Important new report from United for ALICE entitled ALICE in focus: Children in financial hardship. United for ALICE found that nearly one million (946,119) children (17 or younger) in Michigan — 44% of all children — lived in a household with income below the ALICE Threshold of Financial Survival in the robust, pre-pandemic Michigan economy of 2019.
These households include families in poverty as well as those who were ALICE: Asset Limited, Income Constrained, Employed. Michigan households below the ALICE threshold don’t earn enough to afford the essentials of housing, child care, food, transportation, health care, a smartphone plan, and taxes — the basics needed to live and work in the modern economy.
In this post I want to focus on the children living in a household below the ALICE threshold with at least one working adult. 642,000 Michigan children lived in a working ALICE household. 68 percent of all Michigan children in ALICE households. So more than two thirds of children living in households that cannot pay for basic necessities live in a household with at least one working adult.
In Michigan in 2019 there were 1,515,000 children living in households with at least one working adult. So more than four in ten (42 percent) Michigan children in working households lived in households below the ALICE threshold.
- 173,000 of these children lived in a household with two adults, both working. That is 23 percent of children living in a household with two adults, both working.
- 266,000 lived in a household with two adults, one working. 56 percent of children living in a household with two adults, one working.
- 203,000 lived in a household with one adult who worked. 72 percent of children living in a household with one adults who worked.
These data are consistent with our findings that Michigan’s high ALICE rate is primarily caused by too many of us work in low-wage jobs. Nearly six in ten Michigan jobs pay less than what is required for a family of three to be middle class ($47,000). That is more than 2.5 million Michigan jobs in a robust economy that paid less than what it takes to be a middle class household of three.
The pandemic made clear that these low-wage workers live paycheck to paycheck not because they are irresponsibly buying “unnecessary” luxuries, but because they are in low-wage jobs that leave them struggling to pay for the necessities. The reality is that most of those struggling economically, in good times and bad, are hard-working Michiganders who like us get up every day and work hard to earn a living. The United for ALICE data make clear that many of these hard-working low-wage workers are raising children.
If we are serious about achieving an economy that as it grows benefits all Michiganders, and if we are serious about Michigan being a place that provides equal opportunity for all its children, we need to figure out how to increase income and benefits of lower-wage workers.
What these lower-wage workers need most is income, not programs. For us that means starting with a big increase in the state’s Earned Income Tax Credit. Expanding the EITC can help all 642,000 Michigan children living in a working ALICE household. In fact, because the EITC’s definition of an eligible child is broader than that of United for ALICE, the EITC benefited 985,000 Michigan children in 2019.
- The maximum federal credit for a household with one child is $3,618. Increasing the state’s match of the federal credit from the current six percent to 30 percent would increase the state maximum credit from $217 to $1,085.
- The maximum federal credit for a household with two children is $5,980. Increasing the state’s match of the federal credit from the current six percent to 30 percent would increase the state maximum credit from $359 to $1,794.
- The maximum federal credit for a household with three or more children is $6,728. Increasing the state’s match of the federal credit from the current six percent to 30 percent would increase the state maximum credit from $404 to $2,018.