The minimum income needed for a family of four in Hawaii to pay for basic necessities has ballooned to $104,052 a year, according to a report released Wednesday by the nonprofit group Aloha United Way.
The rapid rise in the cost of living in Hawaii (basic subsistence budgets for families increased by 18% and individuals by 26% from 2019 to 2021) is dramatic even for researchers who had predicted the increase. .
“I think for all of us, this was more significant than we could have ever imagined,” said Suzanne Schoold, chief operating officer of Aloha United Way.
The report released Wednesday is part of an effort to track the needs of people living in poverty as well as those who are overlooked in federal poverty statistics but continue to live paycheck to paycheck. be. The group is known by the acronym ALICE, which stands for limited assets. Limited income and employment.
Approximately 41% of Hawaii residents fall below the ALICE standard, and 12% of them live below the federal poverty line, the highest percentage in more than a decade.
Food Basket, the Big Island's food bank, has seen an increase in the number of working families needing food assistance over the past year, said Kristin Frost Albrecht, the organization's executive director.
“Many working-class families, many dual-earner families, are still unable to survive until the end of the month,” Frost-Albrecht said.
Rising food costs are also putting pressure on middle-class families, undermining the once-more-common belief that families could get by with two well-paying jobs. she said.
“I don’t think that will happen anymore,” she said.
Inflation is making things worse
This six-figure income requirement calculation is intended for families with at least one young child who needs child care, and families with older children may not face significant costs.
A survival budget includes basics such as childcare, rent, food, medical expenses, and utilities. Nothing is calculated for retirement, rainy day savings, entertainment, etc. Rent is also fairly low, at $1,645 per month for a two-bedroom apartment, well below Honolulu's average market rate.
And then inflation occurs. The report is based on 2021 data, so the current situation is likely to be even worse.
Purchasing power of $104,052 in April 2021 was the same as $118,570 in April 2023, according to the Bureau of Labor Statistics.
The report also reflects how difficult it is for families to recover from widespread financial hardship. The percentage of Hawaii residents with incomes below the ALICE threshold rose during the Great Recession and never returned to pre-2008 numbers.
Before the pandemic, Food Basket served about 14,000 people a month on the Big Island. The organization currently helps approximately 50,000 people each month, or approximately one in four of the island's residents. While this is far fewer than the 85,000 people the company served at the height of the pandemic, it also shows how many more households are facing hardship now than just a few years ago. There is.
“The path to progress”
The good news in this report is that federal and state tax deductions can have a significant impact on a family's bottom line. If a family of four were eligible to claim all the tax credits available to working families, including the federal dependent tax credit, the minimum income they needed to survive would drop to $85,812 per year.
The federal Child and Dependent Care Tax Credit is expanding for the 2021 tax year, potentially giving you a significant boost. Families will be reimbursed for qualified child care expenses of up to $4,000 for one child and $8,000 for two children. For two-parent families to qualify, the expenses must be incurred while both parents are working or actively looking for work.
Lawmakers in Hawaii approved several tax measures this year, including doubling the state's earned income tax credit for working families. The new tax cuts are not included in his current ALICE report.
The ALICE report is important because it shows the direct impact tax credits can have on families and points a path forward, Skjold said.
“These policies really help our families continue to live in Hawaii,” she said.
“Struggling To Get By” is part of a series on “Hawaii’s Changing Economy” and is supported by a grant from the Hawaii Community Foundation as part of the CHANGE Framework project.
