(Washington, DC) - The Rockefeller Foundation & 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 (ESI), the study reveals that North Carolina has experienced a higher rate of economic insecurity than the country as a whole in recent years, ranking 12th among states in terms of the average level of ESI from 2008-2010.
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 21.4 in North Carolina in 2010, which corresponds to over 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. "North Carolina experienced even higher levels of insecurity than the country as a whole-over 1 in 5 residents experienced large economic losses in 2010. And as in the rest of the country, economic insecurity is substantially greater in North Carolina today than it was a generation ago."
North Carolina experienced a record level of insecurity (21.8) in 2008. The national average peaked in 2009 with an ESI of 20.5. Historically, North Carolina has experienced higher levels of insecurity than the nation as a whole.
The ESI for North Carolina rose by 41 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 1.5 million individuals in North Carolina experienced a 25 percent drop or greater, compared with 689,000 in 1986, reflecting a rise in insecurity and a larger state population.
In addition to macroeconomic trends, the North Carolina ESI may have been higher than the national average during the recession as a result of higher 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.