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Fall 2016 ALICE Report PDF

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A L I C E ® ASSET LIMITED, INCOME CONSTRAINED, EMPLOYED Fall 2016 STUDY OF FINANCIAL HARDSHIP UnitedWayALICE.org/NewJersey THE UNITED WAYS OF NEW JERSEY Bergen County’s United Way United Way of Bloomfield United Way of Central Jersey United Way of Essex and West Hudson United Way of Gloucester County United Way of Greater Mercer County United Way of Greater Philadelphia and Southern New Jersey United Way of Greater Union County United Way of Hudson County United Way of Hunterdon County United Way of Monmouth and Ocean Counties United Way of Northern New Jersey United Way of Passaic County United Way of Salem County NATIONAL ALICE ADVISORY COUNCIL The following companies are major funders and supporters of the United Way ALICE Project. Aetna Foundation | AT&T | Atlantic Health System | Deloitte | Entergy | Johnson & Johnson KeyBank | Novartis Pharmaceuticals Corporation | OneMain Financial Thrivent Financial Foundation | UPS | U.S. Venture LETTER TO THE COMMUNITY To the Community: Ten years ago, our United Way set off on a research project that we now call ALICE. We wanted to start a dialogue about what we believe to be the most important issue in America today: A growing population of hardworking people are struggling to achieve the American dream. We’ve had unprecedented success. Today, some 450 United Ways in 15 states are involved, and more are inspired and want to join this movement. With this new, expanded footprint, we now have a better understanding of just how pervasive this problem is. And while the reasons for such prevalent instability vary from locale to locale, the fact that millions of our fellow citizens cannot meet their most basic needs is a sobering reality shared by every community. The question before us today is how we, as a nation, can put aside our differences and get to work envisioning solutions to this growing crisis. I believe New Jersey can be a model for the rest of the country. We are forging new partnerships and leading an effort aimed at easing the tough choices ALICE individuals and families face every day. Working parents should not have to choose between a well-meaning, yet unqualified neighbor or quality early childhood education for their youngest children. Nor should taxpayers lose out on claiming the Earned Income Tax Credit just because a tax preparer is too costly. Workers should not have to risk financial stability or their physical and mental health in order to care for a loved one who is aging, ill, or mentally or physically disabled. I am encouraged by the support of donors, Fortune 500 companies, politicians on both sides of the aisle, community partners, committed volunteers, and dedicated staff who have chosen not to sit idly by as this crisis grows. While there is still much more work to be done, we are having success in altering perceptions and removing these barriers. We are creating positive, meaningful changes for ALICE families. When 1.2 million – or one in four – New Jersey households are falling behind, this touches and affects us all. What is more, ALICE is not some stranger; ALICE is our kids coming out of college, our parents living on Social Security, the people taking care of our parents in nursing homes, and the people taking care of our preschool kids. We all know ALICE and we all need ALICE. So while this report is a set of new and startling data points, it is so much more than that as well. It is a rally cry to inspire actions – individual and collective – to address a problem that only together can we hope to resolve. With gratitude, John B. Franklin, CEO, United Way of Northern New Jersey ii THE UNITED WAY ALICE PROJECT The United Way ALICE Project provides a framework, language, and tools to measure and understand the struggles of the growing number of households in our communities that do not earn enough to afford basic necessities, a population called ALICE. These households have income above the Federal Poverty Level, but still cannot afford the basic expenses of housing, child care, food, transportation, and health care. This research initiative partners with state United Way organizations to present data that can stimulate meaningful discussion, attract new partners, and ultimately inform strategies that affect positive change. Based on the overwhelming success of this research in identifying and articulating the needs of this vulnerable population, the United Way ALICE