Western European and Canadian Poor are Richer than the American Poor, American Middle Class No Longer the Richest Among Global Peers
An American tourist's arrival to any nation, from Afghanistan to Zimbabwe, for a long time, has been met with the presumption that as a potential member of the American middle class, their middle class wealth trumped the middle class wealth of any other nationality in the room. However, recent reports have shown that the American middle class has been bested, and they are no longer the wealthiest among their global peers. The report documents the plummet of the American middle class, large pay disparities, and unbalanced distribution of wealth.
The after-tax middle class income in Canada is higher than American wages. Also, European low-income residents earn more than American low-income residents. The New York Times analysis shows that citizens from other advanced countries have been earning wage boosts over the last three decades; unlike America, which has been sluggish with increases.
"The idea that the median American has so much more income than the middle class in all other parts of the world is not true these days. In 1960, we were massively richer than anyone else. In 1980, we were richer. In the 1990s, we were still richer," said Lawrence Katz, a Harvard economist, who confirmed that the image of the affluent middle class American is no longer a reality.
Median per capita income in the United States in 2010 was $18,700; which translates to $75,000 for a family of four, post-taxes. That's a 20 percent boost since the '80s, but unchanged since 2000. By comparison, Britain has jumped 20 percent between 2000 and 2010, and there was a 14 percent increase in the Netherlands. The median income in Canada also rose 20 percent between 2000 and 2010, equal to almost $19,000 in growth.
Broad factors for the weak income performance in the United States can be attributed a number of things, including the fact that educational attainment in the U.S. has risen at a slower rate than much of the industrialized world in the last three decades, which makes it more difficult for the Americans to access well-paying positions. Americans aged 55-65 have technological, literacy, and numeracy skills that exceed those of the rest of the industrialized world, but younger Americans are behind counterparts in Canada, Australia, Japan and Scandinavia. They are close to peers in Spain and Italy, however. Beyond the cost of education, the cost of modern life necessities (phone and internet) has regularly increased.
An addition factor is that U.S. companies dispense smaller shares of capital to middle class and poor, compared to similar companies in other countries. Executives in America make vastly more than their subordinates, more so than any other wealthy country. Also, labor unions are weaker; the minimum wage is lower; and most American workers are left to earn crumbs while the American economy falters.
Another factor is that Western Europe and Canada are "more aggressive" when it comes to taking the necessary steps to boost take-home pay of low- and middle-income household by redistributing income. On top of that, rich Americans pay lower taxes than the rich in many other nations, while not redistributing as much income to the poor as other nations tend to. Disposable income for the poor is less than anyone else's because of this fact.
Economic growth in the United States is comparable to other nations, and stronger in some cases, however only a small percentage of American households are benefiting from that growth. Most American families are suffering due to rising income inequality. In 2010, median income tied between Canada and the U.S., but the median income in Western European nations still trail behind the U.S. But, the pay gap in many of those countries, including Britain, the Netherlands and Sweden, is much smaller than it was 10 years ago.
Greece and Portugal and a number of other European countries were severely struck by financial crises, and that led to obligatory income plummets. While at the same time the U.S. poor faced harsher struggles. Families at the 20th percentile earned less income than families in Sweden, Norway, Canada, Finland and the Netherlands. This wasn't the case 35 years ago, however.
Directed over the 35 years, the numbers based on the survey offers "some of the most detailed publicly available comparisons for different income groups in different countries over time." The income data provided to the New York Times comes from LIS, which is a group that maintains Luxembourg Income Study Database. LIS is a cross-national data center, missioned to "harmonize statistics" as they facilitate research on global socio-economical standards, assess income equality, analyze debt, and measure poverty.
Evidence of cock-eyed distribution of national wealth lies in the fact that Americans at the 95 percentile of distribution -- those earning $58,600 in after-tax per capita income, not calculating in capital gains --continue to make 20 percent more than those in Canada, 26 percent more than those in Britain, and 50 percent more than those in the Netherlands. American wealth still exists, it simply exists outside of the reach of the masses; well-off American families soar above the rest.
The Guardian published a follow-up feature on the subject, commenting on the fact that American middle class was worse off than its Canadian neighbors, who now claims the coveted position as the richest middle class on the globe. The article offered that income inequality is at its highest level since 1938.
The writer of the piece, a former resident of Toronto, compared the two systems and commented that education in Canada is much more affordable ("Attending Queen's University -- one of Canada's best and certainly its most pricey -- the most I had ever paid for a year's tuition was $1,100, so I had graduated free of debt."), while her U.S. friends are still paying off their own debt. College costs are a tremendous burden and could potential bankrupt families.
Canadian government subsidizes a majority of tuition costs, unlike America. Also, the Canadian healthcare system is a factor, which is paid from taxes. Although, Canadian still pay the cost for dental care, vision, and prescriptions; but they're paying less than Americans. In addition to aforementioned advantages in Canada, Canadians worry less about mortgage costs. At the same time, the cost of films, books, and taxes on goods in Canada are much higher than they are in the U.S. There is a 13 percent federal and provincial sales tax heaped upon already expensive prices. Nonetheless, challenges with cost of education and healthcare breaks families more so than the cost of boots or movie tickets.