More Americans Are Financially Insecure Now Than in the Past 25 Years
New Economic Security Index Shows 20% of Households at Risk
A record one in five American households is financially insecure, the highest level in the past 25 years, according to a new study establishing the “Economic Security Index” (ESI). This new ESI index, designed to measure the economic well-being of American families, was developed by Yale political scientist Jacob Hacker and a team of researchers, with the support of the Rockefeller Foundation.
According to the ESI, people can be considered economically insecure when two circumstances prevail. First, within a year's time they experience a major loss in income (25% or more) resulting from job loss or large out-of-pocket medical expenses (or both). Second, they don't have enough money saved up to replace those losses.
Here are some highlights from the report: Economic Security at Risk: Findings from the Economic Security Index:
- Using data dating back to 1985, the index shows that economic insecurity has risen across all groups in America, though not equally.
- Poorer households were twice as likely to experience a major income drop when compared with their wealthy counterparts.
- Those without a high school education were about 40% more likely to suffer a decline than college graduates.
- Because many Americans have little or no savings, it can take six to eight years for families to recover from a 25% income drop.