Low-wage working households on the rise in Michigan

By: - March 20, 2019 3:36 pm

The Great Recession may be over, but its impact continues to linger in Michigan, especially for those at or near the bottom of the economic ladder.

The Michigan Association of United Ways on Wednesday released a report examining “ALICE” households, an acronym that refers to those that are “Asset limited, income restrained [and] employed.”

That group is composed of households that are above the federal poverty level, but below the “average income that a household needs to afford the basic necessities” — what the United Way refers to as the “ALICE threshold.”

The report — the third of its kind — found the number of those households grew by 13 percent since the last time this was measured in 2010. That happened even as the number of Michigan households in poverty, overall, fell by 6 percent.

Michigan Association of United Ways CEO Mike Larson said in a press release that the report’s aim is to “encourage legislators and business leaders alike to chart a path forward for our state’s most vulnerable residents.”

According to the report, 43 percent of Michiganders in 2017 were either below the federal poverty line or the ALICE threshold, meaning almost half of the state’s households were unable to meet their basic needs.

“The federal poverty threshold is not a very good measure of human need in this country,” said Peter Ruark, analyst at the Michigan League for Public Policy (MLPP). “There are many people that are not considered officially in poverty, but they still are not able to meet all their needs without public assistance or private charity.”

Ruark is a member of the ALICE advisory board, and MLPP works closely with the United Way on policy issues.

The report cites a rise in the cost of living and an employment landscape increasingly dominated by low-wage, low-benefit jobs as the primary trends that have limited those households’ income. It notes that in Michigan 61 percent of jobs pay below $20 per hour, and the majority of those pay less than $15 per hour.

Gov. Gretchen Whitmer used the opportunity of the report’s release to advocate for her proposed fiscal year 2020 budget, lamenting that “nobody working more than 40 hours a week should be struggling to take care of themselves and their families.”

Gov. Gretchen Whitmer at the Fiscal Year 2020 budget presentation | Casey Hull

She said her budget would “help lift Michigan families out of poverty” by increasing the Earned Income Tax Credit for low-income workers and repealing the so-called pension tax. The EITC was sharply cut in 2011 as part of former Gov. Rick Snyder’s plan that reduced business taxes.

Eric Lupher, president of the nonpartisan Citizens Research Council, put an increase in the EITC at the “top of the list” when it comes to helping working households.

“The EITC is a proven tool that’s worked, and has often been supported by people from both major parties,” Lupher told the Advance. “It’s an issue we need to do, and a number of other states are devoting a lot of resources to the EITC.”

Ruark seconded that notion, telling the Advance that increasing “the EITC and the minimum wage would be the most direct way to increase family income among working households.”

Curt VanderWall

Sen. Curt Vanderwall (R-Ludington) and House Minority Leader Christine Grieg (D-Farmington Hills) gave remarks at a press conference announcing the report’s release Wednesday, with Grieg echoing Whitmer’s call to take direct policy action in response to the report.

“The stats and information trotted out to celebrate this ‘comeback’ we hear so much about, they don’t really speak to the facts families are facing,” Greig said in an apparent dig at Snyder’s campaign motto.

In addition to boosting the EITC, Greig proposed raising the minimum wage to $12 per hour by 2022, in keeping with last year’s citizen-backed ballot initiative, which the GOP-Legislature watered down. She also backs repealing Medicaid work requirements enacted last year and called the pension tax “crippling.”

The United Way broke down the results of its study by county. Eaton County outside Lansing has the lowest proportion of families living below its threshold (30 percent). Rural Lake County had the highest proportion at 61 percent.

The report notes that workers who are employed by firms of fewer than 500 employees tend to have lower wages and less robust benefits, and are therefore more likely to fall under the ALICE threshold — a trend that tracks with the state’s overall high proportion of rural poverty.

Christine Greig, Dec. 20, 2018 | House Democrats photo

“Rural Michigan for a long time has been defined by job opportunities that can either be replaced by robots or shipped overseas,” Lupher said. “The long-term prospects for how we can deal with these issues are going to take some serious policy considerations.”

Vanderwall, whose 35th District in Northern Michigan includes portions of Lake County, described financial hardship and poverty as “not a Republican or Democratic issue.” He advocated for raising the child care subsidy cap in his remarks.

According to the report, as of 2017 40 percent of families with children in Michigan live below the ALICE threshold. And the cost of living for a family of four increased since 2010 by 27 percent.

The report also tracked how the state’s changing demographics have interacted with the economy. It noted that the overall aging of the population will lead to an increased demand for caregivers, who frequently struggle to make ends meet by the United Way’s measure.

Welder working at the Carpenters Training Center in Ferndale, March 18, 2019 | Susan J. Demas

The authors also wrote that Michigan’s steadily growing immigrant population is distributed evenly across the workforce, with the largest disparity in the manufacturing field — 25 percent of foreign-born workers participating in that field vs. 18 percent of native-born workers.

The report recommends the state emphasize education and take measures to improve stability in employment — including portable benefits, direct financial assistance and efforts to reduce discrimination across Michigan’s “social structures and legal system.”

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Derek Robertson
Derek Robertson

Derek Robertson is a former reporter for the Advance. Previously, he wrote for Politico Magazine in Washington. He is a Genesee County native and graduate of both Wayne State University, where he studied history, and the Medill School of Journalism at Northwestern University.