The percentage of middle-class families considered financially secure shrunk significantly between 2000 and 2006, according to a new report that suggests our prosperity was precarious even before the current economic meltdown hit.

The first seven years of the century were a time of “considerable slippage” among Americans, “with fewer middle class families financially secure and more families financially at risk,” states the report, entitled “From Middle to Shaky Ground.” It was published by the nonpartisan policy center Demos and the Institute for Assets and Social Policy at Brandeis University.

The report defines “middle class” as those in the middle 50 percent of American households. It rates economic stability by looking at five factors: assets on hand; educational achievement of family members; the percentage of family income spent on housing; the amount of money in the family budget left over at the end of the year (that is, savings); and whether family members had health insurance.

In the year 2006, only 24 percent of middle-class households were at optimal status in three or more of the five areas, and thus considered “securely middle class.” That is a decrease from 29 percent in 2000. Optimal status in the health category means that all members are covered by insurance; in the housing category, it means than no more than 20 percent of family income is spent on housing.

Between 2000 and 2006, the number of middle-class families in which at least one member was uninsured grew from 18 percent in 2000 to 25 percent. 

The report suggests few families are prepared for the layoffs that are becoming increasingly common as economic troubles deepen. As of 2006, 76 percent of middle-class families could not meet even three-quarters of their essential expenses for three months if they needed to live on their assets alone. 

“Between 2000 and 2006,” the report concludes, “the number of middle-class families able to survive on assets during emergencies, who can afford their housing, and who have all members covered by health insurance declined significantly. Since that time, the signs of economic insecurity have only gotten stronger.”

The report lists a number of potential policy solutions, including enacting policies to promote savings, including targeted tax credits; protecting homebuyers from deceptive mortgage lending practices by establishing strong federal standards; prohibiting abusive credit-card practices that allow lenders to change terms at any time for any reason; and reforming the health care system to ensure affordable insurance for all Americans.

“We do have policy solutions at our fingertips to bolster the middle class,” the authors write. “What remains to be seen is how effectively our elected officials will pursue a bipartisan course of action that achieves this.”