5-30-08, 9:59 am

An increasing number of working families are 'being swamped by a rising tide of income instability,' says a new report released by labor-backed think-tank Economic Policy Institute this week.

The report, titled “The Rising Instability of American Family Incomes, 1969-2004,” demonstrates a growing trend toward income insecurity over the last 40 years despite apparent general economic growth and stable income statistics produced by government institutions.

Jacob S. Hacker and Elisabeth Jacobs, the authors of the report, examined data produced by Panel Study of Income Dynamics, which tracks income patterns, and revealed that 'income patterns for many families have become much more erratic.' “Where they might have expected to make a gradual but steady ascent up the income ladder, more Americans are finding themselves on an economic roller coaster,” explained Hacker. “Instead of being able to plan for their future, they’re left worrying about when the next big dip is coming.” The causes for the growing trend toward income volatility are numerous and there are some more recent disturbing trends since the turn of the century, the report explains. Changes in sources of income within households doubled over the course of the time period under study, with the biggest numbers of changes occurring in the mid-1980s and in the early 2000s.

Linked to this is the fact that the share of working-age people experiencing the loss of half or more of their household income rose from less than 4% in the early 1970s to nearly 10% in the 2000s. Indeed, the incidence of large income drops was much greater during the 2001 recession than in the recession of the early 1980s, which was the worst economic downturn since the Great Depression.

Income volatility has more dramatically impacted men than women, with men seeing the larger and more sustained rises in earnings instability than women, the study shows. This accounts for much of the increase in family income volatility, since men’s earnings make up a larger share of household income.

These facts make the case for a more concerted push to erase the gender income gap to help ease the disproportionate impact of volatility on household incomes. Additionally, these findings also undermine right-wing critics who blame women who leave and enter the workforce to care for children or other family members for household income instability.

The report also demonstrates that higher education and skills do not necessarily prevent working families from being impacted by the growing trend of income instability. The increase in volatility crosses all major demographic and education groups. In fact, the report showed, over the past generation income volatility grew faster for those with at least four years of college than it did for those with just a high school education.

It also appears that a two-income household (or more) in recent years may not lessen the impact of income instability as it did in the 1990s. “The lessening effectiveness of some of the things families typically do to improve their situation only compounds their worries,” said Jacobs. “The end result is more uncertainty with fewer options for getting their family onto more secure ground.”

Dwindling health and pension coverage, job dislocations and high levels of involuntary job displacement, rising household debt, bankruptcy and mortgage foreclosures, and the erosion of public benefits contribute to the disturbing trends documented in this report.

--Reach Joel Wendland at