Via Bob Herbert, a Rockefeller Foundation study using a new index for measuring economic insecurity — the percent of Americans who had a net loss of 25% or more of their financial income — shows that for many Americans, life got less secure, not more over the last few decades:
In 1985, at a time when the unemployment rate was 7.2 percent, the portion of American families that would be counted as economically insecure by the terms of this new index was 12 percent. Professor Hacker explained that the percentage would naturally tend to rise or fall with improvements or a deterioration in the economy.
But what has happened over the past few decades is that the percentage of insecure Americans relative to any given level of the economy has tended to steadily rise. So in 2002, coming out of a mild recession, there was a 5.8 percent unemployment rate, but the percentage of economically insecure families had jumped to 17 percent.
All of the data for 2009 are not yet in, but the research team projects, conservatively, that more than 20 percent of Americans experienced a 25 percent or greater loss of household income (without a financial cushion) over the prior year — the highest in at least a quarter of a century.
A decrease of this magnitude in available income is a heavy blow. As the study points out, “The typical individual who experiences a decline of at least 25 percent in household income requires between six and eight years for income to return to its previous level.”
“What we’re seeing, basically, is what we’re calling ‘the new normal,’ ” said Mr. Hacker. “We’re slowly ratcheting up this level of economic insecurity.”
If you’ve been wondering what I mean when I say that we’re using the values of big corporations and the rich to shape the economy, this is Exhibit A.