Project has grown from a pilot in Morris County, New Jersey in 2009, to the entire state of New Jersey in 2012, and now to the national level with 15 states participating. United Ways in New Jersey are proud to join the some 450 United Ways from these states to better understand the struggles of ALICE. Organizations across the country are also using this data to better understand the struggles and needs of their employees, customers, and communities. The result is that ALICE is rapidly becoming part of the common vernacular, appearing in the media and in public forums discussing financial hardship in communities across the country. Together, United Ways, government agencies, nonprofits, and corporations have the opportunity to evaluate current initiatives and discover innovative approaches that give ALICE a voice, and create changes that improve life for ALICE and the wider community. To access reports from all states, visit UnitedWayALICE.org States with United Way ALICE Reports North Dakota Washington Montana Minnesota New Hampshire Vermont Maine Wisconsin South Dakota Oregon Idaho Wyoming Michigan Massachusetts New York Iowa Nebraska Pennsylvania Rhode Island Illinois Indiana Ohio Connecticut Nevada Utah Colorado West New Jersey Kansas Missouri Virginia Delaware Kentucky Virginia Maryland California Oklahoma Arkansas Tennessee C Naroorltihn a DCioslturmicbt ioaf Arizona New Mexico Georgia Texas South Carolina Alabama Florida Louisiana Mississippi Alaska New Jersey (2012) First Cohort (2014) Hawaii Second Cohort (2015-16) iii Third Cohort (2016-17) THE ALICE RESEARCH TEAM The United Way ALICE Project provides high-quality, research-based information to foster a better understanding of who is struggling in our communities. To produce the United Way ALICE Report for New Jersey, a team of researchers collaborated with a Research Advisory Committee, composed of 12 representatives from across the state, who advised and contributed to our Report. This collaborative model, practiced in each state, ensures each Report presents unbiased data that is replicable, easily updated on a regular basis, and sensitive to local context. Working closely with United Ways, the United Way ALICE Project seeks to equip communities with information to create innovative solutions. Lead Researcher Stephanie Hoopes, Ph.D. is the lead researcher and director of the United Way ALICE Project. Dr. Hoopes’ work focuses on the political economy of the United States and specifically on the circumstances of low-income households. Her research has garnered both state and national media attention. She began the United Way ALICE Project as a pilot study of the low-income community in affluent Morris County, New Jersey in 2009, and has overseen its expansion into a broad-based initiative to more accurately measure financial hardship in states across the country. In 2015, Dr. Hoopes joined the staff at United Way of Northern New Jersey in order to expand this project as more and more states become involved. Dr. Hoopes was an assistant professor at the School of Public Affairs and Administration (SPAA), Rutgers University-Newark, from 2011 to 2015, and director of Rutgers-Newark’s New Jersey DataBank, which makes data available to citizens and policymakers on current issues in 20 policy areas, from 2011 to 2012. SPAA continues to support the United Way ALICE Project with access to research resources. Dr. Hoopes has a Ph.D. from the London School of Economics, a master’s degree from the University of North Carolina at Chapel Hill, and a bachelor’s degree from Wellesley College. Research Support Team Andrew Abrahamson Helen McGinnis Dan Treglia, Ph.D. ALICE Research Advisory Committee for New Jersey Jeff Backstrand, Ph.D. Michael Gerardi, M.D. Joseph Rubenstein, Ph.D. Rutgers University Atlantic Health System, Stockton University Morristown Medical Center Staci Berger, M.P.A. Harold Simon Housing and Community James M. Jacob National Housing Institute/ Development Network New Jersey SHARES Shelter Force Arnold Cohen Chris Kirk, Ph.D. Toby Tyler, M.B.A. Housing and Community Atlantic Health System Marketing Research Consultant Development Network Patrick McGuinn, Ph.D. Diane Wentworth, Ph.D. Amy Davidow, Ph.D. Drew University Fairleigh Dickinson University Rutgers University iv WHAT’S NEW Data & Methodology Updates Every two years, the United Way ALICE Project engages a Research Advisory Committee of external experts to scrutinize the ALICE methodology and sources. This rigorous process results in enhancements to the methodology