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Why Job Security Score?
Because income defines a consumer’s lifestyle, purchasing, investment and credit behavior
Few things in a person’s life define their current and future financial situation, purchasing behavior, and lifestyle more than their employment and job security. Employment is one of the most basic and essential requirements for most individuals, and it plays a pivotal role in their economic, intellectual, mental, physical, emotional, psychological, social, and general well-being and any disruption in employment, and the associated loss of income, could cause short to long term financial hardships.
For individuals making personal decisions regarding their personal finances or career, or businesses seeking how to best interact with their customers, understanding and quantifying job security provides critical insight.
When job loss strikes a worker, changes to the person’s life occur quickly. The individual's loss of income means their ability to purchase goods and services and meet their financial obligations have been severely curtailed, imposing severe hardship on the unemployed and their families. However, in a constantly changing global economy in which jobs are moved across national borders and technology is replacing workers—not to mention the continuous fluctuations and cycles of business—how do you quantify job loss risk for the individual worker? Scorelogix answers this need with Job Security Score.
The Realities of Unemployment

Unanticipated unemployment is an unavoidable reality of the modern economy, and it can happen to any individual at any time. Often it is an underestimated and underappreciated problem facing working individuals.

Unemployment is more common and rampant than often realized. In 2005, about 7.6 million people were unemployed at any given time for an average duration of 18 weeks, over 21 million jobs were lost (total, not net), and over 17.9 million new claims were filed for unemployment insurance (from US Dept. of Labor’s initial claims for unemployment insurance).

Economic volatility, jobless recovery, rapidly changing technologies, overseas job migration, outsourcing, intense international competition, higher productivity and volatile business dynamics all continue to make jobs vulnerable.

A combination of low personal savings, high consumer spending, mounting consumer debt, rising debt service obligations and minimal government unemployment insurance benefits makes matters worse for individuals when they become unemployed. In the absence of sufficient savings, government UI benefits could be inadequate for an average individual to maintain a safe and decent standard of living based on realistic local costs faced by families for food, housing, child care, health care, tuition, car, mortgage, credit cards, transportation, taxes, and other necessary expenses.

Consumer Credit Indicators Paint a Grim Picture

An average individual has plenty of reasons to be worried about the consequences of unemployment because key consumer credit health indicators have shown considerable deterioration in recent years. Personal savings as a percentage of disposable income is at record low levels, consumer debt is growing rapidly, consumer debt service ratio is at its highest level, and personal bankruptcies are at record high levels.

Consumer credit indicators suggest that individuals could be hit hard, perhaps more than ever, in the event of an unemployment, because of their not-so-robust financial situation.

Data from the U.S. Department of Commerce indicates that personal savings rate has fallen drastically and is at record low levels. From 1946-2002, the average personal savings rate was 7.8 percent. The highest annual percentage rate during that period was 10.9 percent in 1982. Compared to this 2005 savings rate was just about 2.0% which was one of the lowest among developed nations.

In addition to lowest level of savings rate Federal Reserve data indicates that household debt is near its highest level in 22 years. The debt service ratio too is near its highest level. Industry experts and analysts are concerned that this unprecedented level of debt, and debt service relative to income, might pose a critical risk to the financial health of American households.

These credit indicators suggest that consumers today are financially over-extended and are likely to be much closer to the threshold of delinquencies, bankruptcies, and major lifestyle changes than before, and even a mild unemployment situation could push them over the edge towards financial hardship.

      Income Loss & Credit Risk