Ad-Express and Daily Iowegian, Centerville, IA

June 22, 2012

Iowa is experiencing record level of economic insecurity


Daily Iowegian

WASHINGTON D.C. — The Rockefeller Foundation and Yale University professor Jacob Hacker today released “Economic Insecurity Across the American States,” a state-by-state report of economic insecurity over the last generation and during the recent economic downturn. Using the groundbreaking Economic Security Index, the study reveals that while Iowa has a far lower rate of economic insecurity than the country as a whole, ranking 39th among states in terms of the average level of ESI from 2008-2010, the state experienced a record level of instability in 2010.

The ESI is a comprehensive measure of economic security which tracks the proportion of Americans who see their “available household income” – their household income after paying for medical care and servicing their financial debts — decline by 25 percent or more from one year to the next and who lack an adequate financial safety net to replace this lost income.

The ESI was 18.6 in Iowa in 2010, which corresponds to nearly 1 in 5 individuals experiencing large economic losses. The report found that Mississippi, Arkansas, Alabama, Florida, and Georgia have the highest levels of insecurity, while New Hampshire, Wisconsin, Connecticut, Washington, and Minnesota were ranked as the most economically secure. The data also reveals that insecurity is higher among states in the South and West, and lower in the Midwest and Northeast.

“The Great Recession was both broad and deep. No part of the nation was spared,” explains Jacob Hacker, Director of the Institution for Social and Policy Studies at Yale University. “Nonetheless, some states weathered the downturn better than others, and Iowa was among them. That Iowa did better than average, however, does not mean it did well. Even after the official end of the recession, 1 in 5 residents experienced large economic losses in 2010, and economic insecurity is substantially greater in Iowa today than it was a generation ago.”

Iowa experienced a record level of insecurity (18.6) in 2010. The national average peaked in 2009 with an ESI of 20.5. Historically, Iowa has always experienced lower levels of insecurity than the nation as a whole.

Nonetheless, the ESI for Iowa rose by 30 percent between 1986 and 2010, reflecting a broader national decline in economic security over the last generation. Since the ESI is simply the proportion of those who experience a 25 percent drop in available household income, it is easily translated into estimates of the number of those who experience large losses. In 2010, roughly 437,000 individuals in Iowa experienced a 25 percent drop or greater, compared with 297,000 in 1986, reflecting a rise in insecurity and a larger state population.

In addition to macroeconomic trends, the Iowa ESI may have been lower than the national average during the recession as a result of lower concentrations of individuals known to have higher exposure to economic risk at the national level. For example, large losses are more prevalent among individuals who reside in a household headed by someone who has less than a college degree, is Black or Hispanic, or is a single parent.

“Economic Insecurity Across the American States” shows that, while nearly every state experienced record insecurity during 2008-2010, all states experienced a significant rise in insecurity between 1986 and 2010. This trend began long before the recent downturn, as every state had higher average insecurity between 1997 and 2007 than between 1986 and 1996. In other words, American households were becoming more vulnerable to large losses in income even before the Great Recession.

The data also shows that the rankings of states in regards to levels of insecurity remained relatively consistent over the period from 1986 to 2010, indicating that state differences in insecurity have been fairly persistent over the last generation.

“Economic Insecurity Across the American States” was written by political scientists Jacob S. Hacker and Gregory Huber of Yale University, aided by Stuart Craig, a research associate; Philipp Rehm of Ohio State University; and Austin Nichols of the Urban Institute, guided by a technical committee retained to reinforce the intellectual and analytical integrity of the work.

For the full report, visit www.EconomicSecurityIndex.org.

“Economic Insecurity Across the American States” is a follow-up report to the Economic Security Index (ESI).  ESI is part of the “Campaign for American Workers” initiative of the Rockefeller Foundation.  The initiative strives to improve economic security among American workers and their families, in part by improving knowledge and understanding among policymakers and thought leaders of the dimensions of American economic security.

The ESI was developed over the last four years by political scientist Jacob S. Hacker and a multi-disciplinary research team.  Professor Hacker is based at the Institution for Social and Policy Studies at Yale University, which aims to facilitate interdisciplinary inquiry in the social sciences and research into important public policy arenas.

The ESI research team has been guided by a technical committee retained by the Rockefeller Foundation to provide oversight and to reinforce the intellectual and analytical integrity of the work.  Chaired by respected economist Henry Aaron of the Brookings Institution, the technical committee is comprised of seven leading experts on economic security:

Henry Aaron (Brookings Institution)

Gary Burtless (Brookings Institution)

Henry Farber (Princeton University)

Robert Greenstein (President, Center on Budget and Policy Priorities)

Larry Mishel (Director, Economic Policy Institute)

Alicia Munnell (Director, Boston College Center on Retirement Research)

Robert Solow (Nobel Prize in Economics, 1987)

The ESI and associated reports are the independent intellectual product of the research team and should not be understood to express the views of the Rockefeller Foundation, Yale University or any institutions that hosted or funded the individual members of the team or the technical advisory committee.

About the Rockefeller Foundation

The Rockefeller Foundation fosters innovative solutions to many of the world's most pressing challenges, affirming its mission, since 1913, to "promote the well-being" of humanity. Today, the Foundation works to ensure that more people can tap into the benefits of globalization while strengthening resilience to its risks. Foundation initiatives include efforts to mobilize an agricultural revolution in Sub-Saharan Africa, bolster economic security for American workers, inform equitable, sustainable transportation policies in the United States, ensure access to affordable and high-quality health systems in developing countries, accelerate the impact investing industry's evolution, and develop strategies and services that help vulnerable communities cope with the impacts of climate change. For more information, please visit www.rockefellerfoundation.org.

About the Yale University Institution for Social and Policy Studies

The Institution for Social and Policy Studies (ISPS) strives to facilitate interdisciplinary inquiry in the social sciences and research into important public policy arenas. Recognizing that important social problems cannot be studied adequately by a single discipline, the Yale Corporation established the Institution for Social and Policy Studies in 1968 in order to stimulate interdisciplinary collaboration within the university. Through these activities, ISPS seeks to speak to important social science and policy questions, both in the United States and abroad.

About Jacob Hacker

Jacob S. Hacker, Ph.D., is the Director of the Institution for Social and Policy Studies (ISPS) and the Stanley B. Resor Professor of Political Science at Yale University. An expert on the politics of U.S. health and social policy, he is author of Winner-Take-All Politics: How Washington Made the Rich Richer—And Turned Its Back on the Middle Class (2010), with Paul Pierson, The Great Risk Shift: The New Economic Insecurity and the Decline of the American Dream (2006), The Divided Welfare State: The Battle over Public and Private Social Benefits in the United States (2002), and The Road to Nowhere: The Genesis of President Clinton’s Plan for Health Security (1997), co-winner of the Brownlow Book Award of the National Academy of Public Administration.

A frequent media commentator, Hacker has testified before Congress, advised leading politicians, and written popular pieces for leading publications including The New York Times, Los Angeles Times, and Washington Post. He is the author of a 2001 proposal for universal health care (re-issued in 2007 as “Health Care for America”) that became a template for several presidential aspirants’ plans. Most recently, with a grant from the Rockefeller Foundation, he has developed a new index of economic security, the ESI (www.economicsecurityindex.org), and is overseeing a new public opinion survey on perceptions of economic insecurity in the United States. In addition, he oversees a Social Science Research Council project on the “privatization of risk” and is Vice-President of the National Academy of Social Insurance. Professor Hacker received his B.A. from Harvard in 1994, and Ph.D. from Yale in 2000. From 1999 through 2002, he was a Junior Fellow of the Harvard Society of Fellows.