How the ALICE Threshold Hopes to Redefine the Federal Poverty Line

Find out how people just scraping by is defined and which groups are advocating for support.

Fact checked by Vikki VelasquezReviewed by Andrew SchmidtFact checked by Vikki VelasquezReviewed by Andrew Schmidt

What Is ALICE (Asset Limited, Income Constrained, Employed) in Economic Terms?

ALICE (Asset Limited, Income Constrained, Employed) is an acronym for workers earning just above the federal poverty level but making less than they need to cover basic living costs. These individuals hold a wide range of jobs with below-average pay in sectors such as retail sales and restaurant services.

The acronym was developed by the United Way and is based on its ALICE Threshold. Some consider it an alternative to the Federal Poverty Line. The nonprofit has set a standard ALICE Threshold for each U.S. state and country.

Key Takeaways

• ALICE refers to employed individuals and families who struggle to afford the basics of living.
• ALICE households earn above the poverty level but still face financial hardships.
• Financial challenges disproportionately affect households of color.
• The ALICE Project aims to define and understand the struggles of ALICE households.
• Solutions and support programs exist to address the challenges faced by ALICE individuals and families.

Of the 129 million households in the U.S., 54 million (42%) fall below the ALICE Threshold, according to United for ALICE, a grassroots movement led by the United Way of Northern New Jersey. At least one-third of households in every state were below that threshold in 2022. The organization’s 2024 update found that between 2021 and 2022, the number of ALICE households continued to increase, continuing a decade-long growth trend.

How the ALICE Threshold Is Calculated

The ALICE Threshold is determined using the organization’s Household Survival Budget, which includes the bare minimum cost of basics like housing, child care, food, transportation, healthcare and technology, taxes, and miscellaneous costs. The methodology involves using basic cost-of-living factors to determine the number and proportion of households that cannot afford the cost of living in a specific area. The budget is calculated separately in each U.S. county and for different types of households.

Two thresholds are calculated: one for households headed by someone under age 65 and one for households headed by someone over age 65 (the second is based on the Senior Survival Budget, which takes into account the different costs for older households, reflecting reduced spending on food and transportation and higher spending on healthcare).

The threshold is rounded to the nearest income category of the American Community Survey—a survey conducted by the  U.S. Census Bureau to measure the shifting social, economic, demographic, and economic status of the U.S. It’s then adjusted for household size and composition for each county.

The Struggles of ALICE Workers

ALICE households, as defined by the United by ALICE group, earn enough to be above the poverty line but still struggle to live on bare-bones budgets. This is in part because they face high living costs but aren’t able to benefit from as much public assistance as those who live below the poverty line.

Families are facing higher costs of living each year. For example, in 2023, 54% of ALICE households reported to the U.S. Census that it was difficult to pay for basic needs like food, rent or mortgage, car payments, and medical expenses—higher than the 50% who reported the same challenges in 2020 amidst the economic damage caused by the COVID-19 pandemic. And in 2022, 39% of households living below the ALICE threshold said their housing costs had increased in the previous 12 months.

During this time, many of these families weren’t receiving enough assistance to make ends meet. Just 18% of ALICE households received Supplemental Nutrition Assistance Program (SNAP) benefits in 2022, and 16% of ALICE households were behind on their rent payments in October 2023.

The ALICE parameters calculate not only the basic costs of living—housing, child care, food, transportation, healthcare, technology, plus other expenses and taxes—and measure the households that are unable to afford those basic needs. But they also incorporate contextual conditions, such as fewer job opportunities, longer commutes between work and lower-cost homes, and the stress of emergency rooms overused for primary care.

ALICE households often face difficult choices and hardships daily. Child care, for example, is one of the highest costs for families with children. The most recent U.S. Census Bureau’s Household Pulse Survey found that in 2022 around 61% of parents living with at least one child didn’t have any formal child care arrangements. When families were asked what they did when child care was closed, unavailable, or unaffordable, 34% of ALICE respondents said they cut work hours, while 31% said they take unpaid leave and 21% said they supervise at least one child while working.

