A record-high 581,000 Connecticut households, about 40%, couldn’t afford a basic “survival” budget in 2023, according to a new analysis from the United Way of Connecticut.
And while more than 60% of families in Bridgeport, New Haven, Hartford and other poor cities fall below this threshold, poverty now is growing the fastest outside of urban centers.
The United Way on Friday released its annual poverty assessment based on its ALICE methodology. An acronym for Asset-Limited, Income-Constrained [and] Employed, ALICE is an alternative to the longstanding Federal Poverty Level, a metric increasingly criticized by policymakers as outdated and misleading.
The United Way estimates it cost a family of four — two parents and two children — $116,000 to cover basic survival needs, including food, housing, utilities, child and health care and transportation in 2023.
For a single parent with one child, the projected survival budget two years ago was $69,000.
The ALICE methodology assumes these families cannot afford a computer but rely only on a smart phone to meet all information technology needs.
Minimum earnings to cover a survival budget rose about 9% from 2021 to 2023 while the number of ALICE households has grown almost 17% since 2019.
“The number of ALICE households has really ticked up pretty meaningfully since 2019,” said Lisa Tepper Bates, president of the United Way’s Connecticut chapter. “That’s not the direction any of us want to see this going.”
Most of the largest increases have occurred in the state’s rural eastern half and in the suburbs surrounding cities. For example, the share of ALICE households in New Milford, a suburb north of Danbury, grew from 26% in 2019 to 44% in 2023.
“The idea of people struggling is not limited to any one part of our state, and, in fact, is getting worse in parts of our state [that] might like to think that they are somehow safe from this, this epidemic of financial need,” Bates said.
The new report also underlines Connecticut’s longstanding income inequality along racial and ethnic lines.
While 34% of white households and 31% of Asian households were below the ALICE threshold, other groups faced greater rates of hardship. These include:
- Native Hawaiian/Pacific Islander, 63%
- Hispanic, 59%
- American Indian Alaska native, 59%
- Black, 56%
- Two or more races, 49%
The ALICE calculations represent an alternative to the Federal Poverty Level, a simple metric developed in the mid-1960s by U.S. Social Security Administration economists and based largely on the cost of a minimum food diet. A family of four earning more than $30,000 was considered above the poverty line in 2023. A family of two had to make just $19,720.
The Urban Institute, a nonprofit economic and social policy research group based in Washington, D.C., echoed the United Way’s ALICE conclusions last December.
The institute reported a family of four in the northeastern U.S. needed to earn close to $151,100 in 2022 to be economically secure. Its True Cost of Economic Security measure evaluates adequate food, clothing, housing, health care, child care, transportation, postsecondary education, debt service, savings for unexpected expenses and retirement, and additional miscellaneous costs.
“The [federal] poverty line tells you very little about who is struggling in your community,” Bates said. “It tells you about who is suffering the most. It does not tell you who is the whole of that universe of people trying to make those basic tasks, month to month.”
The United Way, which has been presenting ALICE projections since 2014, initially encountered surprise and resistance from state officials and others when it reported a survival cost far above the Federal Poverty Level, Bates said.
But once skeptics review the ALICE budget component-by-component, Bates added, “every single time, not kidding, 100% of the time, people will have said, ‘That number’s too low.’”
Critics of the ALICE projections and similar calculations note Connecticut’s social safety net, on average, is far more generous than those offered in most other states.
But Connecticut’s investments in these areas, relative to inflation, have been slipping for more than a decade as state officials prioritize reducing the huge pension debt the state amassed between 1939 and 2010.
Connecticut, which entered this past fiscal year with more than $35 billion in unfunded pension obligations, has dedicated $8.6 billion captured by savings programs into the pensions since 2020 and is expected to deposit close to another $2.5 billion this fall.
Meanwhile, a legislative leadership plan to dramatically boost payments to doctors who treat poor patients on Medicaid was scaled back dramatically.
Connecticut hadn’t raised Medicaid reimbursement rates in a broad-based fashion since 2007, leaving many insured patients unable to find physicians who will treat them. Leaders said a $250 million infusion in this area is needed to make a big difference and pledged to get there in four years, starting with $75 million in extra Medicaid spending this fiscal year.
But because of budget caps and savings rules, that $75 million investment ultimately was scaled back to just $15 million.
Similarly, the Connecticut Conference of Municipalities says state education aid to cities and towns — once adjusted for inflation — effectively is down more than $400 million per year since Gov. Ned Lamont took office in 2019, forcing increasing property tax hikes at the local level.
Advocates for low- and middle-income households say one of the best ways to assist families in or slipping into poverty is to create a new per-child credit within the state income tax. The United Way is among those spearheading a push for a $600-per-child credit – with a maximum of $1,800 – for single-parent households making less than $100,000 and couples under $200,000.
The credit, which analysts have estimated would cost the state $300 million to $350 million per year, also would be refundable. That means even if a household earns so little it has no state tax liability to apply the credit to, it would have $600 per child added to its refund.
Lamont, a fiscally moderate Democrat, has been resistant to a child tax credit. The administration says the governor prefers to offer tax breaks that reach a broader range of households than the roughly 270,000 that would qualify for a per-child benefit.
The governor last year proposed boosting another income tax credit that offsets a portion of municipal property tax bills from $300 to $350, and broadening eligibility. But while Lamont’s plan would have benefited about 800,000 filers, it only would have distributed about $85 million or one-quarter of the total relief proposed for the child tax credit.
Lamont and the Democratic-controlled legislature in 2023 adopted one of the largest income tax cuts in state history, returning about $460 million, chiefly to middle-class households this year. Most families received about $300 extra.
But many legislators have said that, since income taxes are rarely reduced, the claim of the largest cut in state history is misleading. That relief, they say, has been too modest given inflation and eroding municipal aid and core state programs.
Congress and President Donald Trump recently ordered big cuts in aid to Connecticut and other states for health care, food stamps and other programs, Bates noted, adding many families here likely will continue to lose ground over the next few years. A $600-per-child credit, while costing just a fraction of recent state surpluses, could lift thousands of households above the desperation level.
“Legislators, I think, understand that if you are interested in talking about the people in your district scraping by paycheck to paycheck,” she added, “this [ALICE report] is the data that you want to pay attention to.”