Investigating Economic Insecurity

Resident Fellow Karlyn H. Bowman
Senior Fellow
Karlyn Bowman
Iraq still tops the charts as the big issue in politics today, but many observers think economic insecurity follows close behind. Last week, three separate Congressional committees held hearings on the well-being of the middle class. The politics of the issue could be potent. The Washington Post headlined a story last week, "Democrats Want to Rise With the Middle Class."

How are Americans doing? What do they say about their ability to pay their mortgages or rent, and monthly credit card bills? How often are Americans short of cash? What about ordinary health care expenses for themselves and their families? Are the expenses overwhelming many families today?

A new AEI public opinion study, "Economic Insecurity: Americans' Concerns About Their Jobs, Personal Finances, Retirement, Health Care and More," tries to answer those questions by looking at the responses Americans give when the pollsters ask them how they are doing. AEI conducts no polls of its own. We rely on data from the major polling firms and from media-polling partnerships such as the Washington Post/ABC News poll.

Americans are optimistic about their retirement prospects, but those who are retired describe their circumstances somewhat differently.

Only 10 percent of Americans think it is either very or fairly likely that they will lose a job in the next year. This response has been fairly stable since Gallup started asking the question in 1975. When the question is broadened to ask whether "you, someone in your family, or someone else you know personally will lose a job in the next six months," a formulation that Ispos pollsters use, around 15 percent say that this is "extremely" or "very" likely. Do Americans fear that their jobs will be shipped overseas? Gallup has asked the identical question about outsourcing three times since 2003. In each asking, around 10 percent have said that they are worried that their company will move jobs overseas.

What to people say about their finances? Here again, the new AEI study looked at trend data from a variety of pollsters. In January, when the Los Angeles Times and Bloomberg News asked people to describe the state of their personal finances, 15 percent said they were very secure, and another 56 percent as fairly secure. Sixteen percent called themselves fairly shaky, and 12 percent very shaky. The Los Angeles Times has asked this question several dozen times since 1991, and the results are fairly constant.

In a Gallup question asked yearly since 2001, people are asked how worried they are about ordinary expenses. In 2006, 11 percent said they were very worried and another 16 percent moderately worried about not being able to pay their rent or mortgage. In another question, 10 percent were very worried and 8 percent moderately worried about not being able to pay the minium payment on their credit cards. Fourteen percent were very worried, and another 24 percent were moderately worried about not having enough money to pay normal monthly bills. Thirty-eight percent of responders to a CBS News/New York Times question said that their household income was enough to save and buy some extras, 44 percent described it as just enough to meet their bills and obligations, and 17 percent it was not enough to meet those expenses.

Americans are optimistic about their retirement prospects, but those who are retired describe their circumstances somewhat differently. Around 70 percent of us tell Gallup that we have enough money to live comfortably right now. When Gallup follows up with another question, around 50 percent of us expect that we will have enough money to live comfortably in retirement. Workers think that retirement savings plans will provide the largest share of their income when they retire. Those who are retired say that Social Security is actually providing their biggest chunk of income.

Turning to health care, two in ten told Harvard/Robert Wood Johnson pollsters that they had had trouble paying medical bill in the past 12 months. In another question 16 percent said there was a time in the past 12 months when they or another family member needed medical attention and did not get it. The reason: Most said it was inability to pay. Americans say the amount they pay for the health insurance and prescription drugs has gone up in the past year. Americans fear most their ability to pay medical costs in the event of a serious illness. A third of responders in Gallup's 2006 poll said they were very worried about this prospect.

Is the middle class economic insecurity that we hear so much about real? Certainly it is for some. But the new AEI public opinion study suggests that most people are able to meet their basic expenses. Few describe themselves on easy street, but most of us are getting by.

Karlyn Bowman is a senior fellow at AEI.

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