Question

PROMPT:  The article indicates that in the year 2016 the number of households earning less than the Federal Poverty Line ($24, 300 for a family of four or $11,880 for a single adult) represented 10.5% of the population of New Jersey, but that the number of households earning more than the Federal Poverty Line but not enough to afford basic necessities ($74,748 for a family of four or $26,640 for a single adult) represented 28.0% of the population of New Jersey. The households that have incomes above the Federal Poverty Line but are unable to afford basic necessities are called ALICE (Asset Limited, Income Constrained, Employed).

Comment on the disparity between the Federal Poverty Line and the ALICE level.

The households in the ALICE category have one or more adults working to earn an income. What role should the individual, government and other members of society play in addressing the shortfall between the household income and the amount needed to afford basic necessities?

Does the Household Survival Budget detailed in the report seem reasonable to you? Are there other categories of expense that should have been included?

Answer 1

As is the case in other parts of the world, income inequality is major problem in the US. New Jersey is a state in the US. The data given above tells us that the 10% of population in the state lives below Federal poverty line, whereas 28% of the population other than the 10% living below poverty line, are earning just enough to be called as people living above poverty line, however they can not even afford basic necessities.

ALICE are those people who are living paycheck to paycheck. They're also called working poor. The difference between the ALICE and those living below federal poverty line shows the different degree of poverty, of needs or requirements for these people in the country. This data can be very helpful to understand levels of poverty at different stages and what kind of policies can be adopted for different categories of poor people.

The individuals, government and other members of society can play unique roles for these people in addressing the shortfall between their income and the amount needed to afford basic necessities. For example, individuals of ALICE household can be provided cash transfers, tax rebates, etc., by the government in order to augment their incomes, help from the society in the form of lower contribution in payments for using public amenities. Such steps would ensure more disposable income in the hands of ALICE households and reduce their financial stress.

Household Survival Budget detailed in the report seems more or less reasonable to me. Other categories of expense that should have been included are internet bills, higher taxes on gasoline etc.