Diving into ALICE: ALICE and poverty – what’s the difference?

This is the first installment in a series about ALICE and poverty in Central Indiana. Data in this blog represents the seven counties served by United Way of Central Indiana: Boone, Hamilton, Hancock, Hendricks, Marion, Morgan and Putnam counties.  

United Way of Central Indiana and Indiana United Ways, in partnership with United for ALICE, recently released a report called “ALICE in the Crosscurrents: COVID and Financial Hardship in Indiana.” This report talks about how the COVID-19 pandemic has impacted two important groups of people: households living in poverty and those that are ALICE (which stands for Asset Limited, Income Constrained, Employed). 

What is the difference between these two groups? And why is ALICE important? 

Families are “in poverty” when they have an income below the Federal Poverty Level. This is a standard set by the federal government to decide if people are eligible for public programs like food and housing assistance. 

The Federal Poverty Level is based on standards created in the 1960s that are updated each year for inflation. (Click here to learn more on the history of the Federal Poverty Level.) The Federal Poverty Level is used across much of the United States but does not reflect the cost of living in different places. 

For many families, the Federal Poverty Level was just not adequately matching financial struggles. In response, United for ALICE has created the ALICE measurement to shed light on families struggling to make ends meet. 

ALICE families make more than the Federal Poverty Level but fall below the ALICE Threshold. That threshold is an income at which individuals and families can afford their basic needs. 

The ALICE Threshold is based on budgets that include costs for everyday essentials like housing, transportation, food and child care.

The ALICE report provides budgets for each county in Indiana that reflect local costs for these expenses. This gives a more accurate representation of the true cost of living here in Central Indiana than the Federal Poverty Level. 

Using real-world expenses can make a big difference. As seen in the chart, the ALICE Threshold is over twice the Federal Poverty Level for most households in Central Indiana.  

Because the ALICE Threshold is based on real-world budgets, we know families below this level do not make enough to cover everyday costs. They must make difficult choices between essential items like groceries, rent and child care. ALICE families are not in poverty by the traditional government standard, but they are one emergency – like an unexpected medical bill or major car repair – away from poverty. 

Although ALICE families have higher incomes than families in poverty, they have less access to support when needed. Because they are above the Federal Poverty Level, they often do not qualify for government assistance like the Supplemental Nutrition Assistance Program (SNAP) or Housing Choice Vouchers. 

Though there are differences in how families experiencing poverty and those that are ALICE are counted, they share common challenges. Research shows that poverty is a root cause of issues faced by people, families and communities. The ALICE report shows that families below the ALICE Threshold may not have enough food, may face setbacks with learning loss and may struggle to pay rent. 

In Central Indiana, 67,500 households – 10% – are in poverty. Another 176,962 households – 26% – are ALICE. By only looking at poverty, we would overlook financial hardship for the tens of thousands of ALICE families that make tough choices every day.  

United Way and its partners throughout Central Indiana are committed to helping families move on a pathway out of ALICE and poverty into financial stability. 

Click the button below to read the latest ALICE report.