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Blog: Measuring Economic Security

Jul 20, 2010 | By Amy Johnson, Emerson Hunger Fellow

As is common knowledge, our current measures of poverty are woefully problematic at providing an accurate understanding of the financial struggles faced by many Americans. In an effort to provide one more accurate measure of instability, the Rockefeller Foundation has designed the Economic Security Index (ESI). According to their report, the ESI measure “represents the share of Americans who experience at least a 25 percent decline in their inflation-adjusted ‘available household income’ from one year to the next and who lack an adequate financial safety net to replace this lost income.” The measure takes into account a major loss of income, out-of-pocket medical expenses, and lack of adequate financial wealth to buffer either of these financial loses.

Not surprisingly, in examining trends since 1985, the report highlights that Americans have become more financially insecure in recent years. Between 1985 and 1995, the ESI measured 12.1%, whereas between 1997 and 2007, the ESI measured 14.7%. And although data is not available yet to measure the ESI in 2009, the authors project the figure to be 20.4%, thus reflecting the heightened economic challenges that people have faced during the great recession. The ESI percentage was higher for people with lower income quintiles and less educational attainment, as well as for single parents and Black and Hispanic/Latino populations.

Check out www.economicsecurityindex.org, the official website for the project that comes complete with interactive components about the measure and with options to create your own graphs!