Connecticut Families Face Growing Gaps, Challenges in Day-to-Day Financial Stability

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The day-to-day fiscal reality was troubling before the pandemic for a growing number of Connecticut families, as newly released data reflects. The pandemic has likely made it worse, and it likely to have a continuing adverse impact, according to officials at the United Way organizations in Connecticut.

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The findings of the Connecticut United Ways’ 2020 ALICE Report, a study on financial hardship, pointed to worsening family finances among working families throughout the state.  The new report concludes that before the onset of the pandemic, 38% of Connecticut’s households lacked the income to pay for necessities such as housing, food, childcare, health care, technology, and transportation. That number includes those families living at or below the federal poverty level and the 27% who live above it but below the basic cost of living threshold.

United Way calls these households ALICE, an acronym that stands for, Asset Limited, Income Constrained, Employed.  The new ALICE Report reveals the following trends affecting ALICE:

  • A disproportionately high percentage of Black and Hispanic households live below the ALICE Threshold (57% of Black households and 63% of Hispanic households).

  • A growing number of households live on the edge of the ALICE Threshold. In Connecticut, 13% of households were on the cusp of the ALICE Threshold, with earnings just above or below it.

  • Many jobs will require an increasing ability to incorporate new technologies, work with data, and make data-based decisions, which means that ALICE workers need more access to upskilling, on-the-job training, and work-based training opportunities

  • ALICE families are more vulnerable to an emergency, because it is becoming more difficult to save and build assets.

The report further demonstrates the now exacerbated economic vulnerability of many Connecticut residents, who, in addition to dealing with longstanding financial challenges, are now also struggling with furloughs, job losses, and an inability to pay bills and provide for their families.  

“ALICE workers are essential to the vitality of our communities. Despite working hard, many ALICE workers are not able to earn enough to keep pace with the high cost of living in Connecticut and the COVID-19 pandemic has exposed just how many families are walking a financial tightrope,” said Richard Porth, CEO, United Way of Connecticut.

The report uses data from a variety of sources, including the U.S. Census and the American Community Survey, to quantify that households in Connecticut’s workforce are struggling.

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Growing financial challenges require more and more families must make tough choices every day as they manage their household budgets. The report highlights the extent of the challenges facing Connecticut families, even before the pandemic struck:

  • 38% of Connecticut households (513,727) cannot afford the basics of housing, food, health care, child care, and transportation. (This includes both ALICE households and those below the poverty line.)

  • Despite working hard, 27% of Connecticut households (367,175) have incomes above the federal poverty level but below the ALICE threshold. 

  • In 148 of Connecticut’s 169 towns and cities, at least 1 in 5 households are below the ALICE Threshold.

  • It now costs more than $90,000 a year for a family of four with one infant and one toddler to pay for the basic needs in the ALICE Household Survival Budget.

·         Connecticut’s high cost of living is a big part of the ALICE story, especially for housing and child care. 44% of families live in a child care desert, defined as having no child care providers at all, or so few options that there are three times as many children for each available licensed child care slot.

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The report also noted that 55% of jobs in Connecticut pay $20 per hour or more, which is among the highest in the country, but only two of the top 20 occupations in Connecticut (in terms of number of jobs) pays enough to support the ALICE Household Survival Budget for a family of four.  The data indicated that 52% of workers in Connecticut are paid hourly workers who are more likely to have fluctuations in income, with frequent schedule changes and variations in the number of hours available for work each week/month.

The past decade has not been kind to Connecticut families, the report points out.  The number of ALICE households in Connecticut increased 40% from 2007 to 2018 as a result of rising costs and stagnant wages. There are many more ALICE households than households in poverty. The Federal Poverty Level, with its minimal and uniform national estimate of the cost of living, far underestimates the number of households that cannot afford to live and work in the modern economy, according to the United Way report. In Connecticut, the percentage of households that were ALICE rose from 20% in 2007 to 27% in 2018, while poverty increased from 8% to 11%.

Being issued just weeks after two weather-related events that impacted hundreds of thousands of state residents, the section of the report highlighting the vulnerability of ALICE households to natural disasters takes on new weight.

“Disasters directly threaten the homes of ALICE families since more affordable housing is often located in vulnerable areas. The jobs where ALICE works are also more at risk, since low-wage and hourly paid jobs are more likely to be interrupted or lost. In addition, ALICE households have few or no savings for an emergency to begin with, and their communities often have fewer resources to assist households,” the report states. 

In addition, with more people working from home or having their children participate in school from home, the report’s review of internet access – or the absence of it – is more salient than ever.

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“Technology has also become more important for work, education, community participation, and, crucially, disaster response and recovery. But access to technology still varies by income and geography. For many families, that lack of access translates directly to reduced job opportunities, educational opportunities, health care access, and financial tools.”

In Connecticut, 29% of households with income below the ALICE Threshold do not have an internet subscription, compared with only 6% for households above the ALICE Threshold.

The report, which included data through 2018, is presented collaboratively by 16 United Way agencies in Connecticut, working in various geographic regions throughout the state.  Similar reports are issued in 21 states and more than 648 United Ways across the country - research aimed at providing a framework, language, and tools to measure and understand the struggles of the nation’s ALICE population.

The 2020 Connecticut ALICE Report is sponsored by The Hartford, Xerox, and Connecticut’s 16 United Ways. For more information or to find data about ALICE in local communities, visit http://alice.ctunitedway.org.  To learn more about the choices facing ALICE families, visit http://www.makingtoughchoices.org/.