By: Dan Weil
April 24, 2014
The growing inequality of income in this country apparently is doing some serious damage to the middle class.
Indeed, the U.S. middle class is no longer the richest in the world, a title it held for years, The New York Times reports. The U.S. poor also have lost out relative to the poor overseas during the last 30 years. To be sure, wealthy Americans have padded their lead over foreigners.
Canada’s middle class, which was way behind the U.S. middle class in 2000, appears to have taken over the No. 1 ranking, according to The Times. Canada’s median income tied United States median income in 2010 and almost certainly has topped it since then.
Economic growth in the United States matches or surpasses that in many other countries, but the benefits aren’t flowing to middle- and lower-income households.
U.S. median income still is out in front of Western European countries, but the gap has shrunk markedly in several countries, including Britain, the Netherlands and Sweden, The Times reports.
The Times suggests three factors appear to be impacting the income performance in the United States. First, educational attainment has risen more rapidly in industrialized countries than it has in the United States during the last 30 years.
Second, U.S. companies pay their top executives more than do companies in other countries, leaving less money to be paid to middle-class and poor workers. In addition, The Times adds, the minimum wage in the United States is lower.
Finally, Canadian and Western European governments redistribute income more aggressively than does the U.S. government in order to increase the take-home pay of middle- and low-income individuals.
Developments in housing represent a major reason for Canada’s middle class beating out its U.S. brethren, says Derek Thompson of The Atlantic.
“The U.S. is emerging from a catastrophic collapse of the housing market that obliterated household wealth for millions of middle-class families,” he writes.
“Canada, however, is in the midst of a delirious housing boom and a personal debt craze that reminds some economists of the U.S. market exactly a decade ago.”
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