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Pandemic Impact: 157,000 More NJ Households Financially Insecure

Updated: Jul 25, 2023

New ALICE Report shows pandemic aids temporarily blunted the financial crisis, yet warning signs on the horizon

The ranks of New Jersey households experiencing financial hardship grew by more than 157,000 during the first two years of the COVID-19 pandemic, resulting in a total of 1.3 million households or 37% struggling to afford the basics during the crisis, according to a new report from United Way of Northern New Jersey and its research arm United For ALICE.

While job disruptions and inflation delivered significant financial pain, a combination of pandemic supports and rising wages helped to blunt what could have been a deeper financial crisis, the report finds.

ALICE in the Crosscurrents: COVID and Financial Hardship in New Jersey shows that the number of households experiencing financial hardship continues to be undercounted by official measures.

The number of households earning below the ALICE Threshold of Financial Survival grew by 14% between 2019 and 2021 – more than double the 6% increase in the state’s overall population. That includes households in poverty and those defined as ALICE (Asset Limited, Income Constrained, Employed) – earning above the Federal Poverty Level but less than what’s needed to afford the basics. The number of ALICE households grew by nearly 97,000 for a total of 923,791 by 2021. That’s more than twice as many the total 368,639 designated as in poverty.

“It could have been so much worse,” said United Way of Northern New Jersey CEO Kiran Handa Gaudioso. “Strong pandemic relief supports did provide some temporary relief for ALICE families, which we should feel good about. However, as some of those benefits are coming to an end, and inflation persists, there are serious warning signs on the horizon.”

According to the report, the annual ALICE Household Survival Budget, which is the basic cost needed to live and work in New Jersey, rose by 16% for a single adult to $33,984 and by 13% for a senior citizen to $38,328. While costs rose by 10% for a family of four with an infant and a preschooler, the Child Tax Credit and Child Dependent Care Tax Credit helped to soften the blow, bringing the family survival budget down to $82,176. Without those credits, the budget would have been as high as $98,000.

Even with the variety of pandemic supports available, two-full time workers earning salaries as a cashier and a retail salesperson – two of the most common occupations in New Jersey – fell short of affording the family budget by $18,564.

“One of the positive changes during the pandemic was that tax credits, stimulus payments and rental assistance were available to ALICE households,” said Stephanie Hoopes, Ph.D, United For ALICE National Director. “Often, ALICE has been locked out of qualifying for those kinds of financial assistance. However, as some of these supports are peeled away, there are clear warning signs ahead, including growing food insufficiency across the country. If we ignore these signs of stress on our essential workforce, it will be to the detriment of our economy and the well-being of our communities.”

Additional report insights include:

  • Racial disparities persist in the rates of financial hardship; 52% of Black and 51% of Hispanic households were below the ALICE Threshold in 2021, compared to 32% of white households.

  • Seniors had among the highest rates of hardship. Nearly half – 49% – of New Jersey’s senior households could not afford basics in 2021.

  • In 2021, 60% of the 20 most common jobs in New Jersey paid less than $20 per hour, which is not enough to support a family of four with an infant and a preschooler, even with two parents earning this salary.

  • In Federal Reserve surveys, the percentage of respondents with income below the ALICE Threshold who reported having emergency savings dropped from 52% in October 2019 to 46% in November 2021. Meanwhile, those survey respondents earning incomes above the Threshold saw emergency savings rise from 71% to 75%.

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