Are you an ‘ALICE’? Experts sound the alarm over concerning financial trend

Experts warn of a growing group of financially vulnerable Americans known as “ALICEs.”

An ALICE – or Asset Limited, Income Constrained, Employed – is someone who makes enough money from their work to disqualify them from government assistance, but struggles to meet day-to-day expenses.

The term was coined by the nonprofit United Way in its publication United for ALICE program. It classifies ALICEs as Americans who earn more than the federal poverty level of $15,060 for an individual or $31,200 for a family of four but are unable to make ends meet.

About 29 percent of U.S. households are ALICE, according to the latest data from United for ALICE, while 13 percent are below the federal poverty level.

Many ALICEs are workers whose salaries are not enough to meet basic needs, meaning they could be forced to sacrifice health care to meet rent payments, for example.

The share of people in this vulnerable financial group has risen over the past decade, with states like Montana and Idaho seeing the biggest jumps during the pandemic. Business insider reported.

This is because while US incomes have increased, they have not kept pace with rampant inflation, skyrocketing borrowing costs and rising real estate prices.

According to the latest 2021 data, the three US states with the highest percentage of ALICE households are all in the Southeast: Georgia, Mississippi and Florida. About 18 states have rates above 30 percent.

In Alaska and Wyoming, the share of ALICE households is smaller than anywhere else, at 22 percent.

In an effort to curb persistent inflation, the Federal Reserve has raised interest rates to a 23-year high of between 5.25 and 5.5 percent, adding to pressure on household budgets.

While expectations for a rate cut were high in the first half of this year, a better-than-expected inflation report earlier this month dashed hopes for a rate cut as early as May.

Speaking in Washington DC last week, Federal Reserve Chairman Jerome Powell said it will take “longer than expected” to bring inflation back to the central bank’s 2 percent target – indicating it will also likely take longer will take to reduce interest rates.

Although poverty rates have largely fallen in the US, the end of government assistance is leaving many Americans falling through the cracks.

For example, to qualify for SNAP benefits or food stamps, Americans must apply in their state and meet certain requirements requirementsincluding income limits.

Families must have an income below about 138 percent of the federal poverty level, meaning a family of four must have a gross income of less than $39,000.

For Supplemental Security Income, which provides benefits to Americans with disabilities, the limit for individuals is typically $1,971 per month.

Stephanie Hoopes, national director at United for ALICE, told Business Insider, “It’s hard to put into data the frustration, the stress, the day in and day out, of having to make some really bad choices.”

‘Are you going to get the medicine for your child, or are you going to eat tonight? Do you keep the electricity on? Are you going to daycare?’

Hoopes said the federal poverty level is outdated in many ways because it doesn’t take into account regional differences and the changing share of people’s budgets that goes toward food.

She added that less attention is being paid to helping people who are better off financially but still cannot invest in their future.

Separate research shows that more than half of Americans who earn more than $100,000 a year live paycheck to paycheck.

An investigation by Barrons found that 51 percent of people with annual salaries over $100,000 run out of money every month.