I think it's pretty complex, but out of my peer group (friends and family my age, college buddies, etc...) the majority of us are in that situation. The tradititional hiring model that most 40 or 50 something's remember isn't nearly as prevalent anymore. It still exists, but I know plenty of well-educated, experienced people around my age that just bounce from contract to contract in their fields. For some it's super stressful and for some it's actually pretty great. One of my best friends works as an engineer specializing in assembly line technologies and just takes three month or six month contracts for a ridiculously high hourly rate and spends about a third of his year travelling. I know far more though that have just been bouncing around for years looking for something permanent and stable.
Living in the Midwest, I can get by on a lot less than what I made in SoCal, but I've had plenty of job offers here that were just insultingly, laugh out loud low. "Hey, you've got a degree and a few years of experience... Want to come work for our marketing department for $12/hr?" I've been lucky enough to not have to take anything like that, but there are plenty of people that get forced into that sort of position and can't build up much of a financial base.
In the end, I just want to tell every 12 year old I see to either train themselves to become a kickass programmer/developer or learn a skilled trade.