The Wisconsin poverty rate of only 13 percent obscures the true magnitude of financial instability in the Badger state. Despite its natural resources and economic strengths, Wisconsin also contains sharp disparities in wealth and income according to a report released today by the United Way. What is often overlooked is the growing number of households that earn above the Federal Poverty Level (FPL), but are unable to afford the state’s cost of living. Across Wisconsin, 42 percent of households struggled to afford basic household necessities in 2014.
Closer to home in Dane County, with a population of 516,284, a median household income of $61,582 and an unemployment rate of 5.1 percent, 41 percent of households teetered on financial brink.
Half a century after the War on Poverty was first waged by United States President Lyndon B. Johnson, United Way launched a national research project on the ALICE population to ignite a nationwide dialogue around the size and scope of working Americans who are unable to afford basic needs today.
ALICE is a United Way project that stands for Asset Limited, Income Constrained, Employed and represents residents who earn more than the U.S. poverty line, but less than the basic cost of living. The United Way ALICE Project is a grassroots movement committed to strengthening communities by improving the lives families, neighbors, and colleagues who work hard, earn above the federal poverty level, but not enough to afford a basic household budget of housing, child care, food, transportation, and health care.
According to the 280-page report, which drills down to include statistics for nearly every municipality in the state’s 72 counties, ALICE lives across Wisconsin, in every county and every town. Contrary to some stereotypes, ALICE families live in rural, urban, and suburban areas. The official U.S. Federal Poverty Level (FPL), which was developed in 1965, has not been updated since 1974, and is not adjusted to reflect cost of living differences across the U.S. A lack of accurate measurements and even updated language to frame a discussion has made it difficult for states – including Wisconsin – to identify the full extent of the economic challenges that so many of their residents face.
Using the realistic measures of the financial survival threshold for each county in Wisconsin, the report reveals a far larger problem than previously identified. Nearly 671,000 Wisconsin households fall into the ALICE population. That number is more than double the official poverty rate, which accounts for 289,209 households in the state. These numbers are staggering: In total, 960,131 households in Wisconsin – fully 42 percent, and triple the number previously thought – are struggling to support themselves.
What is causing the prevalence of these ALICE households is the fact that Wisconsin’s cost of living is beyond what most jobs in the state can provide to working households. With the cost of living higher than what most wages pay, ALICE families work hard and earn above the Federal Poverty Level (FPL), but not enough to afford a basic household budget of housing, child care, food, transportation, and health care.
The report also stated that as older Wisconsin residents retire in the next two decades, a lower percentage of the remaining working-age population will be white and a higher percentage will be Hispanic and Asian. These younger and more racially and ethnically diverse cohorts will make up an increasing share of the labor force over the next two decades and beyond.
National reports have found that in education, income, and wealth that now exist along racial lines in the U.S. and reflect policies and institutional practices that create different opportunities for whites, blacks, and Hispanics, with individual behavior playing only a minimal role. Structural impediments to equity exist in the legal system, health care, housing, education, and jobs. For these reasons, the report says, it is not surprising that blacks and Hispanics are two of the demographic groups disproportionately likely to have lower income and to be among households below the ALICE Threshold.