Long-Term Economic Pain

[David Farber <dave () farber net>]

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From: dewayne () warpspeed com (Dewayne Hendricks)
Date: July 27, 2010 2:40:18 PM EDT
To: Dewayne-Net Technology List <xyzzy () warpspeed com>
Subject: [Dewayne-Net] Long-Term Economic Pain

July 26, 2010
Long-Term Economic Pain
By BOB HERBERT
<http://www.nytimes.com/2010/07/27/opinion/27herbert.html>

The pain coursing through American families is all too real and no one seems to know what to do about it. A rigorous 
new analysis for the Rockefeller Foundation shows that Americans are more economically insecure now than they have been 
in a quarter of a century, and the trend lines suggest that things will only get worse.

Rampant joblessness and skyrocketing medical costs are among the biggest factors tearing at the very fabric of American 
economic life so painstakingly put together in the early post-World War II decades.

The analysis was done by a team of researchers led by Professor Jacob Hacker of Yale University. They created an 
economic security index, which measures the percentage of Americans who experience a decrease in their household income 
of 25 percent or more in one year without having the financial resources to offset that loss. (Major medical expenses 
were counted as a decrease in available income.)

The team’s findings were grim. Simply stated, more and more families are facing utter economic devastation: completely 
out of money, with their jobs, savings and retirement funds gone, and nowhere to turn for the next dollar.

Economic insecurity has been increasing for at least a generation and perhaps longer, with very dangerous levels being 
reached in this latest recession. Professor Hacker discussed the ominous trend lines in an interview.

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.

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