Many NJ families missing out on economic recovery, study shows

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This video shows approximately five of the forty-five minutes Gov. Murphy spoke in Nutley Monday, October 1, 2018. Murphy’s focus was the economy. Kevin R. Wexler, NorthJersey

Post-recession recovery remains elusive for low-income workers in New Jersey. Child care and rising health care costs weigh heavily on the families as they struggle to pay for basics such as food, housing and transportation, according to a new economic study. 

The number of households struggling to afford the basics grew by 15 percent between 2010 and 2016, according to the United Way ALICE Report released Monday by United Way of Northern New Jersey.

Reports of the broad economic recovery is at odds with findings that show 38.5 percent of New Jersey households can’t afford the basics for survival.

“So often we’re hearing really good economic news come out: increased productivity, stock markets booming, and especially low unemployment,” said Stephanie Hoopes, director of the United Way ALICE Project. “We think that we’ve recovered from the Great Recession which ended in 2010 and we’re seeing actually the number of ALICE households continue to increase since then.”

ALICE, acronym for Asset Limited, Income Constrained, Employed, is defined as those households earning above the poverty line but less than a basic cost of survival. The number of ALICE households grew from 754,664 in 2010 to 895,879 in 2016, a 19 percent increase and nearly triple the number in poverty. There are nearly 3.2 million households in New Jersey.

The cost of basic needs outpaced the rate of inflation and wage growth, rising 16 percent to $26,640 annually for a single adult and 28 percent to $74,748 for a family of four with an infant and preschooler.  

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Meanwhile, median earnings only increased by 12 percent during the same period.

“Think about your children coming out of college who can’t get a decent job,” said John Franklin, CEO of United Way of Northern New Jersey. “Think about your parents living on Social Security. Think about the people who take care of your kids in child care, or your friends who take care of your parents in the nursing home. These are people we need in our community.”

Along with the increase in costs of household goods, low wages in New Jersey are part of the problem, Hoopes said.

“We see still more than half of wages in New Jersey pay less than $20 an hour,” she said. 

She also pointed to the the rise of the gig economy and part-time or three-quarters time jobs that lead to varying wages from week to week. The move toward small firms in New Jersey equates to more job churn and fewer benefits. More than half of people work in small firms in the state now, she said.

Some of the major findings in the report include: 

• The biggest drivers of cost increases for families since the end of the recession are health care (up 99%), transportation (up 25%) and child care (up 14%).
• With 51% of the private sector employed by small businesses, these employees face greater financial risks with lower average salaries that do not meet the survival budget for a family.
• One-third of households headed by adults 45 to 64 years old can’t make ends meet. Households in these prime earning years saw the largest jump – 22 percent – falling below the ALICE Threshold.
• Four counties — Morris, Union, Salem and Camden — had the largest increases of 25 percent or more in the number of families struggling to afford the basics.

The report, which is available online for review, includes an interactive map which breaks down the percentage of ALICE families on a county by county basis. Every municipality in the state is also included. A survival budget and stability budget are included for each county. 

A household survival budget is the costs to afford the basic necessities such as housing, child care, food, transportation and health care.

The average annual survival cost for a single adult is $26,640. For a family of four with an infant and preschooler the annual cost is $74,748. Savings are not included and it’s a bare bones budget that assumes frugal spending on food and other expenses.

“It’s really the bare minimum and it’s a very hard budget to live on month to month,” Hoopes said. “You can get by maybe one month but then if something happens, if you have an emergency, there’s no line item for savings or an emergency in there.”

The report includes totals for married couples without children, a single parent with a school-aged child or infant, and two adults with two school age children. Each line item expense for housing, food and more is included. Taxes are also included.

The report includes the required hourly wage necessary to achieve the survival budget, which is $13.32 per hour for a single adult and $37.37 for a family of two adults, one infant and one preschooler. 

Bergen County survival budget: 

• Single adult $26,412
• Married couple $35,424
• 1 adult, 1 school-age child $38,124
• 1 adult, 1 infant $48,744
• 2 adults, 2 school-age children $54,996
• 2 adults, 1 infant, 1 preschooler $75,744

Bergen County stability budget: (adds technology such as a smart phone, savings, and a miscellaneous column).

