CONCLUSION: ALICE AT A CROSSROADS The ALICE analysis of the four surveys presented in this Report shows that those who went into the pandemic struggling —starting out with low incomes, low-wage jobs, and little or no savings — were the most vulnerable to the dual impact of the health crisis and the ensuing economic disruption. The differences between how households above and below the ALICE Threshold experienced the pandemic are striking. Who did better and worse? The November 2020 SHED asked respondents to consider their current financial standing in comparison to 12 months earlier. Respondents below the ALICE Threshold were significantly more likely to report being somewhat or much worse off than those above the ALICE Threshold (34% vs. 17%). But 19% of respondents below the ALICE Threshold reported being much better off or somewhat better off. Characteristics of this group provide some insight into what helps families to be more financially stable (Figure 25): • Respondents below the ALICE Threshold who reported being somewhat or much better off were more likely to have worked full time, received a raise or promotion, started a new job, had insurance through an employer or union, maintained a savings or checking account, kept rainy day funds, had a retirement plan on track, and been very confident in approval for credit. • Those below the Threshold who reported being somewhat or much worse off were more likely to have worked part time, been laid off or lost a job, had household income that varied quite often from month to month, rented rather than owned a home, had to pay an unexpected medical bill out of pocket, owed outstanding credit card debt, had medical debt, set aside no rainy day funds, and not been confident in approval for credit.
Figure 25. Characteristics of Those Better and Worse Off Household Characteristics
Respondents Below the ALICE Threshold: Household Financial Status Compared to 12 Months Prior (November 2020–November 2021) MUCH BETTER OFF OR SOMEWHAT BETTER OFF
Employment
MUCH WORSE OFF OR SOMEWHAT WORSE OFF
• Full-time job
• Part-time job
• Received a raise or promotion
• Laid off or lost a job
• Started a new job
• Household income that varied quite often from month to month • Rent
Housing Tenure Health Insurance
• Insurance through employer or union
• Paid unexpected medical bill out of pocket
Savings, Assets and Debt
• Savings or checking account
• Unpaid balance on credit card
• Rainy day funds
• Medical debt
• Retirement plan on track
• No rainy day funds
• Very confident in approval chances
• Not confident in approval chances
Access to Credit Note: Differences between groups were significant.
Source: ALICE Threshold, 2018; Federal Reserve Board, Survey of Household Economics and Decisionmaking (SHED), November 2020
ALICE NATIONAL COVID SURVEY REPORT
35
OCTOBER 2021
