As a part of the ongoing release of this year's ALICE® Report and the associated data, United for ALICE released an updated ALICE Essentials Index on July 10, 2023. When prices increase faster than wages and other sources of income, purchasing power decreases and households struggle to make ends meet. For Asset Limited, Income Constrained, Employed (ALICE) households, those making above the Federal Poverty Level, but not enough to afford basic essentials in the county in which they reside, this presents an even greater challenge.
The ALICE Essentials Index measures the increase over time in the costs of the essential goods and services that households need to live and work in the modern economy. Those goods and services include housing, child care, food, transportation, health care, and a smartphone plan, key components of the ALICE Household Survival Budget. In comparison, the traditional measure of inflation, the Consumer Price Index (CPI), measures a basket of over 200 goods and services, which dilutes the increase in the cost of basics.
From 2007-2023, the ALICE Essentials Index in Pennsylvania increased by an average rate of 3.1% per year compared to the National CPI, which increased 2.5% annually. From 2007 to 2022, the average wage for a retail salesperson increased 2.5% annually, keeping up with the overall rate of inflation, which fluctuates from year-to-year. However, the sustained lag of wages behind the ALICE Essentials Index equated to a loss of more than $20,300 over the past 15 years for a retail salesperson, almost a full year's wages.
Because the CPI is used to calculate the Federal Poverty Level, and both are used to make policy decisions, there are variety of policy implications. Eligibility for many human services programs is determined by income guidelines based on the federal poverty level. Among those who do receive benefits, their support is diminished over time, resulting in sustained hardship. At the same time, the costs of basic goods and services continue to outpace wages meaning ALICE families will continue to struggle on their quest for financial stability. Accordingly, local United Ways, and United Way of Pennsylvania need to continue our efforts around educating our decisionmakers on the ALICE data, building supports for increased economic mobility, and advocating for public policy change that helps ALICE households make ends meet in their household budget.