What is the single most important ingredient needed to maintain a middle-class lifestyle? Economic security: the ability to withstand economic shocks caused by a sudden loss of income. Unfortunately, the shocks are increasingly common and the security is increasingly elusive, which explains why the middle class is shrinking. In 2010, a substantial 20.5 percent of Americans were economically insecure--up from 14.3 percent in 1986, according to the Economic Security Index (ESI)--a research initiative led by Yale political scientist Jacob S. Hacker. The economic insecurity of Americans varies greatly by state, however, and those state numbers are now available in a new ESI report.
ESI defines the economically insecure as Americans who have experienced a one-year drop of at least 25 percent in their disposable household income (the income that remains after paying for medical care and servicing debt) and who lack savings to cope with the decline.
Economic insecurity has been rising in every state without exception. But some states are worse than others. Insecurity is greatest in Mississippi, where 24.5 percent of the population experienced at least a 25 percent drop in income in 2010 and lacked savings to make it through the hard times. Insecurity is lowest in New Hampshire, where a smaller (but still substantial) 17.0 percent of the population found themselves in financial free fall in 2010. Reports for individual states can be downloaded from the site.
Source: Economic Security Index, Economic Insecurity Across the American States