2 Out of 3 Middle Class American Families on Shaky Financial Ground

Fewer than one in three middle-class families in America is financially secure, and the remaining majority are either borderline or at high risk of falling out of the middle class altogether, according to a new study published this week by Demos and the Institute for Assets and Social Policy (IASP) at Brandeis University.

By a Thread: The New Experience of America’s Middle Class is the first comprehensive report to measure economic stability across the American middle class. Based on national government data, By a Thread is the first in a series of reports and briefing papers that will utilize the new “Middle Class Security Index” developed by the non-partisan policy center Demos and IASP/Brandeis.

This Index measures the financial security of the middle class by rating household stability across five core economic factors: assets, educational achievement, housing costs, budget and healthcare. Based on how a family ranked in each of these factors, they were defined as financially “secure”, “borderline” or “at risk”.

“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, Director of the Institute on Assets and Social Policy at Brandeis and one of the co-authors of the report. ” It also points to specific areas-like lack of assets-that inhibit financial security,”

The Middle Class Security Index shows worrying trends:

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Only 31 percent of families who would be considered middle-class by income are financially secure.

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One in four middle-class families match the profile for being at high risk of slipping out of the middle class altogether.

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More than half of middle-class families have no net financial assets whatsoever.

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Middle-class families have median debt of $3,500 and at least half of them have no assets.

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Only 13 percent of middle-class families are secure in their asset levels-meaning that they have enough to cover most of their living expenses for nine months should their regular income cease; 79 percent are “at risk” in this category, meaning they could not cover the majority of their expenses for even three months. Another 9 percent are “borderline.”

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Twenty-one percent of middle-class families have less than $100 per week ($5,000 per year) remaining after meeting essential living expenses. These families are living from paycheck to paycheck with very little margin of security

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