Stephanie Hoopes on Building a Better Barometer for Financial Hardship

Lisa Hamilton:
From the Annie E. Casey Foundation: I'm Lisa Hamilton: and this is Casey Cast.

Today's guest — social entrepreneur and researcher Stephanie Hoopes — has developed a series of measures around ALICE, which stands for Assets Limited Income Constrained Employed, which is an acronym used to describe families and workers who live above the poverty line but still earn too little to make ends meet.

She started her career as a professor and has a Ph.D. from the London School of Economics. She now runs the research and innovation center United for ALICE at the United Way of Northern New Jersey.

With her work, Stephanie is shining a bright, data-powered spotlight on the lives of these working families as she seeks to answer questions like: How we can build a better economy that recognizes the contributions of all workers and families? What makes a difference for families economically? And what differentiates the families that fall further into poverty from the ones who are just scraping by — or even pulling through — during these challenging times? That's a lot of ground to cover. So, let's get started.

Welcome, Stephanie! Thank you for joining us on CaseyCast.

Stephanie Hoopes:
Lisa, thank you so much for inviting me to the podcast. I'm so excited to dig into these big questions.

Lisa Hamilton:
Fantastic. Well, let's start with the basics. Where did the idea for ALICE come from? You were teaching at Rutgers at the time. How did ALICE come to be?

Stephanie Hoopes:
You never know what leads to the next thing. I'm working along in my career as a professor and studying and teaching political economy, and I volunteered for my local United Way and they put me on the grants committee. At the time, our little United Way was in a county where the poverty rate was about 4% or 5%, and I was so excited. I thought, ‘I'm going to have this money to give away. And we are going to end poverty. Maybe we'll be the first county in the country to eliminate poverty.’ And then I started reading the grant applications and there was so much need and very compelling. I thought, ‘This is a huge mismatch between this data that I have on the one hand and what I'm seeing on the ground on the other.’

So, I put back on my researcher hat, went and looked into the federal poverty level and realized it was very poorly equipped to tell me anything that was happening on the ground in my county — or really any county in the country. It had been developed more than 50 years ago when Lyndon Johnson needed a measure for the war on poverty. And it's the same number across the country, built on the premise that food is a third of your budget. So, 50, 60 years after the war on poverty, food is no longer a third of your budget and — lo and behold — there are many more households living in financial hardship but that aren't captured by that federal poverty level.

I went back to the United Way and said, ‘I've got this idea for a report. I'll do it for free. It'll just be a little project on the side.’ So, in a small committee, we actually came up with the acronym, ALICE, and we built what we call the household survival budget and measured just the bare minimum to live and work in the modern economy. Then we counted up how many people in our community earned below that.

Instead of 4 or 5%, it was 25%. That's when we realized this is a huge mismatch in our understanding. The report went out into the community and a year later, and I ran into a friend of mine on the street. She worked for the county, and she said, “Hey, we just had this great meeting. We were trying to decide a policy solution. And somebody said, ‘How will this impact ALICE?’” That's the moment I knew we were on something. And, from there, we went back and did a report for the whole state. Then other states saw it, and we expanded to six states, 10 states. And now we are actually in 27 states.

Lisa Hamilton:
You sort of briefly touched on this archaic federal poverty measure that we use across the country in order to try to understand who might be low-income in this country. But what you reveal is that that's actually not a good measure. So, tell us more about what you learned about who are ALICE families and what their circumstances are?

Stephanie Hoopes:
Technically, ALICE families are households that earn above the federal poverty level but below that threshold that's built on that bare minimum budget.

But, in practical every day, we all know ALICE. ALICE workers help our economy to run smoothly. That's our child care workers. It's the security guard. It's the barista at the coffee shop. And then, during the pandemic, ALICE was the essential worker who helped many of us quarantine at home. And, in fact, delivery drivers are one of the number one jobs in many states across the country. And then, closer to home, many of us have children who are starting out in the work world, who are ALICE — parents who haven't been able to save enough and are needing to retire are ALICE. Many of us have been ALICE. So, this isn't a group over there that we think about. It is core to our everyday lives.

And a key part of being ALICE is struggling paycheck to paycheck, but with little or no savings. So, one emergency away from financial ruin in many cases. In total, 42% of households across the country are below the ALICE threshold. So, that would be poverty plus ALICE. We also know that these households are composed of all races and ethnicities, all household types, all ages, and they live in all areas of the United States: urban, suburban, rural. We also know that some groups are disproportionately ALICE, especially those that are Black, Hispanic, have a disability, limited-English speaking. And then, if you have a combination of those, you're even more likely to be below that ALICE threshold.