and new ideas in how to more accurately measure and present this important data. While these changes impact specific calculations, the overall trends have remained the same – ALICE represents a large percentage of our population and these households are struggling to provide basic essentials for their families. For this Report, the following improvements have been incorporated. To ensure consistency and accurate comparison in changes over time, data has been recalculated for previous years. For a more detailed description of the methodology, see the Methodology Exhibit. • The ALICE Threshold for each state now accounts for county- level differences. This key measure is now calculated by combining the average household size for each county rather than using the statewide average household size. • The ALICE Household Survival and Stability Budgets have been updated to reflect today’s economic and technological realities. The Household Survival Budget’s health care costs increased due to the Affordable Care Act. Because many ALICE households do not qualify for Medicaid but cannot afford even the Bronze Marketplace premiums and deductibles, the penalty for not having coverage is added to the out-of-pocket health care cost. The ALICE Stability Budget added the cost of a cell phone with internet access. In both budgets, there was also an adjustment to the 2012 single tax calculation, which slightly increased the tax line item. • The Economic Viability Dashboard is now presenting each of its three indices – Housing Affordability, Job Opportunities, and Community Resources – separately instead of as one combined score. Each index represents a critical condition for the stability of ALICE households, and poor scores in one index cannot be compensated by good scores in another. These indices are not cumulative. • The ALICE Income Assessment has been recalculated to more accurately depict the assistance available to help an ALICE household meet basic needs. Only programs that directly help low-income households meet the Household Survival Budget, such as TANF and Medicaid, are included. It no longer includes programs that assist households in broader ways, such as to attend college, or that assist communities, like community policing. Source changes • The American Community Survey no longer provides 3-year averages, so data for all communities with populations less than 65,000 will rely on 5-year averages. • The National Association of State Budget Officers (NASBO) replaces individual state budgets as the source for state spending on programs to assist vulnerable families, making the spending categories standardized and comparable. • In the Economic Viability Dashboard, the variables for two of the indicators of the Community Resources Index – education resources and social capital – have been changed to items that vary more by county. The variable for education resources is now 3- and 4-year-olds enrolled in preschool; and the variable for social capital is the percent of the population 18 and older who voted in the most recent election. v TABLE OF CONTENTS EXECUTIVE SUMMARY ��������������������������������������������������������������������������������������������������������1 Y I� WHO IS STRUGGLING IN NEW JERSEY? �����������������������������������������������������������������������������4 E II� WHAT DOES IT COST TO FUNCTION IN TODAY’S ECONOMY? �������������������������������������������15 S III� ACHIEVING STABILITY: INCOME, SAVINGS AND PUBLIC ASSISTANCE ����������������������������21 R IV� HOW HAVE ECONOMIC CONDITIONS CHANGED FOR ALICE FAMILIES? ���������������������������29 E CONCLUSION� WHAT CHALLENGES LIE AHEAD? �����������������������������������������������������������������40 J BIBLIOGRAPHY �����������������������������������������������������������������������������������������������������������������53 EXHIBIT I: ALICE COUNTY PAGES W EXHIBIT II: ALICE HOUSING DATA BY COUNTY E EXHIBIT III: ALICE THRESHOLD AND DEMOGRAPHICS, NEW JERSEY, 2014 N EXHIBIT IV: KEY FACTS AND ALICE STATISTICS FOR NEW JERSEY CONGRESSIONAL DISTRICTS EXHIBIT V: THE ECONOMIC VIABILITY DASHBOARD N EXHIBIT VI: KEY FACTS AND ALICE STATISTICS FOR NEW JERSEY MUNICIPALITIES I EXHIBIT VII: ALICE HOUSEHOLDS BY INCOME, 2007 TO 2014 E EXHIBIT VIII: STRATEGIES THAT CAN MAKE A DIFFERENCE FOR ALICE EXHIBIT IX: METHODOLOGY OVERVIEW & RATIONALE C I L A vi INDEX OF FIGURES Figure 1� Household Income, New Jersey, 2007 to 2014 ������������������������������������������������������������������������������������������5 