Nov 21, 2013
06:48 AM
Connecticut Today

Yale Study: Nearly One in Six Connecticut Families Face Economic Insecurities

Yale Study: Nearly One in Six Connecticut Families Face Economic Insecurities

Economic insecurity still threatens nearly one in six Connecticut households, according to a Yale University study released this week.

Despite an economy most politicians and experts agree is in full recovery, 15.6 percent of families in Connecticut experienced a 25 percent drop in household income in 2012. In 2011, 17 percent of households across the state lost at least a quarter of their incomes, according to the Economic Security Index study by Yale University and the Rockefeller Foundation.

Nationwide, 17.8 percent of households faced economic insecurity in 2012. More than 20 percent of black and Latino households experienced household financial instability in 2012.

The main culprit driving the gloomy economic report is the job market.

“The job market has become less secure,” said Jacob Hacker, Yale political science professor, director of the Institute of Social and Policy Studies and the author of the study. “Pay arrangements are more variable. People are more likely to experience pay cuts.”

At the same time, unemployment remains stubbornly high. Joblessness in Connecticut is at 8.1 percent, almost one percentage point above the national unemployment rate of 7.3 percent, according to the Bureau of Labor Statistics.

The social safety net also has continued to erode over the last quarter century.

“The cushioning effect of public benefits have declined. It seems that when people experience big drops, the cushioning is less than it has been in the past,” Hacker said.

In use since 2010, the Economic Security Index was established by Hacker and measures a household’s purchasing power after financial debts and medical expenses are paid. Substantial savings accounts and retirement funds, both of which can cushion the loss of a job or severe pay cut, are factored into available household income.

Like other economic measures such as the unemployment rate, the ESI provides a snapshot of the economy’s performance. However, the index only measures drastic losses in household income. Those who have languished in poverty for years are not counted in the ESI, Hacker said.\

Hacker said it’s difficult to quantify the effect of household financial insecurity on the broader economy, but he added that widespread financial insecurity has the potential of stalling the overall economic recovery.

The slight drop in economic insecurity in Connecticut was welcome news to state Comptroller Kevin Lembo.

“On its surface, it’s obviously good news,” Lembo said Thursday.

Between 2008 and 2010, Connecticut had the third-lowest economic insecurity among the 48 states measured in the study. In 2012, the state was among 11 states that recorded a decline in household financial security, according to the study.

But Lembo cautioned that Connecticut’s economic struggles are far from over, and said the state’s economic woes may continue.

“Connecticut has undergone a fundamental shift in our economy,” Lembo said.

The insurance companies, which once employed droves of low-skill workers to answer phones and fill out insurance paperwork, have automated much of the claim process; the large defense contractors who paid middle-class wages to thousands of residents across the state have relocated, Lembo said.

The bedrock of the state economy has been financial services that operate in boom or bust cycles, Lembo added.

The tectonic shift in Connecticut’s economy has created what Lembo called a “permanent underclass.”

“Those who went down the tube together, few of them are coming out,” Lembo said.

For more, visit the New Haven Register.

 

Yale Study: Nearly One in Six Connecticut Families Face Economic Insecurities

Reader Comments

comments powered by Disqus
 
Bookmark and Share Email this page Email Print this page Print Feed Feed