Meet ALICE: 29% of American households who earn above poverty level but don’t have enough to make ends meet

Persistent inflation in recent years has taken a toll on Americans in multiple ways. For instance, according to Bankrate’s money and mental health survey, 65 percent of people who said their mental health is affected by money cite inflation as a cause.

When prices of goods and services are elevated, nearly everyone feels the effects — including those who earn too much to qualify for government aid, yet not enough to cover all their living expenses. The name for those who fall into this category is ALICE: Asset Limited, Income Constrained, Employed.

ALICE is a term to describe those whose income is above the Federal Poverty Level — so they don’t qualify for public assistance — yet they don’t earn enough to cover basic expenses such as rent, food and childcare. Nearly one-third of U.S. households (29 percent) fall into this category, according to United Way’s United for ALICE program.

How much money ALICE needs to survive

Researchers with the United for ALICE program developed a survival budget, which is adjusted by U.S. county and household type, and reflects the minimum costs, plus taxes, of six household necessities:

• Housing

• Childcare

• Food

• Transportation

• Healthcare

• Technology

Based on the survival budget, ALICE researchers also calculated the minimum average household income needed to afford basic costs. Like the budget, this figure varies by U.S. county.

For instance, the survival budget was $30,084 in 2022 for a single adult in Franklin County, Ohio — the county researchers have defined as roughly the median county in the U.S. for income.

A decade of financial decline for ALICE

A new report from the ALICE program found that despite recent wage increases for low-wage jobs, some workers are worse off financially than they were a decade ago. Contributing factors include inflation as well as more than a decade of stagnant wages, according to the report.

“This is a structural problem in our economy where so many jobs are needed to keep our economy running, yet many of these aren’t earning enough to support their families where those jobs are located,” says Stephanie Hoopes, national director, United For ALICE at United Way of Northern New Jersey.

Such jobs can include workers in coffee shops, package delivery and repair persons, as well as security guards and landscapers, Hoopes says. “This isn’t a budgeting problem. This isn’t people not being up-to-date on their personal finance best practices. This is beyond that.”

When it comes to present day wages, stagnant or reduced income was cited by 32 percent of Americans (across income groups) who thought their finances would not improve in 2024, according to Bankrate’s personal finance outlook survey. This answer was the second most cited reason people didn’t expect their finances to improve, with continued high inflation being the top reason.

ALICE Essentials Index: Higher inflation rate than CPI

The ALICE Essentials Index is a measure of the average change over time in the costs of goods and services. Like the Consumer Price Index (CPI), it measures inflation at the consumer level. While the CPI tracks inflation across more than 200 categories of goods and services, the ALICE Essentials Index only tracks the six core categories of housing, childcare, food, transportation, healthcare and technology.

How do the ALICE Essentials Index and the CPI compare? The ALICE Essentials Index rate (currently still a projection) increased to an annual rate of 7.3 percent from 2021 to 2023, compared with a CPI-based annual rate of 6.1 percent for those years, according to the recent ALICE report.

Why is the ALICE-generated inflation rate higher than the CPI? It’s because the ALICE Essentials Index tracks only the basic categories of living expenses, whereas the CPI tracks a broader range of goods and services, according to the ALICE report. For more than a decade, the rise in the cost of these essentials has outpaced the price increases for the CPI’s larger basket of goods and services, the report states.

“ALICE faces a higher rate of inflation, and has been facing a higher rate for a long time,” says director Hoopes.

ALICE statistics by state

Designed by researchers with the United for ALICE program, the ALICE Essentials Index is an inflationary measure comprising six core household spending categories. The data shows this rate jumped to a national level of 7.3 percent (still a projected number) from 2021 to 2023. Broken down by state, Arizona saw the highest increase (10.4 percent), while Hawaii saw the lowest (1.7 percent).

Nationally, 42 percent of households had income below the ALICE threshold in 2022. This included 29 percent who were ALICE and 13 percent who were in poverty. The state with the highest percentage of households below the ALICE threshold was Mississippi (52 percent), while the state with the lowest percentage was Alaska (33 percent).

Where ALICE can get help

Federal Poverty Levels are used to determine eligibility for certain federal assistance programs. In 2024, individuals earning less than $15,060 qualify for benefits, while families of four earning less than $31,200 qualify.

By definition, ALICE individuals earn amounts higher than the Federal Poverty Level, making them ineligible for benefits. No matter your income level, there are various non-governmental resources available if you’re struggling to make ends meet.

“The main place we see ALICE getting assistance is food banks,” Hoopes says. “They provide food for anyone who’s hungry, and they don’t normally ask for income verification or any justification. If you’re hungry, you’re hungry.”

Another resource is 211 call centers, says Hoopes, referring to specialists trained to help connect people with local resources for food, housing and healthcare. They’re available around the clock when you dial 2-1-1 on your phone. “They have thousands of resources available, and their job is to connect people,” Hoopes says.

Some ALICE individuals find work in the gig economy — doing anything from driving for a rideshare service to building decks to crocheting clothing or making t-shirts, Hoopes says. “It’s a way to make extra money to fill in the gaps.”

Ways you can save when money is tight

When your expenses exceed your income, any amount you can trim from your bills or other spending will help to keep your head above water. It also might allow you to put money into an emergency fund.

Follow a budget

A budget is a ledger that lists your monthly income and expenses. It helps you see where your money is going and find areas where spending can be reduced. You can set up a budget using a spreadsheet, a budgeting app or pen and paper. Create categories for each area of spending such as rent, food, housing, transportation, insurance, childcare and utilities.

Find ways to lower expenses

Once your budget is in place, look through it for items you can cut, such as streaming services you’re not using. Also consider expenses you may be able to reduce, such as by finding a new cell phone plan or carrier, or shopping around for more affordable car insurance.

Build up a savings account

Nearly 6 in 10 Americans (59 percent) say they’re uncomfortable with their level of emergency savings, according to Bankrate’s 2024 Annual Emergency Savings Report. found.

If you don’t typically have extra money when the bills are paid, keep in mind that any windfall you receive — no matter how small — could be earning interest in a high-yield savings account. An example would be a tax return or a rebate from a purchase. Money set aside for emergencies, even if small, can help you stay afloat financially when faced with emergency expenses such as a car repair or a medical bill.

Bottom line

ALICE doesn’t qualify for government benefits but still struggles to afford the basic costs of living. Some lower-income workers have seen wage increases but not enough to keep up with inflation. Problems they may experience include inability to pay bills on time, lack of healthcare coverage and not having money in a savings account to help cover unplanned expenses.

Non-governmental resources available to those struggling financially include food banks and 211 call centers, and some find side hustles to help generate extra income.

United for ALICE’s wage tool provides an interactive map where you can view all the U.S. counties, with the corresponding hourly wage needed to support ALICE’s household survival budget.