Tags: middle class | economy | wealth | income

NYT Analysis: US Middle Class Poorer Than Other Countries

By Sharon Churcher   |   Tuesday, 22 Apr 2014 02:36 PM

The American middle class is no longer the most affluent in the world, according to an analysis in The New York Times, which shows that citizens in the middle brackets in other advanced countries have done considerably better over the last three decades.

After-tax middle-class incomes in Canada, which were substantially less than in the United States in 2000, now are estimated to be higher than in the United States, and the poor in much of Europe earn more than poor Americans.

Although U.S. economic growth matches or exceeds that of many other countries, this largely has benefited only the richest households.

Moreover, though incomes in Western European countries still trail those in the United States, the gap with several of them — including Britain, the Netherlands and Sweden — is much smaller than a decade ago.

"The struggles of the poor in the United States are even starker than those of the middle class," according to the Times. "A family at the 20th percentile of the income distribution in this country makes significantly less money than a similar family in Canada, Sweden, Norway, Finland, or the Netherlands. Thirty-five years ago, the reverse was true.

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"With a big share of recent income gains in this country flowing to a relatively small slice of high-earning households, most Americans are not keeping pace with their counterparts around the world."

Median per capita income was $18,700 in the United States in 2010. That figure is an increase of 20 percent since 1980 but is basically static since 2000, after adjusting for inflation, the Times reports.

In comparison, median per capita income rose about 20 percent in Britain from 2000 to 2010 and 14 percent in the Netherlands. Median per capita income also rose by the same robust 20 percent in Canada between 2000 and 2010, giving that nation an $18,700 median figure, the same as the U.S.

The Times analysis says three factors largely account for the weak U.S. performance:

One, education levels lag those in much of the industrialized world.

Secondly, U.S. companies are less generous to their employees: top executives make substantially more money than in other wealthy countries, while the minimum wage is lower.

And the third factor, according to the Times, is that Canada and Western Europe have taken more aggressive steps to use taxes to redistribute income.

Two months ago, The New York Times reported that businesses catering to the middle class were shrinking, while companies selling luxury goods and services thrived.

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