United Way: Nearly 40% of CT households faced poverty in 2022

Nearly two out of five Connecticut households lacked the income to cover a realistic survival budget in 2022, the United Way of Connecticut reported Tuesday.

And the overall number of households in poverty statewide continues to trend in the wrong direction.

“Hardship in Connecticut continued to be shaped by the conflicting economic forces of the pandemic and remained substantially undercounted by official measures,” the United Way wrote in the narrative accompanying its latest ALICE calculations, an alternative to what many state officials recognize as an outdated federal methodology to assess poverty.

An acronym for Asset-Limited Income-Constrained Employed households, the ALICE formula found a Connecticut family of four — two adults, one preschooler and one infant — needed to earn $113,520 in 2022, up from $106,632 in 2021. If that family takes full advantage of all federal tax credits available, the minimum earnings needed two years ago were $108,324.

That survival budget covers housing, foods, utilities, transportation childcare and — assuming the family can’t afford a computer — at least one smart phone.

The ALICE calculations represent an alternative to the Federal Poverty Level, a simple metric developed in the mid-1960s by U.S. Social Security Administration economists and based largely on the cost of a minimum food diet. A family of four earning more than $27,750 was considered above the poverty line in 2022 based on that benchmark.

Housing — which includes utilities — and food were the two largest expense components of the ALICE budget for that typical family of four, representing 34% and 23% respectively. Other segments include: transportation, 17%; healthcare, 15%; child care, 7%; phone and technology, 3%.

Housing, health care, transportation and child care have been key factors pushing Connecticut family budgets higher and higher over the past two decades. According to the United Way, cost growth since 2007 has been 76% for housing, 75% for health care, 66% for transportation, and 57% for child care.

These ALICE families “are forced to consider whether they even continue working and pay the cost of child care,” Lisa Tepper Bates, president of the United Way’s Connecticut chapter, said during a mid-morning press conference Tuesday at the state Capitol. “The money isn’t there. The math doesn’t work for them.”

For a single adult in Connecticut, the minimal ALICE earnings rose from $33,120 in 2021 to $34,812 in 2022. The FPL two years ago was $13,590.

Meanwhile, Connecticut households, considering all sizes, are increasingly falling below the United Way’s threshold.

Slightly more than 151,100 Connecticut households, about 11%, were below the FPL two years ago, and 563,512 or about 39.4% fell shy of the ALICE benchmark.

In 2019, the last year before the coronavirus pandemic struck Connecticut, the share of households below the ALICE threshold was 36%.

Wages for the lowest-paid jobs increased rapidly nationwide between 2019 and 2022 as businesses and policymakers tried to stimulate a tight labor market. The Connecticut minimum wage rose from $11 per hour to $14 during that period.

But inflation also took a toll, including reaching a 40-year high in June 2022 when it topped 9%.

“While these [wage] increases helped fill the gap when pandemic assistance ended, they were not enough to make up for years of falling behind,” United Way analysts added in their report, which also examined those occupations that left the most workers below the ALICE earnings level.

Personal care aides and nursing assistants, two professions increasingly plagued by shortages in Connecticut, topped the list, with 54% and 49% of employees, respectively, below the threshold in 2022.

Others near the top included: fast food and counter workers and cooks, 47%; stockers and order fillers, 43%; movers and other laborers, 41%; cashiers, 40%; teaching assistants, 38%; and waiters and waitresses, 37%.

The United Way also reported that ALICE trends mirror those of the FPL in some problematic ways, falling much more heavily on people of color, for example.

About 58% of Black and Hispanic households earned less than the ALICE limit in 2022, compared to 34% of white families. Other results included: 72% for native Hawaiian/Pacific Islander; American Indian/Alaska native, 59%; and households that reported two or more races, 48%.

Gov. Ned Lamont and the General Assembly did take steps in 2022 to help return more dollars to Connecticut’s low- and middle-income families, ordering one of the largest state income tax cuts in state history.

The first income tax rate cut since the mid-1990s gave many middle-income households an extra $300, while an enhanced tax credit gave Connecticut’s working poor an extra $210, on average.

But those tax changes didn’t take full effect until 2023 and 2024, meaning the impacts weren’t reflected in this report.

United Way intensifies push for CT child tax credit

The United Way is one of several groups lobbying the General Assembly to create a new child tax credit within the state income tax.

The most popular proposal supported by many groups would provide $600 per child, up to $1,800 per household to low- and middle-income families. The credit also would be refundable.

That means that even if a household earns so little it has no state tax liability to apply the credit to, it still could have as much as $600 per child added to its refund.

Supporters estimate the annual cost to the state to provide this relief would be about $300 million to $400 million.

But Rep. Anthony Nolan, D-New London, one of five legislators who attended Tuesday’s press conference, said the state’s coffers easily can spare the cash.

Since aggressive new savings programs were adopted in October 2017 to help government build reserves and whittle down pension debt, the state has amassed a record-setting $4.1 billion rainy day fund while dedicating another $8.5 billion in surplus to cover unfunded pension obligations.

“Stop telling us or your constituents it’s difficult to make the decision,” Nolan said. “We have funding that was set aside in that surplus.”

The New London lawmaker added that while state government has ample reserves to support its budget during the next economic downturn, many ALICE families can’t save anything as they struggle to cover daily living costs. That means no financial cushion for emergency expenses, and no savings for retirement.

Many legislators have spoken out in recent months about the importance of controlling the rising costs of child care, electricity and housing.

And while these are important goals that need attention, Kate Farrar, D-West Hartford, said during the press conference, “The quickest way to make a difference on the bottom line for [ALICE] families is to make sure they have that money back in their pockets.”

Other legislators who attended Tuesday’s United Way event included Reps. Holly Cheeseman, R-East Lyme, Francis Cooley, R-Plainville, and Mike Demicco, D-Farmington.

Bates added that with Connecticut employers struggling to fill about 90,000 jobs, a state child tax credit could be an economic boon.

“People who could be working,” she said, “can’t afford to enter the workforce.”