United Way: Nearly 40% of Michigan residents struggling financially before pandemic

Editor’s Note: This article was originally published by The Monroe News.

One of the reasons the COVID-19 pandemic hit Michigan so hard financially is that many residents were not in a stable economic situation to begin with.

That's the conclusion United Way of Michigan officials have made as they review the latest ALICE  financial report. ALICE is a term United Way agencies use to describe households whose employment incomes are not keeping up with the cost of living. The phrase stands for "Asset Limited, Income Constrained, Employed."

A video presentation was given this week via the Michigan Association of United Way's Facebook Page for the newly released report, which analyzes 2019 data. Because of updated analytics, the United Way considers this year's report to be "the most comprehensive depiction of need in Michigan to date." Coinciding with the state report, the United Way of Monroe/Lenawee Counties also issued a statement and comments.

One of the uses for this research has been to measure the impact of the Great Recession.

"Unfortunately, we have seen an uneven economic recovery across Michigan, ... and those who we have relied on the most have been getting paid the least," Connie Carroll, executive director of the United Way of Monroe/Lenawee Counties, said in her written remarks.

Given the timing of this data, United Way officials will also use ALICE research as a benchmark for where Michigan residents stood financially before the COVID-19 pandemic reached Michigan.

"While we haven't seen the numbers from 2020 yet, we know they're not going to be good," Michigan Gov. Gretchen Whitmer said upon the release of the report.

"Low wages, reduced work hours, and depleted savings, combined with increased costs of living, meant that nearly four in 10 households were struggling to get by in 2019 - and that was before the pandemic hit," Mike Larson, president and CEO of Michigan Association of United Ways, said in his remarks. "Due to longstanding inequities, those numbers were even worse for Black, Hispanic and single-female-headed households."

The ALICE report considers actual household income against the cost of living adjusted to county and metropolitan areas. That's where the financial gap can be seen.

The unemployment rate has been good during some of the years this study has taken place, but it does not give a complete picture. This latest report says 58% of all jobs in Michigan paid less than $20 an hour during 2019; and "an increase in contract jobs and on-demand jobs is leading to less financial stability."

During the past few years, Michigan college graduates also took on more debt to pay for higher education.

Overall, the cost of household essentials increased 3.4% annually from 2007 to 2019; while the rate of inflation during that time was 1.8%. To put the data into annual salary ranges, a single adult in Michigan needed an annual salary in 2019 of about $23,400 or earning $11.70 an hour "just to afford the basics." A family of four in Michigan needed an annual salary of about $64,100, or earning $32.06 per hour.

The household expenses in this research include rent, food, automobile insurance, cost-per-mile for a small or medium-sized car, cost of an employer-sponsored health insurance plan and any local income tax. There also are adjustments for senior citizen households, where out-of-pocket health care costs are likely to be higher.

The trends in both counties under the local United Way's jurisdiction have not changed significantly in recent years. In fact, the 2019 statistics closely mirror the current statewide figures:

• In Monroe County, there were 10% of households at or below the poverty line, 24% in the ALICE range, and 66% above the ALICE threshold.

• In Lenawee County, there were 13% of households at or below the poverty line, 25% in the ALICE range and 62% above the ALICE threshold.

• In State of Michigan, there were 13% of households at or below the poverty line, 25% in the ALICE range and 62% above the ALICE threshold.

As explained on the state United Way's site and through case studies presented in the video program, the consequences of insufficient household income ripple beyond a family to the overall community.

The matter of housing stability also contributes significantly to work and school attendance.

"The larger the gap between income and expenses, the more extreme the decisions and the greater the risks to a family's immediate health, safety and financial stability," the agency's report said. "Choices in one area invariably affect choices in other areas."

The long range goal with this research is to provide insight as government agencies, nonprofits, businesses and families / friends of those affected aim to find solutions that work for a given community.

"Ultimately, if ALICE households can become financially stable, state economies across the country will be stronger and communities more vibrant, improving life not just for ALICE, but for everyone," the report said.

To find the charts for all Michigan counties, along with other states where this project is active, go to UnitedForALICE.org.