ALICE in the Crosscurrents: An Update on Financial Hardship Report Shows Wage Growth Was No Match For Inflation After A Decade Of Falling Behind

WASHINGTON, D.C. (May 22, 2024) — United Way of the National Capital Area (United Way NCA), in partnership with United for ALICE, today released updated data to the ALICE in the Crosscurrents: An Update on Financial Hardship report. ALICE is a United Way acronym for Asset Limited, Income Constrained, Employed, and represents more than 500,000 households in the National Capital Area earning above the Federal Poverty Level but less than what’s needed to survive in the current economy. While ALICE reports are released every two years (the most recent being May 2023, reflecting 2021 data), the report data will now be updated annually. Additionally, previous reports included Maryland and Virginia counties; however, last year’s report was the first to include Washington, DC, enabling United Way NCA to provide a true picture of ALICE and critical information that can help guide efforts to uplift all National Capital Area residents.

ALICE individuals are working yet still cannot afford the basics in their communities. They include professions such as childcare providers, home health aides and cashiers—those working low-wage jobs with little or no savings and one emergency from poverty. 

“Data from the ALICE Update is important because it allows us to annually see the number of ALICE households and what current economic changes are impacting these households,” said Rosie Allen-Herring, President and CEO, United Way of the National Capital Area. “This first ALICE Update reveals that the number of ALICE households still struggling has grown despite salary increases. While we are happy that our workforce is earning bigger paychecks, inflation and the loss of pandemic support prevent individuals and families from rising above the ALICE threshold. This tells us that there is still a strong and significant need for the work we do with corporate and community partners to reduce that number in our region.”  

The new numbers show that while wages increased, so too did costs. For a family of four with an infant and a preschooler, the basic costs to live and work in the National Capital Area, excluding tax credits, rose from $102,563 in 2021 to $117,374 a year later. Compounding the issue in 2022 was the loss of up to $15,000 in federal child tax credits and stimulus payments that this family had access to in 2021.

Though wages for the lowest-paid jobs have risen across the country at the fastest rate in four decades, the number of households struggling to get by in the National Capital Area grew by more than 36,260 from 2021 to 2022.  As a result, 700,971 households in the National Capital Area, or 34%, are living below the ALICE threshold. That calculation includes the 160,682 households living in poverty and another 540,289 households who are ALICE.

The findings in this one year are consistent with a more than decade-long trend. Since the end of the Great Recession, the number of ALICE households in the National Capital Area has steadily grown despite some ups and downs. From 2010 to 2022, the total number of households rose by 16%, households in poverty increased by 16%, and the number of ALICE households grew by 10%. 

“The data is showing persistent and widespread financial hardship — a red flag that the current system isn’t working for ALICE,” said Stephanie Hoopes, Ph.D., United For ALICE National Director. “Current policy has not been enough to break down the barriers that trap ALICE households in financial hardship, from lack of access to housing and child care that’s affordable to inadequate community supports such as broadband internet.”  

Additional insights for the National Capital Area include: 

• From 2010 to 2022, people aged 65 and over made up the fastest-growing age group— the group with the largest increase (37%) in households struggling to make ends meet.
• Racial disparities persisted in the rates of financial hardship:
  • 46% of Black and 46% of Hispanic households were either in poverty or ALICE in 2022, compared to 25% of white households.
• Food assistance continued to elude many vulnerable families in the region. Partly due to the SNAP income eligibility level (130% of the Federal Poverty Level), only 32% of all households in poverty and 15% of all ALICE households participated in SNAP in 2022.

The ALICE in the Crosscurrents: An Update on Financial Hardship Report for United Way NCA was funded by Greater Washington Community Foundation and Kaiser Permanente. To access the data for the National Capital Area, visit UnitedWayNCA.org/ALICE.

About United Way of the National Capital Area

United Way of the National Capital Area works to improve the health, education and economic opportunity of every person in the region. United Way NCA has been improving lives by creating measurable impact in the District of Columbia, Northern Virginia, and Montgomery and Prince George’s Counties for nearly 100 years. In 2020, United Way NCA was among 384 organizations across the United States to receive a generous transformational investment from novelist and venture philanthropist, MacKenzie Scott. For more information about United Way of the National Capital Area, visit UnitedWayNCA.org.

About United For ALICE  

United For ALICE is a U.S. research organization driving innovation, research and action to improve life across the country for ALICE (Asset Limited, Income Constrained, Employed) and for all. Through the development of the ALICE measurements, a comprehensive, unbiased picture of financial hardship has emerged. Harnessing this data and research on the mismatch between low-paying jobs and the cost of survival, ALICE partners convene, advocate and collaborate on solutions that promote financial stability at local, state and national levels. This grassroots ALICE movement, led by United Way of Northern New Jersey, has spread to 31 states and includes United Ways, corporations, nonprofits and foundations in Arkansas, Colorado, Connecticut, Delaware, Florida, Georgia, Hawai‘i, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington, Washington, D.C., West Virginia and Wisconsin; we are United For ALICE. For more information, visit: UnitedForALICE.org