Measuring need is critical to improving economic outcomes for Michiganders

A version of this column originally appeared in The Alpena News.

Discussions around socioeconomic status and the labels that go with it are often subjective. My mother, raising a family of four on a single income, called us middle class. My aunt, a single mother with two kids and one income? Also middle class. My father’s family growing up with two incomes — one an engineer at Ford the other a registered nurse — sure enough, middle class. Most people I have met would describe themselves as middle class regardless of their income.

And that’s why we don’t use vague descriptors like socioeconomic class when we’re working to solve poverty. Instead, we examine needs. Thirteen percent of Michiganders live in poverty and 28% are Asset Limited, Income Constrained and Employed (ALICE), meaning they are working and earn an income above the poverty threshold, but still do not earn enough to meet a basic survival income.

Regardless of the terms we use to define ourselves and our neighbors, there are very concrete things that each of us need and very clear levels of income are required to obtain those things. What ALICE tells us is that over 1.5 million households in Michigan don’t have enough income to meet their basic needs.

ALICE families are not in poverty, but they still need help. Most do not qualify for assistance programs because they earn too much. When everyone sees themselves as middle class, how do we decide who is in need? 

In 1963, Mollie Orshansky, a research analyst for the Office of Research and Statistics under the Social Security Administration, was placed in charge of studying and measuring income adequacy. She settled on what she called “a crude criterion of income adequacy.” This measure was based on the 1962 United States Department of Agriculture’s economy food plan. It then factored in household size and composition. Today, we call this the Federal Poverty Level. 

I want to reiterate this point. The poverty threshold is based on the cost of an economy food plan adjusted over time. The measure does not factor in housing, transportation, child care or healthcare. The world is different today than it was in 1963. The Federal Poverty Level was developed in a time before personal computers, cell phones and the internet. The economy and what is needed to survive is not the same as it once was. 

The poverty level was developed as a means to measure “income adequacy;” however, the threshold for a family of three in 2023 was $23,834. Please ask yourselves—do you feel this amount is adequate to support the lives of three people?

Mollie Orshansky, in her follow-up brief two years later, understood this method of calculating poverty was crude, saying, “The measure of poverty thus developed is arbitrary.” She acknowledged there were other, more refined measures in development based on the relationship of income and consumption.   

The United Way delivers one of these more refined measures in the form of the ALICE Household Survival Budget. This budget is the bare minimum cost of household basics needed to live and work in the modern economy. It factors in housing, healthcare, transportation, child care, food, technology, taxes and miscellaneous costs. All of this is adjusted down to the county level. 

The 2024 ALICE update shows 41% of Michigan households fall below this survival threshold. These households are working, but still do not earn enough to pay for all of their bills and basic necessities. When this data is disaggregated it becomes more startling, with 63% of Black families below the survival threshold and 73% of female-led, single-parent homes—like my aunt’s home—falling below this threshold.

The current poverty threshold fails to determine who is in need in the modern economy. Its creator called it an “interim standard” until a more accurate measure could be created. Today, we have that, with measures such as the ALICE threshold of financial survival.

The League continues to advocate for improvements to Michigan’s cash benefits program, which fails to reach even some in deep poverty let alone the 26% of ALICE families. In today’s economy, lawmakers need to understand what it takes to work and survive in Michigan when making policy decisions. Using ALICE metrics can help them create policies that lift up all of those who are in need and struggling to make ends meet.  

I encourage everyone to review the new 2024 ALICE numbers for your county and see what a survival budget looks like in your community.