Early Modeling Suggests Substantial Increases in the Financial Vulnerability of Hawaii's Families
by Kendrick Leong, Hawaii Data Collaborative
This is the first in a series highlighting results from our new synthetic population modeling project (it’s so new, we do not even have a name for it yet). What excites us most about this modeling approach is its ability to use existing data to simulate the complexity and rapidly shifting nature of life and work in Hawaii. If you have not done so already, we encourage you to familiarize yourself with the approach here.
Significant financial impacts from COVID-19 expected for all income levels in Hawaii
Although the specifics of COVID-19’s economic effects on Hawaii remain unclear, early projections suggest impacts on households of all income levels. Based on preliminary modeling, we estimate that nearly 134,000—approximately 30 percent—of all Hawaii households stand to bear a significant loss of income (defined as a loss in household income greater than 25 percent) due to the effects of the pandemic on the local economy.
ALICE households likely to swell, with some pushed into poverty
Based on income thresholds from Aloha United Way’s Asset Limited Income Constrained Employed (ALICE) income and household expense criteria, low-income, working households are at particular risk for these economic effects. ALICE households earn more than the federal poverty level, but less than the basic cost of living for their state. In Hawaii, ALICE households number approximately 114,000; the current financial shock could increase the number of Hawaii’s ALICE households by as many as 20,000.
What is more, COVID-19 may prove to be a tipping point into poverty for many existing ALICE families. Of the 31,000 ALICE households projected to experience significant financial impact due to the pandemic, as many as 10,000 could slip into poverty (losing half or more of their pre-COVID incomes) without support.
Many “Above ALICE” households expected to slip into ALICE status
By sheer numbers, households in the “Above ALICE” category stand to be the most affected by the COVID-19 crisis. Of the approximately 69,000 above-ALICE households in Hawaii, an estimated 28,000 (41 percent) are projected to fall into ALICE status post-COVID-19. Of the families knocked into the ALICE band, 12,000 (43 percent) 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 post-COVID.
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 percent 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 percent of an ALICE household survival budget, with ALICE households sitting in the 51-150 percent 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:
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 percent of current income) as a result of COVID-19:
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 COVID-19. 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.
Although they are highly preliminary, we are reporting tentative results from this model to offer early insights into the heavy financial 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 coming weeks, addressing limitations and adding parameters based on input from key decision makers.