Lisa Hamilton:
You said 42% and I think there probably are many listeners who are startled by that number. I don't think many people really recognize the extent of financial struggle that exists in this country. And, so, your research revealing that nearly half of the population is ALICE or below — individuals who are struggling with financial insecurity — is, I hope, concerning and alarming to people who hear what we're really grappling with in this country.

Stephanie Hoopes:
And, I think, very relevant to your work is the fact that half of children live in families that are below the ALICE threshold. So, that’s living in a family that can't provide the basic needs for a child. There’s an obvious, immediate impact, but also some long-term implications for that. That race, ethnicity divide is striking there, too. Lisa, we found that 70% of black children and 68% of Hispanic children were living in households below that ALICE threshold compared to 36% of white children.

Lisa Hamilton:
Which, as you noted, that puts their futures at risk because their families aren't able to provide them with those really important basics that provide stability for children growing up: a roof over your head, food on the table, clothes to go back to school — all those things that are really important for children. One thing people might be thinking about is the way you calculate this measure of financial instability. And I think you call it the ALICE threshold, and it's different across different places based on the cost of living. Could you explain what the ALICE threshold is and how it's calculated?

Stephanie Hoopes:
Yeah, thanks for bringing that up because we work very hard to be transparent in our measures.

So, it is interesting what's behind it. The ALICE threshold is based on the survival budget, which is just those core household items that you need. Housing, child care, food, transportation, health care, a smartphone in the modern age, and then ALICE pays taxes. So, we provide budgets for all different household types, and you can see exactly what those amounts are. So, a very transparent budget.

And, in part, we do that because each budget item might seem small, but — when you add it up — suddenly, it can be a large number. And we want folks to see where that comes from. And if you try and cut one of those out, how hard it would be to be able to function. So, that survival budget is our key guide. And, with that, we're able to capture the very different cost of living across the country and even within states. Ultimately, what we're doing is: Here's the cost of living, here's what wages pay, and then we see this mismatch between the two in every community.

Lisa Hamilton:
The first letter in ALICE is assets. And, when you were talking about a family's financial stability, part of that equation is: Do they have any resources to draw on? And, so, your research pays attention to a family's assets. What kind of assets are you talking about, and what did you learn about whether or not families have any rainy day fund and how that affects their financial stability?

Stephanie Hoopes:
That rainy day fund is pretty famous out there in data world. How many families have assets to keep going for three months of an unexpected expense or a $400 unexpected expense? We see, kind of overall, more than half of households — 55% — have some kind of rainy day fund. But, when you break it down above and below the ALICE threshold, you see something really different. For the wealthier households, about three quarters of households have that rainy day fund availability. Below that ALICE threshold, it's about a quarter; a really big difference. And then, even within that, we see differences by race and ethnicity, with white households having slightly more and Black and Hispanic households having even less.

Lisa Hamilton:
Your work has produced several reports, one of which — The Pandemic Divide — looks at the impact of COVID-19 on America's working families who are struggling to make ends meet. In a nutshell, how has the pandemic changed everyday life for ALICE's families?

Stephanie Hoopes:
The pandemic has been really tough for ALICE's families. I think this is a place where averages have been deceiving. The pandemic really wasn't that bad if you had a salary, if you were able to continue working from home — you actually had some quality time with your family. But, for many ALICE families, it was not only a health crisis but also an economic crisis. They're much more likely to have lost a job or earnings as hours were cut back. They had huge challenges of having to go into work. Getting there was a challenge. Keeping healthy was a challenge. And then having to juggle children. Trying to learn remotely and maintain child care with child care centers closed. The challenge — physically, financially and emotionally — was really difficult for most ALICE families.

Lisa Hamilton:
You talked about some of the ways you disaggregate the data. That's one of the things that we found interesting about your report: You disaggregate ALICE data in a lot of different ways, not just racial, but rural and urban and family demographics. Is there anything you'd like to highlight from what you saw about who's more likely to be ALICE and who isn't?

