New Index Shows Economic Insecurity at Record High
Thursday, July 22, 2010 at 10:44 am
Today, the Rockefeller Foundation and Jacob Hacker, a Yale professor, launched the Economic Security Index — a measure of not just unemployment or income, but of broader insecurity related to income loss, out-of-pocket medical spending, drops in retirement accounts and other factors.
A team of policy experts studied economic records from 1985 on, and found that 2009 and 2010 were the most insecure years on record. In 2009 and 2010, one in five Americans experienced a 25 percent or greater decline in household income. In some sense, the record data are to be expected. The index does not cover the bad recession of the very early 1980s, or the economic doldrums of the 1970s; and this recession is the worst since the Great Depression by some measures. Nevertheless, the index demonstrates the broad impact of the recession on security and well-being.
More troubling, economic insecurity has been on the rise for some time, the result of the rise of credit, the spiraling cost of health care and the fraying of the social safety net, among other factors. “The ESI data allows us to see that behind the economic cycle, there is a clear long-term upward trend in the economic insecurity of American families,” Hacker said in a statement. “[W]hile economic insecurity is substantially higher for less affluent and educated Americans than for other groups, it has risen across virtually all parts of American society — it’s an issue squarely confronting the American middle class.”
Some findings from the report:
- The index increased by one third between 1985 and the pre-recession year of 2007. It increased by half between 1985 and 2009. The proportion of Americans experiencing big income drops, measured with more limited data, has increased even more since the 1960s.
- The index classifies 46 million people as insecure in 2007 — before the recession.
- The index broadly tracks unemployment, but has proportionately spiked more than the unemployment rate during the recession.
- It takes an average individual experiencing an income shock six to eight years to return to the same income level.
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