In this ALICE Update, we provide data from a variety of sources to better understand the challenges many ALICE families face accessing good jobs and building assets. Click here to download the full update.
Many families continue to struggle with expenses, limiting their ability to save and build assets. Survey data from the Pew Charitable Trusts indicates that 60% of families nationwide experienced a financial shock in 2014. According to the Corporation for Enterprise Development, roughly 39% of Connecticut residents would have less than three months of liquid savings to cover basic expenses if they faced a financial shock.
Could your family afford a $400 emergency? The May 2016 issue of The Atlantic features an article named The Secret Shame of Middle-Class Americans. Citing recent studies from the Pew Charitable Trusts and the Federal Reserve Board, author Neal Gabler discusses how many American families today find themselves struggling financially. He shares his own story to illustrate the difficult, everyday choices that can prevent families from maintaining financial stability. Click here to read more about their story.
While unemployment has dropped statewide from 9.1% to 5.7% since the end of the Great Recession, more than half of the gains since 2010 have been in lower-wage industries. Further, many Connecticut workers are underemployed and cannot access employer health and retirement benefits.
Underemployment is a broader measure than unemployment that looks at labor force participants without a job, in addition to those that are employed only part-time due to economic reasons such as full-time job availability. The DataHaven Community Wellbeing Survey (2015) showed a statewide underemployment rate of 14%, with indications that 29% of labor force members making between $15,000-$30,000 per year seeking better opportunities.
Connecticut’s ALICE families can move up the ladder and help strengthen our state’s economy. The proportion of technical, professional, and managerial jobs in Connecticut is still higher than all but a few states. We need to protect good-paying jobs and train ALICE workers to move up the ladder and fill these positions which are so important to our economy.
So if good jobs are being offered by Connecticut employers, what obstacles may prevent ALICE workers from obtaining these positions? Saving enough money to pay for tuition and certifications can be challenging. Many feel pressure to work long or unusual hours just to cover their basic expenses. Some ALICE workers with children cannot afford child care, often staying home to care for their children. As a result, many lack the time and financial resources needed to move up the ladder.
Putting aside some savings helps to prepare for emergencies or to invest in homeownership, education, or retirement. But this can be a challenge for many ALICE families. Most of us build wealth and assets through homeownership, but homeownership rates among ALICE families are low. Households below the ALICE threshold comprise 35% of all Connecticut households but only 23% of homeowners.
50% of renters in the state spend more than 30% of their income on housing (Partnership for Strong Communities, 2015). Some ALICE households also have challenges with financial literacy or are financially literate but have difficulty accessing financial products and services due to their income. About 14.4% of households in Connecticut are underbanked, meaning that they spend a significant amount of money on financial services for which most Americans pay little to nothing (“CFED Assets”, 2016). These challenges inhibit the ALICE household’s ability to get needed financial assistance and save for the down payment for a home.