Stephanie Hoopes:
Well, a lot of what we do is myth busting, I would say. There are stereotypes about who is struggling in this country, and it's been very powerful to show that people in all kinds of households are struggling. So, young households, senior households, and households with workers. I think one of the most striking data points for us was when we looked at families with children. You can be living in a family with two working parents and still be below the ALICE threshold. In fact, more than a quarter of married parents, both working, are struggling below the ALICE threshold — in a country where you think if you work hard, you can support your family. It doesn't match. And, so, I think sometimes it's unsettling — the data that we have. But, it's critical to highlight a reality that's happening if we have any chance of finding better solutions.

Lisa Hamilton:
Do you have any idea of what separates ALICE families who gain stability over time from families whose lives grew more unstable? Is there anything that you could highlight that might make the difference?

Stephanie Hoopes:
Yeah. So, in one of our recent reports, called The Pandemic Divide, we looked at who was doing better during the pandemic. While most ALICEs families were doing worse throughout the pandemic — and we can dig into that more — there was a small group who was doing better. We looked into what kind of characteristics they had, and it was strikingly different. The folks, the households that were able to do a little better during the pandemic were those that had a full-time job, had received a raise or promotion, or started a new job. They also had insurance through their employer or a union. They had a savings or checking account. They had that rainy day fund, and they also had a retirement plan on track. And, then, a last dimension that I think is important to note is that they were confident they could receive credit if they applied. A lot of households don't have that confidence or that access to credit. So, those are all basic things — and things policy makers know how to support.

Lisa Hamilton:
What does all this mean to you about the state of the financial health of families — and, as a result, their children — in this country?

Stephanie Hoopes:
Yeah, I think about this a lot. I obviously have a lot of data on how challenging it is for ALICE families, but I want to make sure that all of us keep in mind that it's not ALICE's fault. ALICE is working hard. ALICE is helping us keep our economy running smoothly, and we have a system that's not working for them. We have a system where the cost of living is higher than a lot of jobs and important jobs — jobs that we need — are paying. And, so, it's a problem for everybody and all of us to be thinking about solutions.

Lisa Hamilton:
And puts millions of families in what's obviously an unsustainable financial situation. So, really, your data, I think, is — in every way — a call to action for all of us to think about what kinds of changes we need to make. The Casey Foundation and the United for ALICE Initiative share this love of data in common. How do you use your data in your work in ways that you think will drive change? What do you think will take us from this data to action?

Stephanie Hoopes:
We have had great success with our partners across the country in having this data move into action. In Northwest Arkansas, there's an initiative bringing computers and Wi-Fi hotspots to ALICE students and their families. In Western Connecticut, there's an enrichment fund that's helping ALICE families support their children so they can participate in extracurricular activities. In North Idaho, ALICE has been part of the rationale to bring full-day kindergarten to the state. And, then, United Way in Miami-Dade has launched EDEN Place, which is a community support for parents to help their children's education. So, all kinds of good work is happening. Obviously, we need more, but I just love seeing our partners come up with these creative ideas and identifying the needs on the ground where they are.

Lisa Hamilton:
You took this project from New Jersey to now 24 different states. What have you learned along the way as you've taken an effort like this to broader scale, and how you refine it or make it work in all these different places or make it useful for people in all these places?

Stephanie Hoopes:
We want to do the best quality work, and we want it to be useful. So, our partners have been great about sharing that commitment to excellence — being in it for the long term. We ask them about what's happening on the ground. What do they need? And, as a result, we come up with all kinds of cool tools.

We have a very busy website, called unitedforalice.org, so I hope your listeners will check it out. We have all kinds of things, from a wage tool where you can see what wage you need to support the survival budget in which county. We have a legislative district tool that is the result of our partners saying, "Hey, we need to tell our legislators about this. They only listen if they know it's happening in their district." And, so, we have a great legislative district tool. It's all about listening, feedback and that ongoing communication. And it's got to be two ways.

Lisa Hamilton:
That's awesome. Well, it sounds like you have provided a great set of tools and information that can inform a wide variety of stakeholders in this work. And that sort of leads to my next question. Making sure ALICE families thrive isn't just the role of United Way, but really all of us. We get the opportunity to partner with lots of different organizations around the country. How do you think all of us, all kinds of organizations — public, private, nonprofit — can better serve ALICE families?

Stephanie Hoopes:
Well, I really appreciate that you have that broad view because the magnitude of the challenge is so big, it's going to take all of us who care. It's going to take a wide array of stakeholders. It's too much for one organization, and it needs to happen at all different levels: local, state and then definitely at the federal level.

