Costs Over Time: The ALICE Essentials Index
Updated data on costs over time coming June 2025.
Inflation is one of the most widely utilized indicators of economic health. When prices increase faster than wages and other sources of income, purchasing power decreases and households struggle to make ends meet.
The ALICE Essentials Index measures changes over time in the costs of the household essentials that matter most to ALICE and poverty-level households: housing, child care, food, transportation, health care, and basic technology.
The traditional measure of inflation, the Bureau of Labor Statistics' Consumer Price Index (CPI), tracks a much larger basket of over 200 goods and services — items that financially insecure households can't afford on a regular basis, like full-service meals at restaurants, wine, major appliances, flights, and jewelry. Tracking costs over time using this larger basket alone can conceal important changes in the costs of the smaller basket of basics.
Nationally, the ALICE Essentials Index has outpaced the broader CPI nationwide since 2007. Costs for both measures increased at a faster pace following the COVID-19 pandemic, peaking between 2021 and 2023. During this period, the ALICE Essentials Index increased at an annual rate of 7.3% compared to 6.1% for CPI — both much faster than the annual rates from 2007 to 2010 (3.3% annual increase for the ALICE Essentials Index and 1.7% for CPI).
In Illinois, the ALICE Essentials Index also tended to increase faster than CPI, as shown in the figure below. And like the national trend, costs in Illinois increased at a faster rate following the COVID-19 pandemic (5.9% annual increase in the ALICE Essentials Index from 2021 to 2023).
Inflation Indices, Illinois, Region and U.S., 2007–2024
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Rising Wages Still Can’t Cover Essentials
While wages have risen substantially in recent years, so have costs. And even in occupations where wages are growing faster than costs, wages started from such a low level that many workers are still not able to cover household essentials.
For example, in 2010, child care workers in Illinois earned a median wage of $9.60 per hour ($19,960 annually for full-time work), falling $9,088 short of the annual Household Survival Budget for a family with one adult and one school-age child ($29,048). By 2022, the median wage for child care workers in Illinois increased by 44%, to $13.84 per hour ($28,780 annually, full-time). Yet the annual Household Survival Budget for one adult and one school-age child in Illinois also grew (to $41,328), leaving these essential workers $12,548 short of basic costs — even further behind than they were in 2010.
Median Annual Wages of Selected Common Occupations vs. Annual Total ALICE Household Survival Budget (1 Adult, 1 School-Age Child), Illinois, 2023
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Learn More: Policy Implications
CPI is integrated into government policy, informing interest rates, cost-of-living increases for public assistance programs, and more. Yet it does not provide policymakers with a full picture of who is bearing the brunt of inflation, or how the effectiveness of social insurance programs is diminished as benefits continue to fall further behind the cost of basics. As a result, many government policies fall short in their efforts to support workers and reduce hardship. This is especially true for the programs most relevant to ALICE households, including inflation strategy; tax brackets and credits; the annual increase of benefits in a range of programs from Social Security to pensions for veterans and civil servants; and the annual increase of the FPL (as well as programs with eligibility based on the FPL, like SNAP and Medicaid).
