29% of Households Are Only One Paycheck Away from Destitute

29% of households have jobs but struggle to cover basic needs: They are ‘one emergency from poverty,’ one expert says

The number of American households who are above the poverty line but still struggling financially has reached a staggering figure.

These households, dikenal as ALICE (Asset Limited, Income Constrained, Employed), represent 29% of the population, or nearly 40 million families.

The ALICE population includes essential workers like healthcare aides, cashiers, and childcare providers.

They work hard, but their wages are low, their savings are minimal, and any unexpected expense can push them into poverty.

Inflation has hit ALICE households especially hard.

They spend a significant portion of their income on essential goods and services, and the recent price increases have caused these expenses to soar.

Wages, on the other hand, have not kept pace, and real income has declined.

The Federal Reserve’s efforts to combat inflation by raising interest rates have further exacerbated the situation.

Higher interest rates have made it more expensive for ALICE households to borrow, putting additional pressure on their finances.

As a result, these households are relying more and more on credit cards to make ends meet.

Credit card debt has reached record levels, while personal savings have dwindled.

This has led to an increase in delinquencies, indicating that even more ALICE households are falling behind on their bills.

The situation for ALICE households is dire, and there is little relief in sight.

Inflation remains stubbornly high, interest rates are expected to stay elevated, and wage growth has not caught up.

This squeeze on their finances has serious implications for their well-being and their ability to escape financial vulnerability.