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They went to college. They've done what it takes to do well in America. So why do so many families feel so financially insecure? Because they are.

JOHN RYAN: I've learned loudly and clearly that I'm not in control.

BRANCACCIO: Dangerous swings in family income are now a reality, part of a sweeping economic shift in risk onto the backs of people who work hard and play by the rules.

PETER GOSSELIN: We're playing in an economy that is much more competitive. some are gonna win and some are gonna lose. And when you lose, you could lose really big.

BRANCACCIO: A look at how we're dealing with a whole "New Deal."

BRANCACCIO: Welcome. This is Wilmore, Kentucky. Every schoolkid learns the name of the man who once staked out and owned most of this part of the country — Daniel Boone.

But guess what? Thirty years after he arrived, Daniel Boone had to leave Kentucky, bankrupt and one step ahead of his creditors. Back then, there was nothing to cushion the wild swings in the fortunes of Americans. There was barely a federal government let alone a government safety net. These days the country and economy are rather more developed. But in recent years the economic health and job security of working Americans has become more precarious.

We've been looking into why so many families find themselves on a financial roller coaster these days. What we found shows that those who are pretty well-off in America have more in common than they think with the working poor.

Peter Meryash produced our report, in collaboration with THE LOS ANGELES TIMES.

Social Security is one of the programs designed by the government to even out the financial roller-coaster by taking some of the risk out of retirement. And just last week, President Bush was out traveling again, telling the nation how he wants to make it better.

PRESIDENT BUSH: You should be allowed to take some of your own money, after all, it is your payroll tax, and put it aside in an account of bonds and stocks.

BRANCACCIO: The proposal for personal investment accounts gives working Americans the possibility of a larger payout and more control over the money they have. But critics point out, it also brings the risk of ending up with less.

We want to talk tonight about how this debate is actually part of something far larger — the question of who must bear the risks of economic ups and downs experienced by working Americans. Will it be government and business — or are families pretty much on their own?

PETER GOSSELIN: People are leading essentially riskier lives. And it shouldn't surprise us that they want to hold on to what safety nets are still there.

BRANCACCIO: Peter Gosselin is the national economics correspondent for THE LOS ANGELES TIMES. In a series of ground-breaking stories he finds that big changes in government and business over the last 30 years have left Americans of almost all income levels living closer to the economic edge.

And that means, for the working poor to the traditionally well-off, all it takes today are a couple things going wrong — such as job loss or illness — to send people plummeting.

PETER GOSSELIN: We're playing in an economy that is much more competitive. And the net result is gonna be that the outcomes, you know, some are gonna win and some are gonna lose. And when you lose, you could lose really big.

BRANCACCIO: Take the story of the Ryan family. The financial ups and downs they've lived through over the past two decades are a cautionary tale for America's middle class.

Here's the thing: John Ryan did just what he was supposed to do to build a financially secure life. He and his wife Kim were the first in their families to graduate college. He went on to law school … and then worked hard to climb the corporate ladder.

JOHN RYAN: We were starting out. We needed everything. We both came from blue collar backgrounds. So, it was important for us to get stuff. And that's how it-- how it started and how it progressed for years without really a problem.

BRANCACCIO: The first of their three daughters was born in 1984, and a few years later, John landed a high-paying job as the assistant general counsel for Chambers Development Company, a fast growing waste management firm in Pittsburgh. He was soon making over $100,000, and with that kind of salary, the Ryans felt they could afford a bigger home.

JOHN RYAN: A great house. Turn of the century Victorian, stained glass windows, wrap around porch, cool wood floors, sliding doors. Ten room house. Four fireplaces. And, we loved it.

BRANCACCIO: It was nice, no mansion but an upper-middle class home, in a prosperous Pittsburgh suburb. But not long after the family moved in, came the first signs of trouble. Ryan's employer - Chambers Development - ran into serious financial problems and Ryan's position was eliminated. He was given eight months severance.

JOHN RYAN: At the time, I thought, eight months? That's great. Get a job in a couple of months. I'll have the difference in the bank. All is well.

BRANCACCIO: Remember, Ryan was trained as a lawyer … and by the time of his lay-off had fifteen years of professional experience. Even so, it took Ryan almost a year to find another good-paying job — this one with Fed-Ex in Memphis. He had to commute on three a.m. cargo flights from Pittsburgh. The job lasted three months.

With no salary coming in, Ryan could not keep up with the mortgage payments. The bank moved to foreclose on his home and he got stuck declaring bankruptcy.

For the Ryan family, all it took were a few reversals — that initial lay-off and then a long stretch of unemployment — to start a financial melt-down. It's been a rough road — eight jobs in the past ten years — work followed by lay-offs.

