Arkansas was secondworst in the nation from 2008 to 2010 in terms of “economic insecurity,” according to a report released Thursday.
The Economic Security Index is a measure of the percentage of households that lost 25 percent or more of “available income” from one year to the next because of a spike in medical costs and consumer debt or loss of income, and lack the resources to recover.
Developed by a research team led by Jacob Hacker, a Yale University professor of political science, with support from the Rockefeller Foundation, the index was applied on a state-by-state basis for the first time this year.
The report, “Economic Insecurity Across the American States,” found that Arkansas’ Economic Security Index was 23.6 percent in2010, meaning that nearly a quarter of households lost 25 percent or more of available income. Only Mississippi was worse, the report said.
“Nearly every state experienced record insecurity” during the recession that officially started in December 2007 and ended in June 2009, the report states, but the index has risen “substantially” since as far back as 1986.
The report, which focuses in part on the impact of medical costs on income, comes as the U.S. Supreme Court is expected to rule on a challenge to the federal Affordable Care Act no later than next week, possibly stripping it of the provision that requires all individuals to carry health insurance.
Two Arkansas-based economists took issue with some of the findings of the report.
“The Great Recession was one of, if not the greatest, economic contractionssince the 1930s. So it’s no surprise that there is a lot of insecurity,” said Greg Kaza, executive director of the Little Rock-based Arkansas Policy Foundation.
During the recession, the state sustained a net loss of 43,200 jobs.
“The problem would have been a lot worse without [the cost-saving impact of] Wal-Mart and the state’s phase-out of the grocery tax,” Kaza said.
“I question the claim that [1986-2010] was one big period of insecurity,” he said. “The longest economic expansion in U.S. history happened in that period, between March of 1991 and March of 2001.”
Stuart Craig, speaking on behalf of the research team, said that debt as defined inthe study is “basically credit cards” and thus does not include mortgage or rent payments.
Michael Pakko, chief economist at the Institute for Economic Advancement at the University of Arkansas at Little Rock, said, “Basically, I look at [the study] with a skeptical eye.”
The report states the obvious - that Arkansas is a low-income state and that the country suffered through a recession, Pakko said.
After Mississippi and Arkansas, the states scoring the highest index numbers in 2010 were Alabama, Florida and Georgia. The report said that New Hampshire, Wisconsin, Connecticut, Washington and Minnesota experienced the lowest levels of economic insecurity during the recent downturn. The national average was 20.5.
Northwest Arkansas, Pages 7 on 06/22/2012