Published in Economic Development
Hope Cumbee, shown with her son, Charlie, highlighted the challenges many blue-collar workers face in meeting their budgets, a trend at the heart of the new ALICE report from the Michigan Association of United Ways. Hope Cumbee, shown with her son, Charlie, highlighted the challenges many blue-collar workers face in meeting their budgets, a trend at the heart of the new ALICE report from the Michigan Association of United Ways. COURTESY PHOTO

Study: 43% of Mich. residents face financial instability

BY Sunday, March 31, 2019 10:45pm

Hope Cumbee is the mother of a 4-year-old boy, Charlie. Her husband, Sean, is a self-employed truck driver who works long hours and makes it home just a few days a month.

Their budget is tight, at best.

Most of the time, Cumbee said she and her family, who live in Beaverton, Mich., “get by just fine without any additional benefits or assistances,” but any change to their set monthly budget could have grim consequences. She remembers one particularly tough moment, about a month after the family had to arrange for the funeral of her father-in-law. Her son needed his first round of vaccinations, and they just couldn’t afford it.

“I stood in the lobby and I sobbed,” Cumbee said. “In my head, I had failed at being a mom. It is my job to make sure that he is safe and taken care of, and in that moment, I couldn’t.”

Cumbee is not prone to beg, but she needed help and didn’t qualify for income-based assistance.

“We’re proud of the life we have,” she said. “We are truly blessed, but there are times like when the truck breaks down or the pump in the well goes, and we have to take out a loan for the repairs, and that’s when we fall behind — like so many other blue-collar families do.”

Cumbee’s struggles echo those of a large and growing group of Michigan residents who are working but not bringing home a paycheck big enough to cover their basic expenses, according to a new study by the Michigan Association of United Ways.

The ALICE research project, which released new data last week, found that 14 percent of Michigan’s population lives below the federal poverty level. Another 29 percent are “asset-limited, income-constrained, employed” (ALICE), a measure of the so-called working poor who earn more than the federal poverty level but less than the cost of living.

Together, this means that 43 percent of Michigan households could not afford basic needs like housing, child care, food, transportation, health care, and technology in 2017, according to researchers. That’s up from 41 percent from the last ALICE report.

“The increase is really in ALICE families,” Michelle Van Dyke, president and CEO of Grand Rapids-based Heart of West Michigan United Way, told MiBiz. “Those who are living at the poverty level and below have actually gone down a percentage point. The benefit of having the ALICE measurement is understanding the survival budget for a family because the federal poverty line doesn’t really capture what’s actually happening with families across our communities.”

The cost of the average family budget in Michigan increased by 27 percent from 2010 to 2017, despite a low 12 percent rate of inflation nationwide during the same timeframe, according to the ALICE study.

Although unemployment rates have fallen to historic lows, the report found that low-wage jobs dominate the employment landscape, with 61 percent of all jobs in Michigan paying less than $20 per hour. Furthermore, an increase in independent contractors and on-demand jobs — the so-called “gig economy” — is leading to less financial stability for households throughout the state.

Shifting landscape

For the many households that earned slightly above the ALICE threshold in the past, increases in the cost of living and flat wages have pushed them below the threshold and into financial hardship, Van Dyke said. Two of the largest cost increases have been in housing and child care.

“The increases in housing are not a surprise to us because we know that that’s become a real issue in our community, in Kent County, as housing and rent costs are rising,” she said. “We want to high-five each other because the housing market is so great, especially in the downtown Grand Rapids area, but we do see the negative impact that it has on families especially. We’re seeing more and more families that are experiencing homelessness.”

The ALICE study lays out an average “survival budget” for a single adult and a family with two young children based on costs in each county. According to the research, an average single adult in the state needs to bring home a little more than $20,000 while the family would need more than $60,000 per year to cover the costs.

“The survival budget is truly no frills,” Van Dyke said. “This is not saving money. This is not paying for a college education. You’re not going out to eat. It’s truly a bare-bones budget and what you would need to get through every month. You’re literally one crisis away from poverty because there is no savings for a car repair or furnace breakdown or whatever it is.”

Many households are making difficult choices to try to cover increasing costs and coming to solutions like Cumbee, who stays home with her son instead of paying for child care, which is often the top expense in a young family’s budget.

Even without the cost of child care, a family of four would still need one wage earner making an average of at least $23 per hour to keep from falling behind, Van Dyke said, adding that with the cost of child care, the person would need to earn more than $30 per hour.

“We can now see the percentage of jobs in the state of Michigan that pay less than $20 an hour,” she said. “If you’re a single adult, you’re probably OK earning that income. If you’re a family of four, you are going to struggle.”

Seeking a safety net

Although the minimum wage in Michigan was set to go up from $9.25 to $9.45 an hour on March 29 with future scheduled increases every year until 2030. Rep. Christine Greig, D-Farmington Hills, told MiBiz the new system is actually “worse than what we had before.”

“It’s a backslide from what we already had,” she said. “With what was gutted and passed in the legislature, it slowed the increases down and then it stops for the inflationary changes.”

The issue will require policymakers, academics, businesses and social service agencies to work together to address long-term systemic change, according to Van Dkye.

“What I would never want anyone to think is this is solely an issue from a company perspective, (and) they just need to pay more,” she said. “It’s far more complex than that and it’s a whole system working together.”

Cumbee hopes the ALICE study will help others understand and consider the significant number of families like hers “who work very hard” and “would never ask for help, but occasionally could use a hand-up” to stay out of financial crisis.

“When the bad things happen, we don’t have a safety net. We just fall,” she said. “We always pick ourselves back up, but most of the time we end up with even more bills than we started with.”

Read 2509 times Last modified on Monday, 01 April 2019 00:12
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