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In the United States, there is a growing population of individuals who are considered ALICEs – Asset Limited, Income Constrained, Employed. These individuals earn above the poverty line but still struggle to make ends meet due to rising costs and stagnant wages. According to United Way’s United For ALICE program, nearly 40 million families, or 29% of the population, fall into this category. This percentage does not include the 37.9 million Americans who live in poverty, further highlighting the financial struggles faced by many in the country.

Rising inflation has only exacerbated the financial challenges faced by ALICEs. Low-income households, in particular, have been hardest hit by the spike in prices for necessities such as food, rent, and gas. Despite some wage growth in the low to moderate-income scale, inflation has outpaced these increases, putting additional financial strain on already vulnerable households. The Federal Reserve’s response to inflation, including multiple interest rate hikes, has further increased borrowing costs for consumers, making it even more difficult for ALICEs to make ends meet.

ALICE households find themselves in a difficult position, with limited options for reducing spending or increasing income. Many lower-income families have turned to credit cards to cover essential expenses, leading to a spike in credit card debt. This reliance on credit cards has only added to the financial burden faced by ALICEs, who already have limited savings and investment accounts to fall back on in times of need. With credit card delinquency rates on the rise, the outlook for these financially vulnerable individuals is bleak.

As inflation continues to present challenges and interest rates remain high, ALICEs are left in a precarious position. The lack of wage growth, coupled with the persistent increase in prices, paints a grim picture for these individuals. The hope for rate cuts by the Federal Reserve to alleviate some of the financial pressure has been dashed, leaving ALICEs struggling to keep up with their expenses.

The financial struggles of ALICEs in America are a stark reminder of the widening wealth gap and the challenges faced by those living on the brink of poverty. Without significant changes to address rising costs, stagnant wages, and limited opportunities for financial stability, the future remains uncertain for the millions of individuals who fall into the ALICE category.

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