ALICE Doesn’t Work Here Anymore
By: Edmund Ura
The working poor. That’s who ALICE is. The acronym stands for Asset Limited, Income Constrained, Employed. People who fall into this category do not earn enough income to lead a healthy life. Those who identify as ALICE are fed up, and you can’t blame them. You may be thinking that this type of employee is not common, but there are far more of them than you think. The most recent ALICE report for Michigan finds that 38% of households do not earn enough to afford basic household necessities. In many Michigan counties, primarily in rural areas, households below the ALICE limit exceed 50%.
There are a few important things all employers should know about this situation:
The pandemic has exposed the weakness of many employers’ compensation practices. They have restricted wages and wage increases for years due to concerns over competitive pricing or maintaining profit margins. Many employers believe the false assumption that being “competitive” would allow them to recruit and retain talented individuals. Employers need to recognize the reality. These labor market conditions are not going away any time soon, and they will need to adapt if they want to survive.
Many employees left the workforce during the pandemic. Some employees took early retirement, some learned that the earnings one spouse or partner made did little more than cover childcare expenses. But more employees realized that they do not have to work for lousy employers, in lousy jobs, with lousy pay. Employees started looking around. Many took classes and even looked to different industries, and this is not a trend that will end soon.
About a third to half of all employees plan on looking for another job as soon as they can. On the other end of the spectrum, many unemployed people still don’t possess the skills that some employers need right now. So no, this isn’t going away, and you won’t be able to wait it out.
The necessary numbers. According to United Way’s ALICE project, the household survival budget for a single adult is about $23,400, or about $11.70/hour. While a family, two adults and two children, need an annual income of $64,116, or $32.06/hour. The MIT Living wage calculator for Michigan puts those figures at $13.63 and $45.42/hour in total for a family.
If you, as an employer, are paying less than $11.70 (or more pessimistically $13.63) per hour, you are not paying someone enough to live. You shouldn’t expect those people to stay, because they do not have the necessary resources to tend to their own or family’s needs. With far more openings than individuals available to fill them, ALICE now has options – and you need to do everything in your power to find a way to hold on to them.
If people can’t live off of your wages, they won’t be willing to come back to work.
Many employers are complaining about not being able to stay open because people aren’t willing to work. But people are more than willing to work – if their employers treat them in a humane way. In every media report about someone forced to close their restaurant because they can’t find help, there are quotes from many other employers who have no problem hiring and retaining. They are paying more than a living wage, offering the type of benefits and flexibility that people need, and thinking of their employees as well as themselves.
Some people argue that some jobs were never intended to provide a living wage and that people in those jobs have no right to expect they should be paid enough to live on. But that doesn’t matter, does it? You may need to change your business model to accommodate them, or you can go out of business. It’s your choice.
