By Graeme MacKay, The Hamilton Spectator – Friday April 25, 2014
Canada passes US in middle-class wealth
According to a New York Times report, the rich in the US are getting richer, but the poor and middle classes are falling behind some of their Western peers.
“Middle-class incomes in Canada – substantially behind in 2000 – now appear to be higher than in the United States,” David Leonhardt and Kevin Quealy write. “The poor in much of Europe earn more than poor Americans.”
The UK median income is still behind that of the US, but it’s catching up fast – a 19.7% increase since 2000. This is the same increase as Canada’s, whereas the US number was up by only 0.3%. (It’s worth noting that Germany’s middle class is also stagnating – at 1.4%.)
The Times reporters based their conclusions on a survey of household incomes in about 20 countries over the course of 35 years, taking into account inflation, differences in taxes, government benefits and cost of living in different locations.
“With a big share of recent income gains in this country flowing to a relatively small slice of high-earning households, most Americans are not keeping pace with their counterparts around the world,” they write.
The reporters point to three reasons why all but the wealthiest American may be falling behind:
First, educational attainment in the United States has risen far more slowly than in much of the industrialized world over the last three decades, making it harder for the American economy to maintain its share of highly skilled, well-paying jobs…
A second factor is that companies in the United States distribute a smaller share of the bounty to the middle class and poor than similar countries elsewhere…
Finally, governments in Canada and Western Europe take more aggressive steps to raise the take-home pay of low- and middle-income households by redistributing income.
The struggle for middle- and lower-class Americans is reflected in public opinion polls, the reporters write, which generally show greater dissatisfaction with their government than in other Western nations.
If the US middle class has it bad, the poor have it worse.
“The American poor now clearly trail the poor in several other rich countries,” Leonhardt and Quealy write. “At the 20th percentile – where someone is making less than four-fifths of the population – income in both the Netherlands and Canada was 15 percent higher than income in the United States in 2010.” (Source: BBC NEWS)