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The poverty line vs. the actual cost of living

United Way, which operates about half the nation’s 2-1-1 call centers, says around 36 million American households, or 29%, were considered ALICE (Asset Limited, Income Constrained, Employed) in 2021, the most recent year for which data is available. That’s an 18% rise from 2010, while preliminary data show the same trend persisting through 2022.

Although the Census Bureau raises the federal poverty line each year in line with inflation data, experts say this benchmark hasn’t actually kept pace with America’s rising cost of living.

The figure for 2024 stands at just $15,060 for a single person and $31,200 for a family of four.

“The federal poverty line is garbage,” United Way of Connecticut president Lisa Tepper Bates told the Journal.

Some poverty experts say the math is wrong, making the assumption that families spend a third of their total income on food, even though on average, housing makes up the largest slice of household budgets. Plus, the metric doesn’t differentiate between states, even though some are costlier to live in than others.

In Connecticut, for example, where Daley’s family resides, housing is 24% and utilities are 30% higher than the national average, according to RentCafe data.

And United Way of Connecticut estimates the barebones survival budget for a family of four with two young children in the state could be as high as $126,000, the Journal reported. The organization uses the local cost of housing, groceries, child care, healthcare, transportation, technology and taxes to determine survival budgets.

But several programs, like the Supplemental Nutrition Assistance Program (SNAP), which helps low-income families purchase groceries, and the Children’s Health Insurance Program (CHIP), which provides low-cost health coverage to children of families that earn too much money to qualify for Medicaid, use the federal poverty guidelines to determine eligibility.

“We wonder why there’s so much anger in public discourse today, and it’s in part because of the stress people feel to just keep themselves and their families afloat,” Tepper Bates said. “People feel like the system is not serving them.”

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The ‘middle class’ is struggling

United Way workers say they’ve been receiving calls for many residents who earn too much to qualify for assistance.

“It’s heart-wrenching to have to say to someone who’s struggling, ‘I’m sorry, you’re not eligible,’” said United Way contact specialist Theo Bonet, adding that he’s seen a recent spike in the frequency of calls.

Bonet says he even spoke to someone who earned $10,000 a month, but was searching for low-cost medical facilities because he couldn’t afford health insurance.

“I just was kind of in disbelief to hear someone who makes that much struggling,” Bonet says.

The truth of the matter is that a middle-class income is no longer enough to afford a traditional middle-class lifestyle. The prices of everyday essentials are climbing, housing is in short supply and more families are getting swept into a paycheck-to-paycheck cycle.

A recent poll from The Washington Post found Americans consider an income of between $75,000 and $100,000 to be middle class.

However, the publication also uncovered that just over a third of Americans met its criteria for a middle-class lifestyle: steady employment, health insurance and the ability to save for the future, pay bills without worry, afford emergency expenses and retire comfortably.

“The idea that you can have a secure job with predictable wages, with health care and retirement, and being able to pay for your housing — those things are all part of a mid-century vision of the middle-class life trajectory,” says Caitlin Zaloom, an anthropology professor at New York University.

“Even in the 1960s, the idea that this was a very widespread phenomenon was always kind of a fiction.”

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Serah Louis is a reporter with Moneywise.com. She enjoys tackling topical personal finance issues for young people and women and covering the latest in financial news.

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