[F]our out of every 10 Vermont households don’t earn enough money “to afford the necessities of housing, child care, food, transportation, health care, and a smartphone.”
A smartphone?
More about that presently. At any rate, removing the smartphone from the equation doesn’t change much. Some 40 percent of Vermont households would still be too poor to afford the basic household essentials: food, housing, health care, transportation, child care. Vermont must be an economic disaster zone.
Uhh, no. According to a new nationwide study using ”new measures to identify and assess financial hardship at a local level,” 43 percent of all households in the country don’t earn “the minimum income level necessary based on the Household Survival Budget.”
That’s 51 million households that “can’t afford the basics,” according to a new report. That includes the 16 million officially poor households plus almost 35 million designated as ALICE, an acronym for “Asset Limited, Income Constrained, Employed.”
So these are households in which at least one person works.
Vermont fares better than most states. In neighboring New York, for instance, 47 percent of households don’t earn enough to afford the basic necessities. North Dakota had the fewest households that don’t earn enough (less than 32 percent). California, Hawaii and New Mexico all had roughly 49 percent of their households earning less than what was considered the minimal survival level.
From one perspective, these findings should come as no surprise. As economic inequality has increased and “real” (inflation-adjusted) incomes for most workers have barely budged, scores of studies have revealed the economic distress afflicting millions of American households.
This latest report stands out for a few reasons. Unlike the official federal poverty line, it takes into account the differences in the cost of living depending on where people live. Unlike some government and academic studies, it includes government transfer payments (food stamps, earned income tax credit, etc.) as part of a household’s income.
And it has been sponsored, financed and conducted by one of the most respectable (if not bland) organizations in the country. This study is officially called “the United Way ALICE project.” It comes from the United Way, the nation’s largest charity and a pillar of the American mainstream.
Not that the organization has been a complete stranger to controversy. In the 1990s, its CEO went to prison for fraud. There has been some criticism that its top executives earn too much money.
But it has not had any discernible political tilt, and certainly not a tilt to the left. One of its former CEOs, Elaine Chao, is President Donald Trump’s secretary of transportation, was President George W. Bush’s secretary of labor, and is the wife of Senate Majority Leader Mitch McConnell of Kentucky.
And yet implicit in this report is a challenge to what might be called the mainstream Republican “free market” approach to economic policy. Nowhere does the ALICE report come out and say that workers earn too little because their bosses and employers earn too much.
But that message is sent even though it is not spoken. The study finds that in most places a household would need to earn at least $30 an hour (often much more) in order to afford life’s basic necessities. But most of the jobs being created, it finds, pay quite a bit less.
“Two-thirds of jobs in the U.S. pay less than $20 per hour or
$40,000 annually if full time,” the ALICE study reports. “The three
most common jobs, accounting for 11.5 million workers in the U.S., are retail sales people, cashiers, and food preparers (with) median wages of less than $13.07 per hour. This dominance of low-paying jobs shows no signs of slowing down.”
In fact, it shows signs of speeding up.
“The acceleration of technology and the rise of the “gig” economy has led to more ALICE workers being employed part time, on demand, or in contingent work with fluctuating hours and few benefits,” the report says. “These inconsistent schedules and income makes it even more challenging for ALICE families to pay bills and schedule child care.
“Meanwhile, freelance and contingent labor is expected to … become nearly 20 percent of the labor force by 2020.”
In all states, the report said, the number of ALICE households exceeds the number of poor households. In Vermont, according to the report, only 11 percent of households have income below the federal poverty line; another 29 percent fall under the ALICE designation.
As is true elsewhere, the rural counties have the fewest affluent households. In Essex and Caledonia counties, half the households have incomes below the ALICE line, and in Orleans County the figure is 48 percent. Grand Isle (30 percent) and Chittenden (31 percent) counties, not surprisingly, had the lowest ALICE populations.
The percentages in the other Vermont counties: Addison 39, Bennington 46, Franklin 47, Lamoille 42, Orange 38, Rutland 45, Washington 40, Windham 43, Windsor 43.
As is true of any study, some of the assumptions of this one are open to criticism. Obviously, all the people in all the households with income below “the survival budget” are surviving. Some of them pay no child care costs because they have no children, or because they leave their children with relatives.
Then there’s the smartphone. Laura Bruno, the spokesperson for the ALICE project, acknowledged that whether to include this had been discussed.
“We decided that it has become essential to work in the modern economy,” she said (via email). “Think about Uber drivers, who are part of the gig economy and are most likely ALICE. How could they do their job without one?”
Besides, the study found, 77 percent of Americans already have a smartphone. That comes close to making it a necessity.
“It truly is a survival budget,” Laura Bruno wrote. “We use the most conservative estimates for each line item. The child care line item is the cheapest option available to families — in-home family licensed child care. The food line item is based on the USDA’s thrifty budget which requires cooking every meal and never eating out.”
