Modeling the Financial Impact of COVID-19 on Hawaii’s ALICE Households

4/06/2020

Modeling the Financial Impact of COVID-19 on Hawaii’s ALICE Households Executive Summary Based on preliminary modelingi, we estimate that 134,000 (29.4%) Hawaii households will stand to bear a significant loss in incomeii due to the effects of COVID-19 on the local economy, as defined by the Aloha United Way’s Asset Limited Income Constrained Employed (ALICE) income and household expense criteria. The current financial shock could threaten to increase Hawaii’s ALICE household populationiii by as much as 20,000 households, and may prove to be a tipping point for many existing ALICE families. Of the currently ALICE households projected to be significantly financially impacted, as much as 10,000 could slip into poverty (losing half or more of their preCOVID incomes) without support.

However, the households most impacted will be those that were not at the ALICE survival budget level before the COVID-19 crisis. Of these approximately 69,000 above-ALICE families, it is estimated that around 28,000 (41%) will fall into ALICE status post-COVID. Of these families knocked into the ALICE band, 12,000 (43%) will have lost between 76 and 100 percent of their pre-COVID incomes.

The graphs below illustrate the estimated shifts in household financial status from pre- to postCOVID.

All Hawaii Households How to read this graph: On the left are the number of households sitting within different levels of the ALICE household survival budget. The “Comfortable” income group earns 250% or more of the ALICE survival budget, adjusted for household characteristics. In other words, households in this top level are faring well financially. The levels go down in increments of 100% of an ALICE household survival budget, with ALICE households sitting in the 51-150% band. This graph shows the estimates of how many households from the pre-COVID status on the left will move to a different status in our post-COVID economy – just follow the lines from left to right.

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Significantly Impacted Hawaii Households This second graph is the same as the one above, except that it focuses only on the estimated 134,000 households expected to lose a significant amount of income (greater than 25% of current income) as a result of COVID-19:

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Methodology & Limitations ALICE budget thresholds were calculated for each household in a synthetic population by adjusting for household size and composition along the following expense criteria: housing, childcare and education, food, transportation, and healthcare.

Synthesized occupation data, organized by industry sectors, was used to estimate the magnitude of changes in household income. The household financial impact of layoffs and reductions in pay was estimated for industry sectors most likely to be affected by COVID19. Accurately calibrating the financial impact across Hawaii’s industry sectors will require better access to unemployment claims data, as well as other complementary datasets related to income loss.

These modeling results are offered as highly preliminary. We are reporting tentative results from this model in order to offer early insights into the heavy burden COVID-19 mitigation will place on Hawaii’s families. The Hawaii Data Collaborative will continue to refine this and other synthesized population models in the common weeks, addressing limitations and adding additional parameters guided by input from key decision-makers.

Please visit https://www.hawaiidata.org/hawaii-synthetic-population for a high-level overview of the modeling approach. More detailed technical documentation is currently being drafted. ii A “significant loss in income” due to the effects of COVID-19 is defined as a loss in household income greater than 25%. iii Households with an income between 50 and 150 percent of their calculated ALICE survival budget are considered ALICE households in our model. i

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