The Rising Instability of The Rising Instability of American Family Incomes, American Family Incomes,

1969-20041969-2004

Jacob S. Hacker*Jacob S. Hacker*Yale & New America FoundationYale & New America Foundation

Elisabeth JacobsElisabeth JacobsHarvard & Brookings InstitutionHarvard & Brookings Institution

*with the assistance of Frank Limbrock and Nigar Nargis*with the assistance of Frank Limbrock and Nigar Nargis

%

20%

40%

60%

80%P

erce

nt

Agr

eein

g

All Less than$50,000

$50,000-$150,000

Morethan

$150,000

Annual Income

"There is more risk to my family's financial future than in the past."

"There is less risk to my family's financial future than in the past."

Source: MetLife American Dream Survey, November 2006.

““Compared to 10 years ago, do you Compared to 10 years ago, do you think Americans today have…”think Americans today have…”

65% 16%

19% More EconomicSecurityAbout the SameSecurityLess EconomicSecurity

Source: Rockefeller Foundation American Worker Survey, February 2007.

%

25%

50%

75%

100%

125%

150%

175%

1973 1978 1983 1988 1993 2000

Note: Dotted lines indicate bi-annual survey years. Shaded areas indicate periods of national recession.

Cumulative Growth in Family Cumulative Growth in Family Income Volatility Since 1973 Income Volatility Since 1973

Percentage of Working-Age Americans for Whom Percentage of Working-Age Americans for Whom Family Income Declined by at Least 50 percentFamily Income Declined by at Least 50 percent

0%

2%

4%

6%

8%

10%

1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003

Note: Dotted lines indicate bi-annual survey years. Shaded areas indicate periods of national recession.

0.00

0.10

0.20

0.30

0.40

1973 1976 1979 1982 1985 1988 1991 1994 1998 2004

Mal

e H

ead

s' E

arn

ing

s V

ola

tilit

y__

_

Note: Dotted lines indicate bi-annual survey years.

Shaded areas indicate periods of national recession.

Volatility of Male Heads’ EarningsVolatility of Male Heads’ Earnings

0.00

0.05

0.10

0.15

0.20

0.25

1974-79 1980-89 1990-99 2000-2004

Ave

rag

e F

amil

y In

com

e V

ola

tili

ty

Did Not Finish High School High School Graduate

Some College College Graduate or Higher

Average Family Income Volatility by Average Family Income Volatility by Education Level and Time PeriodEducation Level and Time Period

6%16% 21%

29%

80%

228%

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

Poorestfifth

Secondfifth

Middlefifth

Fourthfifth

Richestfifth

Top 1Percent

0%

50%

100%

150%

200%

250%

1979

2005

Percent Change

Source: Congressional Budget Office, Effective Federal Tax Rates, 2007.

Average Income (After taxes; 2005 dollars)

Would you Would you prefer “the prefer “the stability of stability of knowing your knowing your present sources present sources of income are of income are protected” or protected” or “the opportunity “the opportunity to make more to make more money”?money”?

68%32%

INCOME SECURITY

MORE MONEY

Source: George Washington University Battleground Survey, March 24, 2005.