Figure 2� Household Income by Age of Head of Household, New Jersey, 2014 ���������������������������������������������������������5 Figure 3� Trends in Households by Income by Age, New Jersey, 2007 to 2014 ���������������������������������������������������������6 Figure 4� Households by Race/Ethnicity and Income, New Jersey, 2014 ������������������������������������������������������������������7 Figure 5� Households by Race/Ethnicity and Income, New Jersey, 2007 to 2014 �����������������������������������������������������9 Figure 6� Household Types by Income, New Jersey, 2014 ���������������������������������������������������������������������������������������10 Figure 7� Single & Cohabiting (No Children below 18) Households by Income, New Jersey, 2014 �������������������������10 Figure 8� Families with Children by Income, New Jersey, 2014 �����������������������������������������������������������������������������11 Figure 9� Families with Children by Income, New Jersey, 2007 to 2014 ����������������������������������������������������������������12 Figure 10� Percentage of Households with Income below the ALICE Threshold by County, New Jersey, 2007 and 2014 ���13 Figure 11� Households below the ALICE Threshold, Cities with More Than 20,000 Households, New Jersey, 2014 ���14 Figure 12� Household Survival Budget, New Jersey Average, 2014 �����������������������������������������������������������������������15 Figure 13� Household Survival Budget, New Jersey Average, 2007 to 2014 ����������������������������������������������������������16 Figure 14� Comparison of Household Budgets (family of 4), Passaic, New Jersey, 2014 ���������������������������������������18 Figure 15� Comparison of Household Budgets by Category, 2014 ������������������������������������������������������������������������19 Figure 16� Earnings by Number of Households and Aggregate Total, New Jersey, 2007 to 2014 ���������������������������21 Figure 17� Percent Change in Household Sources of Income, New Jersey, 2007 to 2014 ���������������������������������������22 Figure 18� Households with Assets, New Jersey, 2014 ������������������������������������������������������������������������������������������24 Figure 19� ALICE Income Assessment, New Jersey, 2012 to 2014 �������������������������������������������������������������������������25 Figure 20� Comparing Basic Need with Public and Nonprofit Spending by Category (Excluding Health Care and Miscellaneous Expenses), New Jersey, 2014 ����������������������������������������������������������������������������������������26 Figure 21� Total Public and Nonprofit Assistance per Household below the ALICE Threshold, New Jersey, 2014 ���28 Figure 22� Number of Jobs by Hourly Wage, New Jersey, 2007 to 2014 �����������������������������������������������������������������29 Figure 23� Employment and GDP, Percent Change, New Jersey, 2007 to 2014 ������������������������������������������������������30 Figure 24� Top 20 Occupations by Employment and Wage, New Jersey, 2014 �������������������������������������������������������31 Figure 25� Small Business Employment by Sector, New Jersey, 2013 ��������������������������������������������������������������������32 Figure 26� Work Status, New Jersey, 2007 to 2014 �����������������������������������������������������������������������������������������������34 Figure 27� Economic Viability Dashboard, New Jersey, 2007 to 2014 �������������������������������������������������������������������35 Figure 28� Housing Affordability Index, New Jersey, 2010 to 2014 ������������������������������������������������������������������������36 Figure 29� Renters below the ALICE Threshold vs� Rental Stock, New Jersey, 2014 �����������������������������������������������37 Figure 30� Job Opportunities Index, New Jersey, 2010 to 2014 ������������������������������������������������������������������������������38 Figure 31� Population Inflows and Outflows, New Jersey, 2014 �����������������������������������������������������������������������������41 Figure 32� Population Projection, New Jersey, 2000 to 2030 ���������������������������������������������������������������������������������43 Figure 33� New Growth by Occupation, New Jersey, 2014 to 2024 ������������������������������������������������������������������������45 Figure 34� Employment by Occupation and Impact of Technology, New Jersey, 2014 ��������������������������������������������46 Figure 35� Median Earnings Asian, Black, Hispanic and White Workers, New