Middle-Class Families in United States At Financial Risk

Two Out of Three Are Financially Shaky

Two out of every three middle-class families in the U.S. is on shaky financial ground or at risk of completely falling out of the middle class, according to a new study from Demos and the Institute for Assets and Social Policy (IASP) at Brandeis University.

Researchers at Demos, a non-partisan policy center, and IASP reached that conclusion based on a new index they developed to track middle-class security. The security index assesses household stability using data on assets, education, housing costs, budgets and healthcare.

"Much like a common cholesterol test that shows whether someone's cardiovascular health is at risk, the Middle Class Security Index shows that financial health eludes the majority of the American middle class," said Thomas M. Shapiro, a co-author of the study and director of the IASP. "It also points to specific areas -- like lack of assets -- that inhibit financial security."

The study based on the index, "By a Thread: The New Experience of America's Middle Class," reports that more than half of all middle-class families have no net financial assets, and only 31 percent can be considered financially secure. Worse still, the report states, one out of every four middle-class families is at "high risk" of falling out of the middle class.

The study also states that only 13 percent of middle-class families have enough assets to cover most living expenses for nine months if they lose their regular income, while 79 percent don't have enough to cover even three months of living expenses. More than one out of five middle-class families (21 percent) have less than $100 a week left after covering their essential living expenses.

In addition to outlining the threats facing middle-class stability, the "By a Thread" report recommends government policies that would help America's middle-class families build up assets, reduce debt, pay for higher education and meet their healthcare needs.