Report shows widespread financial peril pre-pandemic
Report shows more than 25% of households in state struggling in 2018
More than a quarter of Connecticut households lived in financial precarity in 2018, according to a new report, but that figure has likely soared this year as the coronavirus pandemic has forced layoffs and wage reductions for many workers, local leaders said last week.
The 2020 ALICE Report, released Sunday by the Connecticut United Ways, found that in 2018, 27% of Connecticut households met the criteria for “ALICE,” an acronym for “Asset Limited, Income Constrained, Employed.” Another 11% of households earned below the federal poverty line. ALICE households and those below the federal poverty line do not have enough income to cover both current and unforeseen expenses, meaning that an emergency expense, change in income or damage from a natural disaster can be devastating.
“One of the things that is always
so powerful about the ALICE Report is that it shows how financially fragile so many families are, how vulnerable so many families are to an economic shock of any kind,” Hartford Mayor Luke Bronin said outside Hartford City Hall on Thursday at a news conference in advance of the report’s release. “And what we’ve seen over the last six months is an unprecedented economic shock.”
Paula Gilberto, president and chief executive of the United Way of Central and Northeastern Connecticut, noted that COVID19 has disproportionately impacted the health and economic stability of “lowerwage earners, families that never needed support before and people of color.”
The Connecticut United Ways COVID-19 Response Fund has provided more then 3,000 households with $600,000 in emergency financial assistance for food, medicine and support paying bills, according to the organization. An additional $500,000 will be distributed to another 2,500 households.
Half a year i nto the COVID-19 pandemic, thousands of families from Hartford, East Hartford and New Britain still drive to Rentschler Field each week for its emergency food distribution, Jason Jakubowski, president and CEO of Foodshare, a regional anti-hun
ger nonprofit that receives support from the Connecticut United Ways, said Thursday.
Jakubowski suspects that most, if not all, of the families at the food distribution site fit the definition of ALICE. And he said the amount of need has grown over the course of the pandemic, from about 118,000 food insecure people in the region pre-pandemic to about 300,000 now.
“We surveyed cars early on during this process, and
the number that really got to me was that 75% of the people that are going to our Rentschler Field distribution have said they have never needed one of our services before,” Jakubowski said. “They’ve never gone to one of our pantries; they’ve never gone to one of our mobile sites, meaning they’re new to this idea of food insecurity.”
The cost of living has grown significantly in Connecticut in recent years, as the population continues
to rise, straining the availability of low-cost rental housing in metropolitan areas like Bridgeport-Stamford-Norwalk and New Haven-Milford. In 2018, 52% of Connecticut workers were paid hourly, meaning they were vulnerable to fluctuations in income and changes in work schedules, according to the report. Those workers serve a key function in the state economy, particularly in the education and health care industries, but have not benefited from the state’s recent economic gains.
The report determined that to afford the basics in Connecticut, a single adult requires a full-time job earning $14.45 per hour, a single adult 65 or older requires an income of $15.88 per hour and a family of four requires full-time work earning $45.33.
From 2007-2018, the share of Connecticut households in poverty grew from 8% to 11%, according to the report. The share of ALICE households grew during that time from 20% to 27%, a 40% increase, due to the combination of a rising cost of living and stagnant wages. Over that decade, the total number of Connecticut households increased only slightly, from 1.32 million to 1.38 million.
In 2018, an additional 13% of households were on the cusp of the ALICE threshold, meaning that a small increase in wages could lift them into a position of financial stability — or an unexpected expense or decrease in wages could push them into poverty.
Of Connecticut cities with more than 25,000 households, Bridgeport had the highest share of households that met ALICE criteria or were below the federal poverty line, at 73%. In Hartford, 66% of households were ALICE or below the federal poverty line, followed by 64% in Waterbury and 62% in New Haven.
Black and Hispanic households made up a disproportionately high percentage of families living below the ALICE threshold in 2018: 47% of households below the ALICE threshold were headed by people 65 or older, 57% were Black households and 63% were Hispanic households.
Additionally, the report found, t he number of families with children has decreased, falling 9% between 2010 and 2018, making it more difficult for child care providers to stay in business. In 2018, 44% of Connecticut families lived in a “child care desert,” with no child care providers nearby or so few that not all children can be served.
The ALICE report calculates that there is a significant economic benefit to the state GDP that would come with raising the 38% of Connecticut households defined as ALICE or below the federal poverty line above those thresholds: $32.8 billion in earnings and increased consumer spending, $2.9 billion in additional tax revenue and infrastructure spending and $6.9 billion in indirect benefits from improved health and reduced crime.