One out of five Americans has experienced a decline of 25 percent or greater of their household income, according to a new study for the Rockefeller Foundation.
The report describes a new Economic Security Index, developed by Yale professor Jacob Hacker and a multi-disciplinary research team supported by the Rockefeller Foundation, using data from the U.S. Census Bureau's Survey of Income and Program Participation and other sources.
The report found that economic insecurity has increased over the past quarter century. In 1985, 12.2 percent of Americans experienced a major economic loss sufficient to classify them as insecure. During the recession of the early 2000s, this had risen to 17 percent. In 2007, before the current downturn, the picture had improved to 13.7 percent, but measured insecurity remained higher than in the 1980s.
Projections suggest that in 2009, the level of economic insecurity experienced by Americans was greater than at any time over the past quarter century, with approximately one in five Americans (20.4 percent) experiencing a decline in available household income of 25 percent or greater.
The ESI rises and falls with the state of the economy, and especially the unemployment rate. But at any given unemployment rate, more people are experiencing insecurity than in the past.
The extent of economic security also varies substantially across the population. Those with the most income and education have faced the least insecurity. The less affluent, those with limited education, African Americans, and Hispanics have faced the most. Virtually all groups, however, experienced significant increases in insecurity over the past 25 years.
According to the survey evidence, many more Americans worry about economic security than experience large income declines of the sort captured by the ESI. According to the ESI, these concerns have real grounding: Major economic losses have affected between one in six and one in five Americans each year in the last two recessions. More than 60 percent of Americans experienced at least one such loss over the 1996-2006 period, and losses of this magnitude have become more common for Americans up and down the income ladder since the mid-1980s.
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