United Way: A family of four needs $126,000 a year to survive in Conn.
According to the Federal Poverty Level, a metric with roots going back 60 years, a family of four is impoverished this year if it earns $30,000 or less.
But a new analysis Tuesday from the United Way of Connecticut shows the true gap here is more than four times that level — and heading in the wrong direction.
The Connecticut chapter’s latest ALICE projections — an acronym for Asset-Limited Income-Constrained Employed households — found a family of four, with two adults, one pre-schooler and one infant, needed to earn $106,632 in 2021 to cover a basic survival budget.
Unprecedented inflation in housing, food costs and other essentials over the past two years adds another 18.2%, bringing the 2023 estimate to $126,018.
For those two working adults, that requires combined earnings of $63 per hour or an average of $31.50 each.
That’s double the new $15.69-per-hour minimum wage that Gov. Ned Lamont touted Monday.
“The lay person, I don’t think, understands how severe the situation for so many working people has become,” Lisa Tepper Bates, president and CEO of the United Way of Connecticut, said, adding that many public officials also don’t fully appreciate how much poor households are struggling.
“It has been decades of the floor gradually falling out” for thousands of families, she added.
Slightly less than 150,000 Connecticut households in 2021 lived below 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. The FPL two years ago was $26,500 for a family of four.
But critics say that standard, despite being followed by numerous state and federal agencies across the U.S., ignores or under-emphasizes vital expenses working families can’t avoid, including child care, transportation, housing, utilities and the need for at least a smart phone — if the household lacks a laptop computer.
The FPL isn’t adjusted to reflect regional differences in the cost of living, except for Alaska and Hawaii.
Another 402,750 Connecticut households lived between the FPL and the ALICE line in 2021.
That means a total of 552,710 households, or 39% of Connecticut residences, lacked a basic survival budget two years ago.
That’s up from 38% in the United Way’s 2020 report — which was based on 2018 data — and which set its poverty level at $90,660 for that same family of four.
The gap between the FPL and ALICE methodology isn’t as large for an individual, but it’s still significant. The FPL for a household of one this year is $14,580. The ALICE calculation for 2021 was $33,120. That number, adjusted for inflation in 2023, is $39,141.
And those aren’t the only numbers getting worse.
As coronavirus pandemic relief programs are being phased out, some problems facing families below the ALICE threshold aren’t going away.
Food insecurity among Connecticut adults living with children nearly doubled from 2021 to 2022, jumping from 12% to 23%, said Mark Abraham, executive director of DataHaven, a New Haven-based nonprofit that collects and analyzes data on equity and quality of life issues.
About 17% of those households faced food insecurity in 2018.
And Connecticut’s pockets of deepest poverty have struggled with food insecurity rates of 20% or higher for decades, said Abraham, a research adviser on the ALICE project.
“It pretty much goes back as far as there is data on it,” he said.
And while median household income statewide rose 21% between 1980 and 2020, DataHaven reported, much of that overall growth is tied to prosperity in wealthy Fairfield County suburbs.
For example, median household income over those four decades rose in the six wealthiest Fairfield County towns by 81%, from $127,000 to $203,000 in 2020 inflation-adjusted dollars.
In Bridgeport, the state’s largest and poorest city, it rose 7%, from $44,000 to $47,000.
Federal tax relief for poor families has shrunk
Still, some Connecticut households living below the ALICE poverty threshold can mitigate their troubles somewhat by taking advantage of federal tax breaks.
The United Way estimates that in 2021, these could have effectively lowered the threshold for a family of four by $15,204, from $106,632 to $91,428.
But there are complications as well.
The federal child tax credit was temporarily expanded in 2021 from $2,000 per child to $3,000 — or to $3,600 for kids younger than 6.
But Congress allowed that increase to expire after one year. And the credit is slated by law to shrink again, to $1,000 after 2025, unless federal lawmakers act.
An estimated 604,000 Connecticut children lived in households that lost a portion of their tax credit when that 2021 expansion expired, according to the Center on Budget and Policy Priorities, a Washington, D.C.-based policy group. And about 80,000 lived in homes that slipped below the poverty line, or deeper into poverty, after that change.
Similarly, the Child and Dependent Care Tax Credit, which offsets a portion of child care expenses, temporarily rose in 2021 from $3,000 per child and a maximum of $6,000 per household to $8,000 per child and $16,000 per family.
And Bates said a significant number of poor households don’t claim all of the tax relief to which they’re entitled.
Shobana Mani, executive director of SimplifyCT, agrees.
Many families feel nervous or overwhelmed trying to navigate the federal and state income tax systems, said Mani, whose nonprofit provides free tax preparation assistance for low-income families across Connecticut.
“That’s our biggest hurdle,” she said. “We have to get people comfortable with the idea of filing.”
The United Way of Connecticut has been one of the strongest advocates in recent years for state tax reforms to assist working low- and middle-income families, including establishment of an ongoing, refundable child tax credit within the state income tax system.
Most credits only reduce a filer’s income tax liability. But a refundable credit is added to the value of a household’s tax refund, even after the tax liability has been reduced to zero dollars.
“We would like to see a really robust discussion about what we can do in Connecticut to help these families get on more stable financial footing,” Bates said. “I would hope that that discussion would include a fully refundable, state level child tax credit.”
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