A couple things I'd like to point out. There's a lot of ways to attack this. And, if you just start with the items in the household survival budget — so, affordable housing. Housing is just so fundamental to a family and to anybody's well-being. There needs to be more affordable units. Many times, smaller units are sufficient. Our households are getting smaller. They need to be near public transportation. And, a lot of times, you think you have a housing issue, but you actually have a zoning issue.

Child care has been a challenge before the pandemic. If we want parents to work, they need to have safe, affordable quality child care. One of the reasons it's a challenge is because a lot of those child care workers are ALICE themselves. So, we know that they need to be paid more and, yet, it makes the child care more expensive. There's some good work going on to figure out that system. We have a pilot going on in New Jersey called United in Care that's looking to reconfigure the structure of child care and pairing up family child care providers with child care centers so that they can form a hub and spoke — each bringing a different dimension and some flexibility, some ability to expand capacity, but contract as needed.

I know a big place you all have been working on is food, and it's not only availability, but healthy food. And one of the things that we notice in the very small budget item we have for food in the survival budget: You need time and talent to cook on that kind of budget. And, if you're working two or three jobs, how are you going to have the time to do that — let alone the energy? So, we've got some mismatches going on of what's expected on the one hand in terms of the budget and then the other hand in the work place.

Transportation — there's a lot happening there. And then another area is taxes. For the first time, we saw the power of the child tax credit during the pandemic. So, some of the bad experiences of the pandemic could be rolled into some of the good experiences and learned from that.

Lisa Hamilton:
That's awesome. Any new solutions that you think policymakers could be championing for these families?

Stephanie Hoopes:
So, we have a lot of things percolating, and we could think beyond just policymakers. We know that employers probably have the most ability to impact ALICE workers and certainly the fastest. One thing that we're piloting right now is called ALICE at Work, and it's an education and certification program for employers. So, how can they become aware of their ALICE employees and then what can they do better?

Lisa Hamilton:
That's a great solution. I'm glad to hear you thinking broadly about all the various actors who can make a difference in ALICE lives. And that's a powerful statement to say employers actually have the most immediate impact on the lives of ALICE workers. I hope that our corporate leaders who are listening take heed of that.

Well, I have to ask you: What's next for ALICE and for you? Is there a next chapter already in the works or any dream projects on your to-do list? What else do we need to know about ALICE?

Stephanie Hoopes:
Oh, you ask all the good questions. Love this one! So, first and most important, we will be updating the ALICE data in the spring of 2023. That will be our first understanding of the real impact on the ALICE demographics at the local level. And there’s so many different things going on with the pandemic. How did that play out in terms of the ALICE demographics?

Then we have the ALICE economic viability dashboard coming, and it's something that we've been working on behind the scenes for a while. We were invited to participate in a sprint with the U.S. Census Bureau, the Commerce Department, some folks at Harvard, to develop a national well-being index. So, they're helping us go through this process, and we're building out a really cool dashboard that's going to have housing, jobs and, another bucket — household basics — where we're able to look at these three things at the same time and identify gaps, because we know there might be affordable housing in one place, but not good jobs at the same time.

And, so, this is a way for us — but also for communities — to better understand where their gaps are. And, then, part of the dashboard is going to include a scorecard. How can you do better? Is it building affordable housing units? Is it making broadband Wi-Fi more available? So, really helping communities identify where their specific gaps are.

Lisa Hamilton:
That's great! Well, as the organization that's been producing the KIDS COUNT® Data Book for 32 years, we think this is a wonderful journey that you are on. I don't think we can ever have enough information or insight into how people are doing in this country, because only when we're armed with that information can we really do the best that we can for them. So, what an extraordinary project you have put together.

You have given a name and a face to everyday Americans that, as you helped us understand, are around us all the time — the bus driver, the child care worker, your grocery store clerk. All these people that we depend on in our lives. You really made some of the challenges in their lives visible. I'm so very grateful that you're doing this. So, thank you for all the work that you're doing — every day — to help illuminate the financial hardships of families and to inspire us to build better solutions on their behalf.

I want to thank our listeners for joining in, as well. If you like today's conversation, please recommend us to a friend. You can ask questions and give us feedback on Twitter by using the #CaseyCast hashtag, and you can learn more about Casey and the work of our guests by checking out our show notes available at aecf.org/podcast.

Until next time, I wish all of America's kids — and all of you — a bright future.