Roughly four in ten US households earn too little to cover a bare-bones budget where they live (United For ALICE). The sections below look at which essentials drive that gap.
A recent New York Times story, "Rising Costs Push Necessities Out of Reach for Nearly Half of Americans," brought the issue back into the news. It reports on a Pew Research Center survey, not ALICE data: Pew found that 44% of adults had trouble paying for a basic necessity in the past year (Pew Research Center). That is a self-reported measure, different from ALICE's count below. A separate count of this problem comes from United Way's ALICE project.
What does "can't afford the basics" actually measure?
ALICE stands for Asset Limited, Income Constrained, Employed. It describes households that earn more than the federal poverty line but less than the basic cost of living in their county (United For ALICE).
United Way's researchers build what they call a household survival budget for each county. It covers housing, child care, food, transportation, health care, basic home internet and a smartphone plan, and taxes. It leaves out savings and extras such as eating out (United Way of Wisconsin ALICE report).
In United Way's ALICE reports, 42% of US households fell below that line in 2023 (United For ALICE) and 41% in 2024 (United Way of Wisconsin ALICE report). That group combines households officially in poverty with ALICE households, who sit above the poverty line (United For ALICE).
The official poverty line helps explain why the ALICE number is so much higher. It was designed in 1963-64 around the cost of the Agriculture Department's cheapest food plan, multiplied by three for families of three or more (two-person and one-person households were figured differently) (HHS). The federal poverty level also does not vary with local living costs, apart from slightly higher levels for Alaska and Hawaii (United Way of Wisconsin ALICE report).
Why do costs outrun paychecks?
Two different things get blurred together: the inflation rate and the price level. The inflation rate is how fast prices are rising. The price level is where prices stand after years of increases.
When inflation cools, the rate falls but prices don't. Grocery prices rose 1.8% over the 12 months to September 2026 (BLS), but that is growth on top of earlier increases. The Bureau of Labor Statistics tracks this through the Consumer Price Index.
Wages have not kept up lately: from September 2025 to September 2026, average hourly earnings adjusted for inflation fell 0.7% (BLS). And even when pay catches up with last year's prices, that does not undo the increases from earlier years.
Which costs do the most damage?
Housing is the largest line in the ALICE budget: rent made up 34% of the national essentials budget in 2023 (United For ALICE). Rent of a primary residence rose 2.8% over the 12 months to September 2026 (BLS).
Child care is another major cost for households with young children. In most states, a year of care for one infant costs more than a year of in-state public college tuition, according to Child Care Aware of America's 2025 Price & Supply report, which puts the national average annual price of child care at $13,184.
Food, car costs, and health care add to the pile. Car repair costs have climbed noticeably: the CPI for motor vehicle maintenance and repair rose 5.8% over the 12 months to September 2026 (BLS).
None of these can be skipped. That is why a raise of a few percent can still leave a household behind: the biggest bills are the ones with no off switch.
Why does a thin cushion make it worse?
A household that is just covering the basics has no room for a surprise. The Federal Reserve's annual Survey of Household Economics and Decisionmaking found that 63% of adults would cover a $400 emergency expense using cash or its equivalent in the 2025 survey, unchanged from 2024 (Federal Reserve Board); the remaining 37% would not cover it that way.
When a car breaks down or a medical bill arrives, that gap can end up on a credit card or as a missed payment, and interest or late fees can make the next month harder. The pattern is a mechanism, not a character flaw: a small shock meets a small buffer.
What can a household do with this information?
The data describes a structural squeeze, so no budgeting trick fully closes it. But knowing where a household sits relative to its local costs changes what to tackle first. Housing and child care usually matter more than daily spending habits, and they're also the hardest to move.
The one step worth taking: look up your county's household survival budget at unitedforalice.org, then compare it line by line to what you actually spend on those categories. The biggest gap shows where to focus first, whether that's a rent conversation, a child care subsidy, or a benefits check.
This article is for general information only and is not financial, tax, or legal advice. Consider speaking with a qualified professional about your own situation.
Sources
The New York Times, "Rising Costs Push Necessities Out of Reach for Nearly Half of Americans," 14 October 2026 (story that prompted this article; read via the syndicated copy at https://dnyuz.com/2026/10/14/rising-costs-push-necessities-out-of-reach-for-nearly-half-of-americans/).
Pew Research Center, short read on difficulty affording basic necessities, 14 October 2026. https://www.pewresearch.org/short-reads/2026/10/14/many-americans-are-struggling-to-afford-basic-necessities/
United For ALICE, "ALICE Essentials Index: 2025 National Report." https://www.unitedforalice.org/Attachments/ALICEEssentials/alice-essentials-index-2025.pdf
United Way of Wisconsin, 2026 State of ALICE report. https://cdn.ymaws.com/www.unitedwaywi.org/resource/resmgr/alice/2026_state_of_alice_report.pdf
US Department of Health and Human Services (ASPE), history of the poverty thresholds. https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines/further-resources-poverty-measurement-poverty-lines-their-history/history-poverty-thresholds
US Bureau of Labor Statistics, Consumer Price Index, September 2026 release. https://www.bls.gov/news.release/cpi.htm
US Bureau of Labor Statistics, Real Earnings, September 2026 release. https://www.bls.gov/news.release/realer.nr0.htm
Board of Governors of the Federal Reserve System, Survey of Household Economics and Decisionmaking (SHED) 2025 results, press release, 13 May 2026. https://www.federalreserve.gov/newsevents/pressreleases/other20260513a.htm
Child Care Aware of America, Child Care in America: 2025 Price & Supply. https://info.childcareaware.org/media/child-care-prices-rival-major-household-expenses
Our take
This take is opinion, not professional advice.
The Savvy Rabbits Staff
Our editors' take
The article's most useful move is separating the inflation rate from the price level. A rate is a speed; a level is a distance already covered. When inflation slows, people feel relief in the news and none at the checkout, because the rate describes how fast prices are climbing now, not how far they climbed. That is also why the ALICE count runs well above the share of households in official poverty. The poverty line was built around food costs, and ALICE prices a local budget that includes housing and child care. Two measures, two questions. What we didn't find is a direct test of whether the line-by-line comparison the article suggests changes outcomes for households that do it. It does make the largest gap visible, though, and housing is usually where it sits.
