America Insecure

Abstract

This paper synthesizes findings from a series of Urban Institute reports produced under the "Risk and Low-Income Working Families" research initiative funded by the John D. and Catherine T. MacArthur and Annie E. Casey Foundations. The paper places this research in the broader context of literature on economic mobility and income volatility. The report is structured around two key questions: (1) How have economic instability and insecurity changed for America's low-income working families changed over time? and (2) What are the factors that contribute to or offer protection from substantial income losses and promote or inhibit recoveries from such losses?

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Introduction

The Great Recession of 2008 and 2009 has battered America's families. The unemployment rate has more than doubled since the start of the recession, topping 10 percent—the highest level in over a quarter of a century. In addition, families' capacity to weather economic downturns has been diminished as savings and assets have eroded due to simultaneous collapses in the housing and stock markets and the tightening of consumer credit. Even though the economy started growing again in the second half of 2009, most forecasters expect that it will take years for unemployment and family incomes to return to their pre-recession levels.

As the slow and uneven economic recovery takes shape, policymakers and the public need to understand how the economic security of America's families has been changing over time, both during economic downturns and periods of economic growth. It is particularly important to focus on families experiencing large drops in income and ask which families are at greatest risk for such drops and attendant material hardships, what factors protect against hardships, and what can hasten recoveries.

To better understand trends in the economic security of American families, the John D. and Catherine T. MacArthur and Annie E. Casey foundations funded the "Risk and Low-Income Working Families" research initiative that generated a series of research reports and briefs by Urban Institute scholars (see box 1). These papers contribute to a large but diffuse literature on long-term trends in economic security and mobility by providing a fresh look at how these trends vary for families with different levels of income and work effort as well as focusing on families that experience substantial drops in income, identifying the families most vulnerable to such drops, and assessing how families cope with and recover from such losses.

This report synthesizes the Urban Institute's work and places it in the context of the larger body of research on these topics. The following sections first provide a historical context for the research, showing trends in family income over time. Next, the report assesses long-term trends in economic mobility, followed by related research on the questions of earnings and income volatility. The report then focuses more narrowly on substantial drops in income, the correlates and consequences of such drops, and how families cope with and recover from such losses. The report concludes with a discussion of policies to enhance the economic security of American families.

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