When in the mood for a sardonic laugh, I look up the federal government’s official poverty level for a family of four in the United States of America. The number usually elicits howls of derisive laughter, and today will be no exception.
According to the U.S. Department of Health and Human Services, a family of four is considered poor if its annual income is no more than $26,200. Really. You can look it up.
That number might be laughably low, but it’s no joke because it forms the baseline for eligibility for government benefits — Head Start, the Supplemental Nutrition Assistance Program (food stamps), the National School Lunch Program, the Low-Income Home Energy Assistance Program and the Children’s Health Insurance Program.
In its own way of acknowledging the ridiculousness of the baseline, Congress has made adjustments in maximum income levels to allow more people to be eligible for government assistance, including subsidized health insurance. For instance, Maryland is one of 38 states that adopted Medicaid expansion under the Affordable Care Act; you can be eligible for the Medicaid program here if you earn up to 138% of the federal poverty line.
Still, the starting point for official poverty is laugh-inducing when you consider the cost of living in the U.S., and Maryland particularly.
Acknowledging that, United Way launched a national effort to come up with a better understanding of where financial hardship really lives in America. For the last decade, the nonprofit has been looking — state by state and even county by county — at what we have generally called the “working poor,” people who are employed, but who still do not earn enough to support their families. United Way calls such households ALICE households. That stands for “Asset Limited, Income Constrained, Employed.”
The methodology for the ALICE calculus is straightforward: a deep data dive and tabulation of the cost of living in each county to establish what United Way calls the “ALICE Household Survival Budget.” It’s based on the minimum costs of housing, child care, food, transportation and health care. Taxes are factored in along with a contingency fund equal to 10% of the household budget. It is then compared to household income.
So we have a new term, a more realistic and localized metric and, based on United Way’s findings, a better understanding of how much families need to earn to keep up with bills.
And I can’t say I was shocked to see the numbers presented at a recent ALICE discussion, moderated by Franklyn Baker, the president and CEO of United Way of Central Maryland: $77,000 for a family of four in Baltimore County, and that does not include the annual cost of child care. The number was the same for Harford County and Carroll County, but higher in Howard ($94,000) and Anne Arundel ($88,000).
A family of four can get by in Baltimore with $72,000 a year, though the last U.S. Census put the city’s median household income at $48,000.
Given those numbers, Baker says, nearly 40% of households in Maryland, one of the wealthiest states in the nation, are considered ALICE households. (The percentage is higher in Baltimore, at 55%)
“These are hardworking people,” Baker says, “but they are working in low-paying jobs and their earnings just cannot keep pace with the state’s high costs of living.”
And that was the case before the coronavirus pandemic.
Workers in service jobs, and at the low end of wage earners, have been considered the most vulnerable to losing their positions, temporarily or permanently, in the economic conditions wrought by the virus.
According to a data analysis by Harvard researchers, employment rates among low-income workers in Maryland decreased by 37% between January and the end of May. Their earnings were down 33% during the same period. Upper-income workers, people with college degrees and jobs that allow them to work from home, are much better off. “While employment rates have rebounded to pre-COVID-19 levels for high-wage workers, they remain significantly lower for low-wage workers,” the Harvard researchers found.
Even with the supplemental unemployment benefits and stimulus checks that came from Congress in the first round of pandemic relief, the loss of income to ALICE households has set them back financially, leaving them with more debt and even less opportunity to build savings and assets.
There’s significant racial disparity within hardship households throughout the country, says Stephanie Hoopes, national director of the ALICE program. “Black households are much more likely to be ALICE,” she says. “For the U.S., about 42% of white households come below the ALICE threshold, [for] Black households, it’s 60%. And in Maryland, fairly similar — 32% of white households come below the ALICE threshold, while 66% of Black households do.”
The percentage of hardship households in each state ranges from a low of 32% (Wyoming) to a high of 50% (Mississippi and Louisiana). Maryland is ranked second in median household income ($83,242), yet right in the middle of the range, with two out of five households considered ALICE.
By now, we know well what’s to blame for these striking disparities, for all the ALICE households across the land — institutional racism, the decline of unionism, obscene income inequality and the concentration of wealth among a financial and political elite oblivious to peoples’ struggles, corporate greed and years of flat wages. We didn’t need a pandemic to reveal all that. All that has been right before our eyes. You can look it up.