people who actually need them.
It attacks financial hardship at its roots in two big ways — with expansions of the Child Tax Credit and the Earned Income Tax Credit. The Maryland Center on Economic Policy believes the first will benefit 1.1 million children in the state while the second will help more than 250,000 Marylanders who work but barely make ends meet.
There are other provisions that will push benefits to ALICE households. “About 760,000 Marylanders who receive [food stamps] will get an extra $29 per month for food,” says Kali Schumitz of the Maryland Center on Economic Policy. “About 39% of that benefit will go to households in deep poverty, those with incomes below 50% of the federal poverty level.” (There were about 78,000 Maryland children living in extreme poverty in 2019, according to the Annie E. Casey Foundation.)
“The American Rescue Plan is a landmark bill that will help bolster nutrition assistance for the hundreds of thousands of Marylanders who are experiencing food insecurity,” says Michael J. Wilson, director of Maryland Hunger Solutions. The plan, he adds, enhances food programs for young adults, seniors and children through the summer. “This will have a powerful impact not just on low-income participants,” Wilson says, “but will boost our grocery stores and farmers’ markets.”
Some believe Biden and the Democrats have seeded real transformation for the country — a lift for ALICE households and for millions of people who struggle to get by. But that will only happen if we go big in more ways — if we make the tax credits and other provisions in the American Rescue Plan permanent to pull more families and children out of poverty and near-poverty, if we commit to overdue infrastructure spending to employ people whose jobs vanished in the pandemic, and if we tax the rich to help pay for it.