Jersey, 2007 to 2014 ���������������������49 Figure 36� Unemployment for Asian, White, Hispanic, and Black Workers, New Jersey, 2007 to 2014 ������������������49 EXECUTIVE SUMMARY This United Way ALICE Report provides a comprehensive look at New Jersey residents who are struggling financially: 37 percent of households in New Jersey could not afford basic needs such as housing, child care, food, health care, and transportation in 2014. Many households are living below the Federal Poverty Level (FPL), but an even greater number of households are what United Way calls ALICE – an acronym for Asset Limited, Income Constrained, Employed. ALICE households have incomes above the FPL, but still struggle to afford basic household necessities. The number of ALICE and poverty-level households has increased steadily since 2007, even during the recovery from the Great Recession. Although jobs and wages began to increase from 2012 to 2014, the proportion of New Jersey households living below the FPL remained at 11 percent during that period, and the proportion of ALICE households rose from 25 to 26 percent. This Report focuses on what has changed in New Jersey since the second United Way ALICE Report was published two years ago. It updates the cost of basic needs in the Household Survival Budget for each county in New Jersey, and the number of households earning below this amount – the ALICE Threshold. It delves deeper into county and municipal data as well as ALICE and poverty households by race, ethnicity, age, and household type to reveal variations in hardship that are often masked by state averages. Finally, this Report highlights emerging trends that will be important to ALICE in the future. The data reveal an ongoing struggle for ALICE households and obstacles to achieving financial stability: • Struggling Households: Of New Jersey’s 3.2 million households, 11 percent lived in poverty in 2014 and another 26 percent were ALICE. Combined, 1.2 million households (37 percent) had income below the ALICE Threshold, roughly the same as in 2012, but well above the level in 2007. • Basic Cost of Living: The cost of basic household expenses increased steadily in every county in New Jersey between 2007 and 2014. The average budget rose by 23 percent, which is above the national rate of inflation of 14 percent during that time period. In 2014, the average annual Household Survival Budget for a New Jersey family of four (two adults with one infant and one preschooler) ranged from $55,164 in Hudson County to $81,168 in Hunterdon County – well above the U.S. family poverty rate of $23,850. • Low-wage Jobs: Low-wage jobs continued to dominate the landscape, with 52 percent of all jobs in the state paying less than $20 per hour. At this wage, a family of four falls far short of the Household Survival Budget of $64,176. In 2014, there were 3.78 million jobs in New Jersey, still below the peak of 3.94 jobs in 2007. But the number of jobs paying more than $30 per hour increased by 45 percent and these higher- paying jobs accounted for one-third of all jobs in 2014. Y E S • Public Assistance for ALICE: Public assistance continues to be important for the stability of ALICE and R E J poverty-level families, but the assistance has changed in recent years. Since 2012, cash public assistance W E declined by 2 percent and other government spending (excluding health care) for ALICE and poverty N R households increased by 1 percent. Health care spending increased by 25 percent, accounting for 65 O E F percent of all spending on ALICE and poverty-level households. Because services and funds are not T A typically transferable from one area of need to another, there are large gaps for particular needs. The gap D P U to meet housing needs is 44 percent and the gap to meet child care is 51 percent. 6 1 0 2 • Emerging trends: Several trends could change the economic prospects for ALICE families and our – T communities: R O P E ○ New Jersey’s population is aging, and many seniors do not have the resources they need to support R E themselves. C LI A Y ○ Differences by race and ethnicity persist, creating challenges for many ALICE families as well as for A W D immigrants in New Jersey. E T NI 1 ○ Low-wage jobs are projected to grow faster than higher-wage jobs over the next decade. U

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We are creating positive, meaningful changes for ALICE families. The United Way ALICE Project provides a framework, language, and tools to
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