Challenges continue for residents of greater Itasca County who represent a growing number of people who work but don’t make enough to afford a basic household survival budget
Households in this situation are referred to as ALICE (Asset Limited, Income Constrained, Employed), meaning their income is above the poverty line but below the cost of living within the county where they live. A population that has become a focus of United Ways across Minnesota, including the United Way of 1000 Lakes, who shared a new report at the Minnesota Capital on September 10th.
The report, “ALICE in Minnesota: A Study of Financial Hardship,” conducted by United for ALICE and United Ways of Minnesota, highlights that while wages have increased at the fastest rate in four decades, the number of households struggling to get by in Minnesota grew from 2021 to 2022.
According to the study, 834,343 Minnesota households, or 36% fall under the ALICE Threshold. That calculation includes 233,779 families in poverty and another 600,564 defined as ALICE.
“(The) ALICE budget threshold is a number that is calculated for various types of households including single individuals, families of four, single-parent families, and adults over age 65,” explained Kim Brink Smith, United Way of 1000 Lakes Executive Director. “Budgets are calculated using the expected costs of housing, food, transportation, health care, childcare, and technology.
Locally, the report found that 29% of households fit into the ALICE category, compared to the state average of 26%, and 12% of Itasca County households were in poverty, compared to the state average of 10%.
This means in Itasca County more households are struggling per capita than the state average, with 41% below the ALICE Threshold.
The report shows that while wages were increasing, so too were costs. For a family of four with an infant and a preschooler, the basic costs to live and work in Minnesota, excluding tax credits, rose from $63,444 in 2021 to $77,304 a year later. Meanwhile, in Itasca County, that threshold was $78,444 in 2022, well above the federal poverty level of $27,750. Compounding the issue in 2022 was the loss of up to $15,000 in federal child tax credits and stimulus payments that this family had access to in 2021.
The findings in this one year are consistent with a more than a decade-long trend: since the end of the Great Recession, despite some ups and downs, the number of ALICE households in Minnesota has been steadily growing. During this period, the total number of households rose by 10%, while households in poverty remained flat (increased by 1%), but the number of ALICE households increased by 33%.
“The data is showing persistent and widespread financial hardship — a red flag that the current system isn’t working for ALICE,” said Stephanie Hoopes, Ph.D., United for ALICE National Director. “Current policy has not been enough to break down the barriers that trap ALICE households in financial hardship, from lack of access to housing and childcare that’s affordable to inadequate community support such as broadband internet.”
Additional insights include:
From 2010 to 2022, people aged 65 and over made up the fastest-growing age group in Minnesota — and the group with the largest increase (44%) in the number of households struggling to make ends meet.Financial hardship affects demographic groups differently. In the county, American Indian/Alaska Native (80%), Hispanic (27%), and multiracial (42%) households are more likely to fall below the ALICE Threshold than white (40%) households. Likewise, single-parent families (female-headed 71%, male-headed 48%), and those headed by adults under 25 and over age 65 are also more likely to struggle financially.Food assistance continued to elude many vulnerable families in Minnesota. Partly due to the SNAP income eligibility level in the state (200% of the Federal Poverty Level), only 32% of all Minnesota households in poverty and 13% of all ALICE households participated in SNAP in 2022.Minnesota also has a sizable indigenous population, many living on federal and state reservations. The rate of financial hardship varies across the areas. On the Leech Lake Reservation, 48% of households fall below the ALICE Threshold, that calculation includes 18% of families in poverty and another 24% defined as ALICE.
The report will serve as a launching pad for United Way to engage policymakers, business leaders, academics, the faith community, ALICEs, and others to pursue solutions for financial stability.
“United Way strives for a vibrant community where all people have the opportunity to realize their full potential. That means mobilizing the people, partners, and resources needed to help every person thrive,” Brink Smith said. “The ALICE report sheds light on the true extent of financial hardships in our community, so we know where our efforts can make the greatest impact.”
To read the report and access online, interactive dashboards that provide data on financial hardship at the state, county, and local levels, visit uwlakes.org/alice to learn more.
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