BRANCACCIO: How do these uncertainties in your career make you feel?

JOHN RYAN: More vulnerable than a person wants to feel. Particularly when you're brought up with the idea that the male is the breadwinner. I'm not a sexist. I live with all women. But, it's made clear to me when my father suggested some time out of my first layoff, that when he found it necessary to remind me that I'm the man of the family. That I need to provide the income. And be the breadwinner. And that even if that meant going out and selling refrigerators at Sears, that I had to be prepared and able to do that.

BRANCACCIO: And there's another awful part of this, Kim Ryan was struck with serious illness. In 1998, during John's fourth job, she found that she had cervical cancer. After radiation, surgery and an extended hospital stay, Kim's cancer went into remission. And by the couple's 25th wedding anniversary, the family was able to celebrate Kim's good health. But then, last September, devastating news.

JOHN RYAN: She was diagnosed with stage three lung cancer. A life long non-smoker -- go figure. She's had at this point, eight major surgeries in a three month period.

BRANCACCIO: Kim is now on medical leave from her job teaching high school English. Her on-again, off-again employment has added to the Ryan family's financial insecurity.

PETER GOSSELIN: One of the things that I think working Americans, particularly upper middle class Americans who have done the things that they've been told are-- give them the guard all shield, the protection against economic insecurity, gotten an education, gotten a career, gotten trained up. One of the things they don't understand is that just because they did everything right, there's no promise they're gonna win.

BRANCACCIO: The Ryans are one of hundreds of families Gosselin has interviewed who find themselves on a financial roller-coaster — vulnerable from year to year to wild swings in income.

Just how wild are those swings? Researchers at the University of Michigan have been looking at the income of the same five thousand families and their offspring, tracked over 40 years. And after crunching those numbers, THE LOS ANGELES TIMES found that 30 years ago, most middle-class families' income stayed in a tight range — rising or falling no more than $6,500 dollars a year.

Fast forward to today … the swings that families face have doubled ... Incomes are going up and down more than $13,000 from year to year.

PETER GOSSELIN: The bigger the swings the more the chance that they're going to be caught in the downdraft when something bad happens to them. Somebody gets sick. Somebody gets laid off. And if they're caught down there, the harder it's going to be for them to dig their way back, to get their way back. It's not that John Ryan won't come back again. But the problem is that people have got to realize that the kind of economic security that we once thought these six figure numbers incomes promised, is simply not there anymore.

BRANCACCIO: In fact, Gosselin found this same insecurity is so wide-spread, it's even hitting workers making far more than John Ryan.

PETER GOSSELIN: We are in a much more competitive economy. And it means that we are on the edge. And the we here is we the working poor and we the affluent. There is much more that people from $20,000 to 250,000 or 300,000 dollars have in common than people at 250,000 and Michael Eisner.

DAVID BRANCACCIO: What does somebody making 250 grand a year, which is good money, have in common with somebody making not much on the edges of poverty?

PETER GOSSELIN: For folks making 30 and $40,000, for folks making 60, 70, $80,000, and for folks making 150, $200,000. All the lines are doing this much more than they were ten, 20, or 30 years ago.

DAVID BRANCACCIO: Modest means, or higher incomes. That's a lot of volatility, a lot of chaos for a family.

PETER GOSSELIN: That's right.

BRANCACCIO: And for working class families, these swings in income have grown even more dramatically. Elvira Rojas and her partner Jose Moldanado have seen that first-hand. They fled civil war in El Salvador and came to Los Angeles in search of a better life.

ELVIRA ROJAS: I think I really started to have the American Dream from the moment I set foot in this country.

BRANCACCIO: When she first arrived in the U.S., Rojas cleaned houses. Moldanado worked at a dry-cleaning plant. And together they earned about $200 a week not nearly enough to afford their own place to live.

ELVIRA ROJAS: In the beginning, we didn't have our own bedroom. We lived in a two bedroom apartment. And I'd say there were a total of 12 to 15 people living in that apartment.

BRANCACCIO: But little by little, things started to look up. By 1997, with hard work juggling several jobs, the couple was making about $18,000 a year ... Enough income to finally rent space of their own in a two-family bungalow. And then, Rojas landed that a plum position a union job. She was hired at this hotel as a dishwasher on the four-to-midnight shift.

ELVIRA ROJAS: The fact that it was a union job was important. I knew I would be earning a better salary and receiving benefits because it was a union job.

BRANCACCIO: Rojas started out making more than $7 an hour and for the first time, she had benefits too — paid holidays and family health insurance. It provided her with a sense of security and by the following year, the couple's income had jumped $8,000 to a high of $26,000. They started to put together pieces of a middle class life. They bought china and a hutch to display it ... Furniture … a computer and a TV.

