Security First?

Feeling more insecure than you did in the past? it's not just the recession:

Americans Are Increasingly Insecure, by Conor Dougherty: The Rockefeller Foundation has released a new “Economic Security Index” that measures the effect of income loss and rising medical costs on Americans. The verdict: The recession has made Americans a lot less secure, but security was slipping long before the recent recession.

The Economic Security Index, which was developed by Yale political scientist Jacob Hacker, measures inflation-adjusted income that’s available after medical costs. It captures Americans who have had a year-over-year fall of 25% or more in income after medical costs but don’t have enough savings to offset the plunge. ...

The results: The ESI was at 12.2% in 1985 and has grown steadily ever since (with year-to-year fluctuations that track the economy). In 2007, the ESI was at 13.7% and is projected to hit 20.4% for 2009. ...

There are myriad reasons why economic security has become increasingly wobbly, but Mr. Hacker points to three main culprits. One is that men’s earnings have become a lot more unstable since the 1970s, and since many men are still breadwinners that has led to more erratic household income. Government transfer benefits have also become a lot more unstable. And while there are more dual-income families the extra income is not enough to offset growing insecurity. ...

The rising uncertainty is yet another dose of cold water for an economy still on the mend. Mr. Hacker says that it takes somewhere between 6 and 8 years for people to recovery from an income loss of 25% or greater, a shock that can crimp consumer spending and lead greater income inequality even after the economy recovers. ...

If you are a big bank that loses a big part of its income, the government comes to your rescue. But if you are an individual wiped out by health costs, tough luck for you.