Based on the latest data from the U.S. Census Bureau, 37.9 million Americans, 11.9% of the U.S. population, are living in poverty – a number far too high particularly with America ranked first as the richest nation in the world in terms of GDP.
However, the problem of poverty may be even worse than the numbers reported by the federal government.
How could this be? Some experts, like Dr. Stephanie Hoopes, national director, United for ALICE (Asset Limited, Income Constrained, Employed), United Way of Northern New Jersey, point to the methodology used by the Census Bureau in determining the poverty level. She asserts, like many others, that the number reported by the Bureau is based on the official poverty measure which has remained virtually unchanged since the mid-1960s.
And while the Bureau developed the Supplemental Poverty Measure (SPM) in 2011 as an improvement over the existing measure, Hoopes said it still misses thousands of Americans who continue to languish in poverty.
In other words, the SPM falls short of accurately measuring poverty in the U.S.
“We’ve been looking at this for more than 10 years when we first began to compile data in Morris County, New Jersey,” Hoopes said. “We determined there was a mismatch between the federal poverty level and the extent of hardship we were seeing in New Jersey’s residents. It’s an antiquated measure developed in the ’60s for President Johnson and the War on Poverty and it’s based on the premise that food, then, was about one-third of a family’s budget.”
But that number has ticked up with inflation. And Hoopes noted that costs aren’t equal as you move around the country. “There’s a big difference between prices in Mississippi and those in Manhattan,” she said.
“Another problem with using this antiquated measure is housing costs, not food, are what eat into budgets more today, so the old formula just hasn’t adapted to the modern economy,” said Hoopes. “We need something else – something more accurate – to tell us what’s going on.”
ALICE, an acronym for Asset Limited, Income Constrained, Employed, represents the growing number of families earning an income but unable to afford the basics of housing, childcare, food, transportation, health care and technology. ALICE households and households in poverty are often forced to make tough decisions including choosing between quality childcare or paying the rent. Even more, they’re forced to face the long-term consequences of such decisions which often further exacerbate problems for their families.
“In New Jersey, the cost of living increased during the pandemic but not as much as during the great recession (2007 – 2010),” Hoopes said. “However, with some families receiving financial assistance during the COVID pandemic and then with an increase in pay for some low-wage jobs, we still have to see how things will play out. What we can say for sure, based on our most recent report, is that in New Jersey, 11% of households were below the federal poverty level. But another 26% are ALICE households – that means they earned income above the federal poverty level but below the minimal household survival budget.”
Hoopes noted that Blacks and Hispanics represent the largest population groups who could not make ends meet and there’s a big gap between those groups and white families (52% and 51%, respectively, versus 31% for whites).
“We need to do a lot of things different in America because these gaps in wealth and those living or below the poverty level have remained consistent for decades,” she said. “There are many reasons why and it’s not just one thing or another. But what’s even more important from our perspective is that ALICE households are represented by all races – today’s wages just don’t pay enough in the places where the jobs are.”
United For ALICE calculates the cost of household essentials for all counties in New Jersey. These costs, outlined in the Household Survival Budget, are calculated for various household sizes and compositions.
Of New Jersey’s 3,495,628 households in 2021…
• 11% earned below the Federal Poverty Level (FPL)
• 26% were ALICE, in households that earned above the FPL but not enough to afford the basics in the communities where they live.
• Together, 37% of households in New Jersey were below the ALICE Threshold (poverty + ALICE divided by total households).
Hoopes said she remains hopeful but emphasized that the federal government’s business as usual roadmap is no longer adequate.
“We have to name the problem,” she said. “You hear the president talking about people being forgotten or left behind – treated like they’re invisible. We know many are struggling because we met them during the pandemic, including essential workers, delivery persons – people who kept and continue to keep the economy going. But we also saw many ALICE families struggling to find enough to either eat or to remain connected to the internet.”
“We have a huge problem of extensive financial hardship,” said Hoopes. “And we’re using the wrong measurements to identify those persons or families living under such conditions. That’s got to change – it’s the first way to start solving the problem of poverty.”
For more information, visit www.unitedforalice.org. Download the “Covid and Financial Hardship in New Jersey“ 2023 Report here.