ELVIRA ROJAS: I felt like I had the money and I could say, "I can afford this. I can pay for this."

BRANCACCIO: But then came some bad news. Rojas's employer, the Wyndham Hotel, announced it was closing for repairs. A second union job at an airport Burger King vanished as well, when business there came to a halt after the 9-11 attacks. And when the hotel eventually reopened it was under new management and it was non-union.

Rojas got her old job back, but her pay was cut by more than fifteen percent and her benefits were cut too. By 2002, the couple's income had fallen to $22,000. That hurt when Rojas had a miscarriage and was rushed to the hospital.

ELVIRA ROJAS: It was an emergency situation. I'd pay whatever I had to pay and do whatever I had to do to pay the bill. I just wanted to receive medical care.

BRANCACCIO: She paid about half of the four thousand dollar bill with her credit card.

It gets worse. The home they rented was torn down to make way for new condos. Rojas had to find money for rent and security on a new place ... And once again, she turned to her credit cards. At one point, the balance on her four cards reached more than $14,000 dollars.

PETER GOSSELIN: In many ways, debt has become, for this generation, what unemployment compensation and the GI bill, and government guaranteed mortgages were for a previous generation. It's sort of a private safety net.

BRANCACCIO: Wow, credit card debt as our new social safety net?

PETER GOSSELIN: That's right. But notice this difference. In those old safety nets, who bore the risk? The government, or in the case of employment, long term employment, your employer. When the safety net is the safety net of debt, who bears the risk? You do. So, there's been a risk shift from these safety nets right on to families.

BRANCACCIO: It hasn't always been this way. For decades, the government and corporate America made a conscious effort to help shield workers and their families from the harshest downsides of the economy.

During the Great Depression, with unemployment reaching 25 percent, President Franklin Roosevelt promised relief. He brokered a "New Deal" setting up the first economic safety net for all Americans: it's called social security.

FDR SIGNS THE SOCIAL SECURITY ACT, AUGUST 14, 1935: We have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty stricken old age.

BRANCACCIO: And in the years that followed, there was a bipartisan commitment. President Eisenhower expanded Social Security and increased the minimum wage. President Johnson created Medicaid to provide health care for the poor and Medicare for the elderly. President Nixon increased unemployment benefits and pushed for national health insurance.

Corporations were right in there too. For many company executives, providing long-term employment and good benefits for their employees was considered a civic duty. Before World War II, 4 million workers had company pensions. After the war, those numbers sky rocketed to 44 million. And only 1.5 million workers had company health insurance pre-war. That number jumped to 150 million after the war.

Then came the late 1970s, the threat of a Japanese economic juggernaut, gas lines and rationing the U.S. seemingly in crisis.

PETER GOSSELIN: We were in a real tough spot. We managed to both have rapidly rising inflation, rapidly rising unemployment, declining productivity. And there was a broad national consensus we had to do something.

BRANCACCIO: Well, it was a mess. Remember…what was the interest rates on a mortgage? Like 18 percent?

PETER GOSSELIN: Or higher. That's right.

BRANCACCIO: Enter Ronald Reagan. He came to office promising nothing less than transformation.

RONALD REAGAN: Government is not the solution to our problem. Government is the problem.

BRANCACCIO: And he delivered on his promise — shrinking government safety nets; deregulating industries; taking on organized labor. It set the tone for the next twenty-five years. Today, unemployment benefits are harder to get — taxable — and stingier. And the minimum wage, adjusted for inflation, is now near its lowest level in 50 years ... $5.15 an hour.

Democrats too have taken aim at the safety net.

BILL CLINTON: For too long our welfare system has undermined the values of family and work.

BRANCACCIO: In 1996, President Clinton took on welfare reform and by 2004, spending had been cut by one third, or $10 billion — about half of the families receiving benefits cut from the program.

And in the corporate world, dramatic changes as well. Companies that had offered steady employment once upon a time, started cutting costs by cutting jobs. Benefits have been hit too — company-funded pension plans cut back — often replaced by employee contributions to riskier 401 K plans. And you know what's been going on with company health coverage. It's fallen too.

PETER GOSSELIN: If you've been in the workforce for very long, you know that something has changed about the economy over the last 25 years. Something fundamental has changed. You know in your heart that the Reagan Revolution really was a revolution. It may have been incomplete, but there really was a change in the direction of government.

BRANCACCIO: But surely some of these structural changes to the American economy have been good. I mean we're pretty flexible, dynamic economy in America.

PETER GOSSELIN: We are. And it has-- we clearly have solved-- gone a long way to solving the problem that we faced in the late '70s and the early '80s.