• Single adult $45,528
• Married couple $67,716
• 1 adult, 1 school-age child $74,772
• 1 adult, 1 infant $88,728
• 2 adults, 2 school-age children $117,672
• 2 adults, 1 infant, 1 preschooler $150,804

Passaic County survival and stability budgets:

• Single adult $26,412 / $45,528
• Married couple $35,244 / $67,716
• 1 adult, 1 school-age child $36,708 / $71,028
• 1 adult, 1 infant $42,048 / $78,336
• 2 adults, 2 school-age children $52,200 / $102,120
• 2 adults, 1 infant, 1 preschooler $65,328 / $118,896

Morris County survival and stability budgets:

• Single adult $29,160 / $42,936
• Married couple $37,992 / $65,772
• 1 adult, 1 school-age child $39,900 / $72,288
• 1 adult, 1 infant $49,512 / $86,964
• 2 adults, 2 school-age children $59,124 / $115,656 
• 2 adults, 1 infant, 1 preschooler $81,552 / $150,924

Essex County survival and stability budgets:

• Single adult $25,620 / $42,468
• Married couple $33,084 / $64,968
• 1 adult, 1 school-age child $34,416 / $68,484 
• 1 adult, 1 infant $39,744 / $77,556
• 2 adults, 2 school-age children $50,016 / $106,788
• 2 adults, 1 infant, 1 preschooler $63,252 / $130,872

Middlesex County survival and stability budgets:

• Single adult $24,696 / $46,152
• Married couple $35,772 / $70,992
• 1 adult, 1 school-age child $37,296 / $76,536
• 1 adult, 1 infant $44,232 / $88,812
• 2 adults, 2 school-age children $54,888  / $105,240
• 2 adults, 1 infant, 1 preschooler $70,992 / $133,416

Union County survival and stability budgets:

• Single adult $25,620 / $42,468
• Married couple $33,096 / $64,968
• 1 adult, 1 school-age child $33,588 / $70,476
• 1 adult, 1 infant $40,476 / $84,528
• 2 adults, 2 school-age children $48,408  / $107,460
• 2 adults, 1 infant, 1 preschooler $64,152 / $139,056

Hunterdon County survival and stability budgets:

• Single adult $28,236 / $46,644
• Married couple $40,848 / $71,832
• 1 adult, 1 school-age child $44,904 / $78,924 
• 1 adult, 1 infant $54,144 / $92,256
• 2 adults, 2 school-age children $68,124 / $114,204
• 2 adults, 1 infant, 1 preschooler $89,796 / $145,068

Monmouth County survival and stability budgets:

• Single adult $23,124 / $43,056
• Married couple $33,612 / $67,164
• 1 adult, 1 school-age child $35,136 / $73,128
• 1 adult, 1 infant $43,164 / $84,156
• 2 adults, 2 school-age children $52,356 / $110,604 
• 2 adults, 1 infant, 1 preschooler $69,972 / $138,492

Ocean County survival and stability budgets:

• Single adult $26,664 / $43,524
• Married couple $38,352 / $67,968
• 1 adult, 1 school-age child $40,764 / $72,876
• 1 adult, 1 infant $48,084 / $80,820
• 2 adults, 2 school-age children $61,620 / $98,208 
• 2 adults, 1 infant, 1 preschooler $78,744 / $117,936

Somerset County survival and stability budgets:

• Single adult $28,236 / $46,644
• Married couple $40,680 / $71,832
• 1 adult, 1 school-age child $43,080 / $78,108  
• 1 adult, 1 infant  $50,400 / $93,432
• 2 adults, 2 school-age children $64,500 / $113,748  
• 2 adults, 1 infant, 1 preschooler $82,368 / $148,920

Increasing wages would help ALICE families, Hoopes said, but there are a lot of other things that are impacting quality of life and their ability to achieve financial stability.

“It’s the cost of all those basic household necessities,” she said. “That increasing cost of living is an ongoing factor for ALICE. New Jersey is definitely a high cost of living state.”

Follow Jai Agnish on Twitter: @Jai Agnish.

Email: agnish@northjersey.com.

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