Dan Weil: “NYT: US Middle Class Loses Position as World’s Wealthiest” – Money News

Posted on :Apr 24, 2014

By: Dan Weil

Money News

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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