Meet ALICE: Why Working Full-Time Isn't Always Enough

Meet ALICE

Imagine working full-time, paying your bills, and doing everything "right” trying to make a better living for yourself. Then you receive a small raise at work. Instead of celebrating, you get a letter saying you've lost your health insurance, food assistance, or childcare benefits because you now earn just a little too much to qualify for federal or state aid. Now you're left making impossible choices. Do you pay for groceries, your car insurance, or your medication? Do you cover childcare so you can keep working, or do you cut your hours so you can continue to qualify? For many families, earning more doesn't always mean getting ahead, oftentimes it may mean falling off a cliff. What should be thought of as a reward or progress becomes a threat to stability. 

This income limit is based on a system called the Federal Poverty Level (FPL).  

The FPL is a decades‑old federal guideline used to determine who qualifies for programs like SNAP, Medicaid, and childcare assistance. But it doesn’t reflect today’s cost of living or the differences between communities, which means many working families are told they earn “too much” to qualify for help, even though they still can’t afford basic necessities.

That’s where ALICE comes in.  

ALICE, Asset Limited, Income Constrained, Employed  is a way of measuring financial hardship that looks at the real cost of living in each community. Instead of asking only, “How much does this family earn?” ALICE asks, “Can this family actually afford the essentials where they live?”

And when we look through that lens, the picture becomes much clearer.  

In Indiana alone, 38% of households, more than 1 million families, were below the ALICE Threshold in 2024. Even in Indiana's wealthiest county, the struggle is real. Hamilton County has over 32,764 households falling below the ALICE threshold.

That includes:

• 12% living in poverty (using the outdated FPL), and

• 26% who are ALICE working, earning above the FPL, but still unable to afford the basics.

This means more than one in three Indiana households are working hard yet still struggling to meet basic needs. Many people assume that if someone is above the Federal Poverty Level (FPL), they must be financially stable. Unfortunately, that is not always true.

That’s why communities across the country are paying attention to ALICE: it reveals the gap and the reality that the FPL alone cannot capture. 

The Benefits Cliff

One challenge many working families face in their journey to upward mobility is what's known as the benefits cliff. Many assistance programs have strict income limits based on the Federal Poverty Level (FPL). If a family's income increases by even a small amount, they can lose necessary benefits all at once. Imagine receiving a raise that adds just $100 to your monthly paycheck but causes you to lose hundreds of dollars in assistance or health coverage. Although you're earning more, your overall financial situation may actually become worse because now you are trying to make up that loss while trying to create upward mobility. This creates a difficult situation where families can struggle to move forward financially because the loss of benefits outweighs the gain in income. Instead of encouraging economic mobility, abrupt eligibility cutoffs can leave households caught between poverty and true financial stability.

Why ALICE Matters

ALICE doesn't replace the Federal Poverty Level, nor does it automatically change who qualifies for assistance. Instead, it provides a clearer, more accurate picture of financial hardship.

By recognizing families who earn above the poverty line but still can't afford the basics, ALICE helps communities better understand where help is needed. It gives policymakers, organizations, employers, and local leaders better information to design programs that support families as they work toward financial independence. When we understand the full picture, we can have more holistic conversations about affordability and poverty, including wages, affordable childcare, healthcare, housing, and policies that help people build long-term stability instead of simply getting by and keeping them in a cycle of dependence on government aid.

What Can You Do?

Learning about ALICE is the first step. As community members and voters, we all have a role in shaping policies that affect our society and working families. Stay informed about local issues, ask candidates how they plan to address the needs of ALICE households, and support community organizations that are working to reduce barriers to financial stability. Millions of Americans are working hard every day but still struggle to make ends meet. ALICE reminds us that financial hardship doesn't end at the poverty line and that understanding the real cost of living is essential to building stronger communities and policies for everyone.

Mary Tezera is our new HamCo Dems Summer Intern! A recent graduate of Indiana University Bloomington, she's excited to volunteer with HamCo Dems and help tell the stories of Democrats making a difference across Hamilton County.

Like nearly everyone at HamCo Dems, Mary is volunteering her time to strengthen our community. If you enjoy blog posts like this and would like to support our internship program, please consider making a donation. Your generosity helps us provide small stipends to emerging Democratic leaders while continuing to create content that informs, inspires, and connects our community.

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