The Rockefeller Foundation, the New America Foundation, and Yale University economic security expert Jacob Hacker gathered to discuss the issue of economic risk and the release of a report that analyzes how this risk affects Americans entitled Standing on Shaky Ground: Americans’ Experiences with Economic Insecurity. The report is based on a new two-wave survey of Americans that examines their experiences and perceptions between March 2008 and September 2009.
While the original ESI report revealed the breadth and persistence of American economic insecurity, little is known about how Americans experience and cope with economic insecurity. Standing on Shaky Ground fills this knowledge gap, drawing insights from a cross-disciplinary team of scholars. Two of the report’s authors, Jacob Hacker and Mark Schlesinger, joined Heritage Foundation’s Stuart Butler, Washington Post columnist Ezra Klein, and Economic Policy Institute’s Lawrence Mishel to discuss the findings of the report. The event was moderated by New America Foundation board member and correspondent with The Atlantic, James Fallows as well as the Director of the Economic Growth Program, Michael Lind.
Standing on Shaky Ground is a follow-up to the Economic Security Index (ESI), a measure of the share of Americans who experience 25% or more decline in available household income (income minus medical costs and debt service) during a specific period of time. Dr. Schlesinger explained that general concern about economic security is not a result of the recent economic downturn, though they have been exacerbated by the economic conditions. The report identifies four general domains of economic shock: employment, medical care, wealth, and the family. Within these four domains, 12 different shocks occurred between Spring 2008 and Fall 2009. An analysis of these shocks reveals three underlying observations: economic shocks persist over time, shocks cluster within these given domains, and the economic shocks come with coincident shocks in the other domains. The overall result is an accumulation of shocks to American economic stability in which “a ‘rainy day’ becomes a ‘rainy year’” and many Americans find themselves unprepared. Dr. Schlesinger and Dr. Hacker conclude that that the conversation needs to focus on a full recognition of these risks (especially those that are overlooked), an acknowledgement of risks across economic domains, and a vital attentiveness to the consequences that the interpretation of economic statistics can have on Americans’ lives.
The panelists also added their expertise to the discussion. Ezra Klein pointed out that the report highlights the severity of unwanted risks in the every-day life of Americans. He argued that the government must attempt to contain certain unwanted risks so that private citizens can engage in the kind of risks that we do want (e.g. those associated with entrepreneurship). Dr. Butler of the Heritage Foundation commended the report for its approach to the issue of risk, and spoke on the way in which people sometimes respond to risks in ways that may not be beneficial to them in the long term, such as excessive savings rates or the hording of cash reserves by businesses. He implored the audience to think of stabilizers that have good long-term effects that do not undermine long-term economic growth.
You can acces the full report here.