I’ve written about the most recent United Way update to the status of Asset Limited, Income-Constrained, Employed (ALICE) households in Washtenaw County. According to the data, nearly 4 in 10 households in Washtenaw County fall below the ALICE threshold today. That’s only a marginal improvement from last year’s data, which showed that 4-in-10 households don’t earn enough to meet what the United Way terms a “survival budget.”
Essentially, these households live paycheck to paycheck. They are the working poor. These households make too much money to be considered for most types of assistance, but don’t make enough to make ends meet. Often, these residents must choose which bills to pay and when, strategically balancing their incomes against the flood of expenses they incur.
The data point to a national trend: 78% of respondents in a 2023 Payroll.org survey reported that they lived paycheck to paycheck. A Forbes Advisory survey in the same year broke this data down a little farther. The FA survey found that a smaller number – 69% – of respondents said they lived with no savings. In that survey, 40% of respondents said their monthly expenses consumed their entire paycheck, while 29% of respondents admitted that their paychecks do not fully cover their monthly expenses.
There’s a little disconnect between the ALICE data and the surveys; the ALICE data refer to households, while the Payroll.org and Forbes surveys reflect individual earners’ circumstances. According to US Census Bureau data, 13.9% of all Washtenaw County residents in 2022 lived in poverty. This compares to 13.4% of all Michigan residents. Those most likely to meet the federal poverty guidelines were those aged 18-64 (16.6%). These are prime-age workers. Ten percent of all children in Washtenaw County live in poverty, as do 7.5% of people aged 65+.
Finding a path forward for Washtenaw County
More than half (54.6%) of households in Washtenaw County house at least two people who are employed. The fact that four of ten county households live near or below the ALICE threshold means that some of these two-paycheck households don’t generate adequate income to cover all their expenses.
It’s easy to assume that these households struggle due to “profligate spending” and other correctable financial habits. In most cases, this just isn’t the case. Census data show that the median household income in Washtenaw County in 2022 was about $79,700. Using that figure, the average homebuyer can afford a house payment of $1,860 per month. Unfortunately, the current median listing price for a home in Washtenaw County is about $480,000. With a traditional 20% down payment, the monthly payment on that home – including taxes, insurance, HOA fees, etc – would be about $3,225 per month. The median income only covers about 58% of the median home price here.
According to MIT’s Living Wage calculator, in Washtenaw County, a household of four with two adult earners needs to generate about $58 per hour collectively. That’s far more generous than the United Way’s “survival budget” but still less than what’s required to afford the $480,000 median house. (That requires a combined hourly income of $66.50.)
There is a way forward here, though. We need to attract new industries and employers to Washtenaw County. This could reverse the flow of new college graduates from the area and pave the way for more jobs in high-wage, high demand fields. Washtenaw Community College has a role in this approach, but its administration needs to focus intently and urgently on creating occupational and vocational programs that enable graduates to make enough money to live here.
Photo Credit: Mike Fritcher , via Flickr
