Many metrics have been used to measure a household's financial stability, but each measure has shortcomings in describing a household's financial health. One metric has emerged to define the population who live above the federal poverty line but still struggle to make ends meet. ALICE is an acronym for asset limited, income constrained, employed and describes working individuals and families who have difficulty affording basic expenses on their current incomes. ALICE individuals often work in lower-wage, lower-skilled jobs in industries such as child care, transportation, construction, retail, and customer service. This article examines the ALICE project in Florida.

The original ALICE project was developed in 2009 by Stephanie Hoopes Halpin of Rutgers University and the United Way of Northern New Jersey as a pilot for the state's Morris County. The project's success in placing a face on the ALICE population led to its adoption across the state. The New Jersey report was used to help inform key program and policy dialogues related to working families. After the initial report was released, five other states—California, Connecticut, Florida, Indiana, and Michigan—used the model to conduct their own studies to identify ALICE populations.

The ALICE classification sets a threshold that represents the minimum standard of living for a local community. The threshold is made up of five basic necessities: housing, child care, food, transportation, and health care. The ALICE threshold is unique as it adjusts based upon the household type and the county of residence. Unlike other measures that might take an average household or a state average, ALICE looks at the minimal living standards for local families. Thus, a family of four in Dade County, Florida, with two children under five years old will have a different ALICE threshold than if they lived in Orange County, California. As a result, ALICE can provide a robust picture of what is necessary to survive for various family structures, and it identifies those who are on the edge of financial instability but do not live in poverty.

Florida families struggle to get by
Florida's ALICE report indicates that large portions of the state's population are falling behind financially. According to the report, which was released by the United Way of Florida in the fall of 2014, the number of Florida families struggling to make ends meet was nearly three times larger than indicated by the federal poverty line. The study found that 3.2 million Florida households fall below the ALICE threshold, or 45 percent of all households. This includes 1.1 million households below the federal poverty line and 2.1 million between the federal poverty line and the ALICE threshold. Of the six states studied to date, Florida had the second highest number of households living below the ALICE threshold, just behind California's 46 percent. The ALICE population in Florida is widespread. Each county in Florida had at least 30 percent of its households living below the ALICE threshold, and some counties had up to 60 percent (see the map). Hardworking families from every demographic background make up these households.

Since the end of the Great Recession, Florida has experienced increased job growth in many areas. But according to the ALICE report, 69 percent of jobs in Florida pay an hourly wage of less than $20 with more than half (54 percent) paying less than $15 an hour. In addition to low-wage jobs, the report found that costs in Florida for basic necessities are rising. Between 2007 and 2012, housing, child care, transportation, food, and health care costs increased by 13 percent. Moreover, there are more than twice as many ALICE renter households as there are affordable rental units, a shortfall of 915,000 units, notes the report. The combination of significant numbers of low-wage jobs and an increasingly high cost of living means that a large portion of the population must rely on outside sources of income to meet the ALICE threshold or compromise on basic necessities.

Lessons for stakeholders
By conducting this research, the United Way of Florida is able to inform stakeholders about the ALICE population. The report's authors hope to show that the ALICE population is not a new one. Instead, the report provides a new lens by which governments, industry, and nonprofits can look at the population. The ALICE project has shown that the number of households struggling is significantly higher than reported by poverty line figures.

In Florida, with the cost of living growing faster than wages, the ALICE population will increase. Such a situation is likely to be exacerbated if the quality of net new jobs continues to be low. The report authors also foresee challenges for the ALICE population as the proportion of Florida seniors to the total population continues to increase, as forecasted by the state legislature's Office of Economic and Demographic Research  and other sources. This dynamic is described at a national level in the Fed Board of Governor's report on the financial status of older Americans.

The Great Recession deeply affected the financial viability of working families across the country, and middle- and lower-income families' current wealth levels are comparable to where they were in the early 1990s. According to findings from a Federal Reserve Board survey conducted in September 2013, many households were faring well, but sizable fractions of the population were displaying signs of financial stress. The Report on the Economic Well-Being of U.S. Households in 2013 showed that 34 percent of survey respondents reported they were somewhat worse off or much worse off financially than they had been five years earlier, 34 percent said they were about the same, and 30 percent noted they were somewhat or much better off. The report also shows that savings for many households have become depleted since the recession: among those who had savings prior to 2008, 57 percent reported using up some or all of their savings in the Great Recession and its aftermath. The St. Louis Fed's Center for Household Financial Stability is particularly concerned with these issues and conducts research on family balance sheets.

The ALICE project not only sheds new light on this population but also unearths many of the challenges facing working families. A working family's budget is made up of a variety of different expenditures, and the comprehensive nature of the ALICE project can provide in-depth data on what is occurring in each section of the budget. This information can help identify the specific challenges facing working families and any trends within defined geographic areas. The localization of the ALICE threshold provides a targeted picture of how families are faring in specific communities. As the ALICE project is conducted on a regular basis and in additional states, it may provide valuable insight into the state of working families across the Southeast and the country. In future articles, this publication will explore promising policies and programs that community and economic development practitioners may consider to assist these working families.

By Joseph Rondone, CED intern