Inflation and higher interest rates have caused 40 million families, 29% of U.S. households, to struggle to afford the basics, putting them precariously just above the poverty line, CNBC reports.

Currently, 37.9 million Americans, or 11.5% of the population, live in poverty. An individual earning $12,280 a year or a family of four subsisting on $26,500 or less is considered impoverished, according to the U.S. Department of Health and Human Services.

The United Way calls those who are on the brink of poverty Asset Limited, Income Constrained, Employed, or ALICE.

“ALICE is the nation’s child-care workers, home health aides or cashiers heralded during the pandemic — those working low-wage jobs, with little or no savings and one emergency from poverty,” says Stephanie Hopes, national directed at United for ALICE.

The danger of slipping into poverty “is an acute situation for more people now than a few years ago,” says Columbia Business School economics professor Brett House.

There are many lower middle-class Americans “who can just cover current needs but not easily generate a surplus to cover the cost of a home or investments like stocks or bonds,” House continues.

Greg McBride, chief financial analyst at Bankrate.com, says, “The ALICE households, in particular, have borne the brunt of inflation. Even though we’ve seen wage growth on the low- to moderate-income scale, that’s also where inflation has hit the hardest.”

Department of Labor data shows that average hourly earnings have risen only 0.6% in the past year. Inflation has cumulatively risen 17% under President Biden. The latest consumer price index for March showed inflation ticking back up to 3.5%.

In its effort to dampen the economy and stamp out inflation, the Federal Reserve has increased interest rates 11 times in the past two years to their highest level in 22 years. These high interest rates have caused consumer borrowing costs to skyrocket and put homeownership out of reach for millions.

With more Americans charging groceries and everyday necessities on their credit cards, delinquency rates climbed to 3.1% at the end of 2023, their highest since 2011.

“Keeping rates high is hurting the labor market and ALICE’s ability to have higher wages,” Hoopes says.