June 22, 2012
The Great Recession drove economic insecurity to record levels in nearly every state in the country, but left residents of the Southeast and West in the most perilous financial position, a new report shows.
The study, released Thursday by Yale University political science professor Jacob Hacker and The Rockefeller Foundation, found that, from 2008 to 2010, Mississippi, Arkansas, Alabama, Florida and Georgia had the highest levels of insecurity. In Mississippi, for example, about one in four residents suffered large economic losses in 2009 and 2010. In Florida, it was about one in five residents, and the housing bust has helped raise the rate of insecurity by 41 percent since 1986. California, also hit hard by the housing crisis, was sixth in the rankings of overall insecurity, with nearly 23 percent of the Golden State’s residents suffering large losses in 2010.
States in the northeast fared better overall, and residents of New Hampshire, Wisconsin, Connecticut, Washington, and Minnesota had the lowest rates of large economic losses from 2008 to 2010.
That’s not to say that people in those states have been spared economic hardship. “Even states that have relatively low levels of insecurity, such as New Hampshire, nonetheless have very, very high levels of income losses,” Hacker said.
And states like Wisconsin and Minnesota, while they still stack up well in relative terms, also saw fairly large spikes in insecurity from 2008 to 2010. Minnesota, in fact, experienced a 28 percent spike in average levels of insecurity in the years 2008 through 2010 compared with 1997 to 2007, the highest of any state. Delaware, Alabama, Arkansas, Ohio, Idaho, Colorado, Tennessee, Missouri and Nevada also saw increases of more than 20 percent. The New England states, by contrast, had the lowest percentage increases in insecurity.
The new study is the latest in a series of reports on economic insecurity by Hacker, who created an index based on Census data that tracks economic well-being. The index follows year-to-year changes of 25 percent or more in household income as well as other factors resulting in economic insecurity, including out-of-pocket medical expenses and lack of savings to make up for drops in income.
“What we found in previous reports is, not surprisingly, that economic insecurity has risen substantially over the last generation, and especially over the last few years,” Hacker said Thursday. “What we find [in this report] really drives home how broad-based this downturn has been and how broadly economic insecurity affects Americans across different demographic groups.”
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The authors note that, even before the recession hit, economic insecurity had been on the rise across the country well before the Great Recession. “There has been a general rise in economic insecurity over time that can’t be explained just by the fluctuation of the business cycle,” Hacker said. And no state has been spared, as the report point out: “Every state had higher average insecurity between 1997 and 2007 than between 1986 and 1996.” The recession and its aftermath left more than 20 percent of Americans with significant financial losses from one year to the next, compared with around 14 percent who experienced such economic volatility in the mid-1980s.
While every state was hit by the recession, the differences between the states have stayed fairly constant from 1986 to 2010, Hacker notes. The level of economic insecurity in Mississippi in 1986, for instance, was higher than the peak level seen in New Hampshire in recent years. The researchers found that factors including poverty levels, unemployment rates and the share of households headed by a college graduate were linked to economic insecurity, though states like Mississippi and Arkansas had higher levels of insecurity than would be expected based on their unemployment rates. Given those continuing differences, Hacker said, “these states can be thought of as almost a generation removed from each other in terms of insecurity.”
The findings, Hacker said, suggest that states across the country need more help: “The main message there is that there probably really does need to be a broader national response with assistance to the states – that no state has really been able to escape the negative consequences of the Great Recession for economic security.”