U.S. Middle Class Loses Longtime Position as World’s Richest

By on

The American middle class has lost its distinction as the world’s most prosperous.

For the first time in decades, America’s middle class, once the envy of the world, has been dethroned, according to an analysis by The New York Times. Canada surpassed the U.S. and now lays claim to the world’s richest middle class.

According to Time magazine:

America’s middle class is still wealthier than corresponding demographics in Europe, but the gap has narrowed significantly in the last 10 years. Meanwhile, the poor in the U.S. are significantly worse off than their counterparts in Europe and Canada — a total reversal from 35 years ago.

Median income in the U.S., about $74,000 after taxes for a family of four, rose by 20 percent between 1980 and 2000 but has since remained mostly unchanged, according to the Times analysis. Median income in Canada, in contrast, rose by 20 percent between 2000 and 2010 alone.

The New York Times said its analysis, based on 35 years of survey data, indicates that the wealthiest Americans continue to outpace their counterparts across the world. In stark contrast, low- and middle-income households in the U.S. have received much smaller raises than those of their global peers over the past 30 years.

If you look only at per-capita gross domestic product, one of the most commonly cited economic statistics, it would appear that the U.S. is still leading as the world’s richest large country. What those statistics don’t show is the distribution of income. In the U.S., the biggest share of recent income gains went to a small percentage of high-earning households.

“Most American families are paying a steep price for high and rising income inequality,” said the Times.

With only a small segment of people fully benefiting from economic growth in the U.S., the majority of Americans are being outpaced across the globe, the Times said.

“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,” said Lawrence Katz, a Harvard economist.

“In 1960, we were massively richer than anyone else. In 1980, we were richer. In the 1990s, we were still richer.”

That is no longer the case, Professor Katz added.

The Times analysis says a number of factors have contributed to the U.S. middle class falling behind, including a lower minimum wage, stagnating education attainment, and weaker unions.

If you’re a rich American, then you can surely enjoy America’s prosperity. But if you’re lower or middle income, times are tough, and it appears they may stay that way for quite a while.

What do you think of the U.S. losing the distinction of having the world’s richest middle class? Share your comments below or on our Facebook page.

Sign up for our free newsletter

Like this article? Sign up for our newsletter and we'll send you a regular digest of our newest stories, full of money saving tips and advice, free! We'll also email you a PDF of Stacy Johnson's "205 Ways to Save Money" as soon as you've subscribed. It's full of great tips that'll help you save a ton of extra cash. It doesn't cost a dime, so why wait? Click here to sign up now.

Check out our hottest deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,044 more deals!

Comments & discussion

We welcome your opinions, but let’s keep it civil. Like many businesses, we reserve the right to refuse service to anyone. In our case, that means those who communicate by name-calling, racism, using words designed to hurt others or generally acting like an uninformed bully. Also, comments that include links to email addresses or commercial websites typically aren't posted. This isn't a place to advertise your business.

  • Frances King Matchett

    the rich are still the richest because the profits are not being shared with the workers, minimum wage is creating a nation of working poor and homeless, when we had strong unions, at least , they made sure the workers got a piece of the pie also !!!!!!!!!!!!!!! ” A NATION OF GREED ” ……..

    • philofthefuture

      A nation of greed is unions extorting what they have not earned. The more unions are pushed, the more functions will be automated. The latest round of fast food worker agitators need to be very careful with that one, don’t think they couldn’t be automated out of existence.

  • Jack Mabry

    With a few exceptions, large corporations no longer give back to their workers. Without these workers, these corporations would cease to exist. I hate to say it, but it may be time for most workers to unionize. Otherwise, the current inequality will only get worse.

    • Jim Wiggins

      The corporations duty is to the shareholders. If there were no shareholders the corporation would cease to exist. Labor is a cost. Corporations will pay the lowest wages possible until turnover, or other problems related to low employee pay, cost more. When you can demonstrate that raising worker wages will increase shareholder dividends corporations will pay workers more.

      • Jack Mabry

        You sound like the mouthpiece for the corporations. They are making all time profits, and not willing to share any of it with their low paid employees. If you truly believe what you said, I feel sorry for you.

        • Jim Wiggins

          Thank you for your heartfelt sympathy.

          I believe it because it is true, not because I think it is fair to the workers. The corporation for which I work pays me fairly, if it didn’t I would seek other employment.

          My personal feeling is that if corporations would pay more and improve benefits for the lower tier workers long-term profitability would increase.

          Not many corporations have long term metrics but are slaves to this quarters earnings. I think that is ultimately self defeating.

          • Teresa Fleming

            While I agree that a Corp. has a responsibility to shareholders, it’s naive to think that is why workers aren’t making a living wage. If CEO’s were concerned about shareholders they would not be giving themselves multi-million dollar bonuses, even during prosperous times but especially now. GREED! Most people can convince themselves they deserve something that they don’t. Abe Lincoln said it best: America will never be destroyed from the outside. If we falter and lose our freedoms, it will be because we destroyed ourselves.

          • philofthefuture

            “Most people can convince themselves they deserve something that they don’t.” That also goes for labor. The hardest thing people can accept is the fact you are paid what you are worth. If you accept this the solution is clear, make yourself worth more. If you do not accept this, you will have a miserable life because this “law” is immutable. Unions have tried to break that law and it works for a while but in the end either they are slapped down by reality or they end up destroying the very business they were leaching off of. There is not one industry unions have taken over that hasn’t gone bankrupt. They are bankrupting governments as we speak, their last stronghold.
            The problem, as I’ve personally witnessed numerous times, is that labor needs management far more than the other way around. Even a monkey could be trained to put nuts on a bolt and tighten them, that includes the monkeys in management! <) It takes real skill to come up with new ideas, schedules, expense reports, planning, marketing, etc. If you don't think so, try it. Give an empty factory to a bunch of executives and they will roll up there sleeves and crank out product. Give an empty factory to a bunch of laborers and they'll wait around wondering what to do. I've personally witnessed both.

          • philofthefuture

            Quarterly reports are required by government so you can thank them for that one.

    • philofthefuture

      Why do EU corporations expand here? To avoid labor in their home countries. Why are companies flocking out of CA, etc. and into TX, etc.? Right to work. It’s true that in those cases the northern union employees make slightly more but the right to work states have far lower coast of living so the southern worker has a far better STANDARD of living.
      Current inequality is far worse in blue states and cities. Ultra liberal SF being the worst, as long as you vote for liberal oligarchs inequality will only get worse.

  • JKH

    LIVE BETTER – WORK UNION!!

    • philofthefuture

      Dream on, every firm I worked for paid more to non union workers. Competent workers have no problem finding good jobs, it’s the incompetents that have to have union protection.

  • JKH

    I heard on CNBC that Volkswagen assembly workers in Germany average $67 an hour, yet in Tennessee they make $16. So why did they workers turn down the offer to unionize?

    • philofthefuture

      There is no way to directly compare wages as there is a world of difference in the economies of the two nations. That being said, many firms are now expanding here because of our “cheap labor” so the more German firms build here the fewer jobs will be available back there. This was a deliberate move on Obama’s part. Also, unemployment across the EU is absurd even by our standards. Even in good times they were hovering in the double digit area, particularly for the young.