BRANCACCIO: The U.S. economy has grown and in a much steadier manner. Inflation has also been held in check. But Gosselin points out the solutions which helped engineer this strong economy have come at a little noticed cost.

BRANCACCIO: So in each of these cases, unionization, unemployment, retraining, even health care premiums, guaranteed pensions, there's like a refrain. The risk is being shifted from big institutions like government and the companies to the American family.

PETER GOSSELIN: That's right. The argument for that is that if we are-- it's all up to us, we're apt to make a really big effort and that we're apt to, in things like health care, for example, be really good negotiators and drive a hard bargain. The problem is that for all sorts of economic situations we, individual working people and working families, have no way of judging what-- how big the risk is.

BRANCACCIO: It's odd. But that's never how the debate has been framed. No one came to you or me as a citizen and said, "Look, this is what-- the shift that we're engineering, and here's the cost and here are the benefits. Let's talk." It just sort of happened.

PETER GOSSELIN: That's right. And in fairness to many of the people who made it happen-- many of them-- many of political leaders, many business executives didn't set out to put us in a more insecure position. They set out to solve particular problems. But the solutions have all fit together into what now we begin to see is a much riskier kind of economy for families.

BRANCACCIO: To date, Americans have handled this rising risk by working longer hours, sending the second parent into the work force and taking on more debt. But Gosselin wonders whether people are reaching the limit with these strategies and whether, with more changes on the way, they fully understand what's at stake.

PETER GOSSELIN: We are in the midst of a great debate right now with Social Security private accounts, with bankruptcy reform, with changes in Medicaid and the possibility of changes in Medicare, with the whole debate about President Bush's ownership society about still further rearrangements of this. So further-- you can see the ownership society as basically an argument that every household should be its own bottom. Every household should take care of itself, and that we shouldn't share risk.

BRANCACCIO: But some people watching this might say, but just save. I mean, save would help iron out a lot of these zigs and zags of income.

PETER GOSSELIN: And that's absolutely true. That's absolutely true. But I'd raise this question to people. What would you save, what's the right level of saving for a service like health care, which is as I say, could be $200 this year and $200,000 next year.

BRANCACCIO: For now, Elvira Rojas is more concerned about today. She and her family have moved into a cramped, two room apartment.

ELVIRA ROJAS: My dream is to own a home, but right now I can't.

BRANCACCIO: She's trying not to use her credit cards anymore, she says and is paying down more than seven thousand dollars in debt but with 30 percent interest or higher on those cards, it's very hard. The recent raise she got will help … but get this … she's only now back to earning what she made seven years ago.

And John Ryan? He now works at the University of Kentucky … earning about the same salary he made twenty-five years ago when he started out as an attorney.

Family, friends and their church have helped the Ryans through the ups and downs. And they have had some good news recently. Kim was well enough to be transferred out of intensive care to a rehabilitation hospital. The family hopes she'll be home soon.

But John Ryan knows it's his single income that will be the family's mainstay for the foreseeable future.

BRANCACCIO: Has this experience with the ups and downs of your career. Has it changed your attitude to other people that you see in this society? In this economy who have run into difficulties with their careers?

JOHN RYAN: Absolutely. Absolutely. I'm sure at an earlier point in my career, and in my life, when I met people who were between jobs. Or had lost a job a part of me, at least, thought well, what's wrong with you? And I learned, perhaps the hard way after sixteen years of continuous employment, that it can happen to anybody.

And frankly, when I meet someone who's lost a job, or who fears they may lose their job for whatever reason ౏ whether they've been there for two years or 25 years it breaks my heart all over again to think that they may have to go through the same challenges.

BRANCACCIO: And as this country debates the president's proposed changes to Social Security, the planned cuts in Medicaid and fewer bankruptcy protections the question becomes … how much individual risk are we willing to accept to be part of what's being called … an "ownership society"?

PETER GOSSELIN: What kind of society do we wanna be? Do we wanna be a society where the losers lose and we walk by them on the street, and maybe we give 'em a quarter, but the losers lose? Or are we a society where there is at least some minimal floor below which we do not want fellow Americans to fall?

BRANCACCIO: You can find more on our Web site,, on the precarious financial health of working Americans.

Next week, we're be back out on the road, and here's a look at what we're working on: California is leading the fight for tougher environmental controls. But guess who's gone to court to stop it? The U.S. government.

CALIFORNIA ATTORNEY GENERAL LOCKYER: Clean air, clean water. Wetlands. Forestry practices. Efficiency standards. Greenhouse gases. On and on and on. What I make of it is, the worst threat to the California environment is the Bush Administration.

BRANCACCIO: And that's it for NOW. From Wilmore, Kentucky I'm David Brancaccio. We'll see you next week.

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