Households of color are often disproportionately hit with financial hardships compared to their white counterparts. For instance, a study by the National Library of Medicine suggested that racial and ethnic minorities were less able to handle the economic shocks caused by the COVID-19 pandemic due to their lack of preexisting wealth.

In 2022, 59% of Black, 55% of American Indian/Alaska Native, 52% of Hispanic, and 48% of Native Hawaiian/Pacific Islander households were below the ALICE Threshold compared to 37% of white and 35% of Asian households.

54 million

The number of U.S. households below the ALICE Threshold, as of 2022.

The ALICE Project Origins

The ALICE project is a grassroots movement led by United for ALICE. While the movement started at United Way of Northern New Jersey in 2009, it has spread to United Ways, corporations, nonprofits, and foundations in Washington, D.C., and 31 states, including:

• Arkansas
• Colorado
• Connecticut
• Delaware
• Florida
• Georgia
• Hawai‘i
• Idaho
• Illinois
• Indiana
• Iowa
• Kansas
• Louisiana
• Maine
• Maryland
• Michigan
• Minnesota
• Mississippi
• New Jersey
• New York
• North Carolina
• Ohio
• Oregon
• Pennsylvania
• South Carolina
• Tennessee
• Texas
• Virginia
• Washington
• West Virginia
• Wisconsin.

The project aims to use research to raise awareness of the major segment of the U.S. population that is struggling to afford basic necessities. United for ALICE produces reports, facilitates forums for fundraising strategies and more, and builds relationships with communities and government officials to support the ALICE community.

Industries Where ALICE Workers Are Found

ALICE individuals are found in a wide range of industries, though they often hold service jobs. In 2022, 55% of personal care aides, 51% of cashiers, 49% of janitors and cleaners, and 46% of fast food and counter workers were living below the ALICE threshold. Other occupations with many ALICE workers include:

• Accountants and auditors
• Assemblers and fabricators
• Bookkeeping and auditing clerks
• Customer service representatives
• General and operations managers
• Maintenance and repair workers
• Movers
• Nurses
• Office and admin support supervisors
• Office clerks
• Retail salespeople
• Secretaries and administrative assistants
• Software developers
• Stockers and order fillers
• Truck drivers
• Waiter and waitresses

Many of the above occupations earn just above the federal poverty level but not enough to make ends meet.

Groups Advocating for ALICE Households

There’s a wide range of initiatives and programs aimed at supporting ALICE households. Several of these include:

• United Way of Northwest Arkansas teamed up with organizations in 2021 to provide ALICE students with 100 desktops and computer hotspots.
• In 2022, philanthropic organizations including the Winthrop Rockefeller Foundation, Hope Policy Institute, and the Arkansas Community Foundation raised more than $225,000 to erase $35 million in medical debt for Arkansas residents.
• United Way of the Ouachitas offers free tax preparation services to low-to-moderate-income households.
• In 2023, the Asset Funders Network hosted the ALICE Champions Conversation in which policy, business, philanthropic, and nonprofit leaders discussed how to use their influence to help ALICE communities and implement policy changes.

Advocates are also pushing for policy changes using ALICE data and research from United for ALICE. In 2019, for example, early childhood advocates used ALICE data to emphasize the need for legislation to promote affordable day care. More recently, the governor of Hawaii, Josh Green, signed legislation to extend family tax credits in a move to provide relief to ALICE families.

What Is the ALICE Threshold?

The ALICE Threshold is a US County-level metric that is used to describe households that cannot regularly meet their financial obligations despite being fully employed and above the local poverty line.”

What Is the Difference Between Poverty and ALICE?

ALICE specifically refers to those who struggle to cover the cost of their basic needs but who are not living below the federal poverty line.

What Is the ALICE Essentials Index and How Is It Different From the CPI?

The ALICE Essentials Index tracks the increasing costs of basic essentials like housing, child care, food, healthcare, transportation, and a smartphone plan. The consumer price index (CPI) measures far more goods and services, including luxury items.

The Bottom Line

ALICE households are those in which working people are unable to cover their basic needs but still live above the federal policy line. They face rising costs of living but are often unable to benefit from the same level of financial assistance as those who live below the poverty line. In 2022, 42% of households in the U.S.—54 million households—were below the ALICE Threshold.

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