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.
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