In the United States, nearly 40 million families are considered to be ALICEs, which stands for Asset Limited, Income Constrained, Employed. This term was first coined by the United Way’s United For ALICE program to highlight households that earn above the poverty line but still struggle to make ends meet. These families make up 29% of the population, not including the 37.9 million Americans living in poverty, according to the U.S. Census Bureau.
The ALICE population consists of child-care workers, home health aides, cashiers, and others in low-wage jobs. These individuals have little to no savings and are just one emergency away from falling into poverty. The rising costs of living, compounded by stagnant wage growth, have pushed many ALICE households to the brink. Inflation has been a major contributing factor, with essential expenses such as food, rent, and gas experiencing higher-than-average price spikes.
Since the Covid-19 pandemic, inflation has been a persistent issue, reaching levels not seen since the early 1980s. The Federal Reserve responded by raising interest rates, putting additional financial strain on households. The spike in borrowing costs has made it challenging for ALICEs to make ends meet, as their incomes have not kept pace with rising prices. Despite some wage growth in the low-to-moderate income brackets, inflation has eroded the purchasing power of many working-class families.
The current economic landscape has left ALICE households with limited options to reduce expenses or increase their income. Many are turning to credit cards to cover essential bills, leading to a record-high level of credit card debt. The personal savings rate has fallen, making it harder for families to weather financial emergencies. High credit card delinquency rates further exacerbate the financial strain on ALICEs, trapping them in a cycle of debt.
As inflation remains a persistent problem and interest rates stay elevated, ALICE households are caught in a precarious situation. The lack of real wage growth, coupled with the high cost of living, makes it challenging for these families to build financial stability. Solutions to address the needs of the ALICE population must involve targeted policies that prioritize wage growth, affordable housing, and access to financial resources.
The growing number of ALICE households in the United States highlights the urgent need for comprehensive measures to address financial vulnerability and inequality. Without meaningful interventions, the economic disparities faced by ALICEs will continue to widen, placing a significant burden on these families and the overall economy. It is crucial for policymakers, businesses, and communities to come together to support the ALICE population and ensure a more equitable and prosperous future for all Americans.