Thursday , 13 June 2024

Which Country Has the World’s Most Affluent Middle Class (and it is not the U.S.)?

The American middle class, long the most affluent in the world, has lost that distinction – to Canada, no less!

The above edited excerpts, and those below, are from an article* in the New York Times entitled The American Middle Class Is No Longer the World’s Richest by

Although economic growth in the United States continues to be as strong as in many other countries, or stronger, [only] a small percentage of American households is fully benefiting from it.

  • Median income in Canada pulled into a tie with median United States income in 2010, the most recent year of analysis, but other income surveys conducted by government agencies suggest that since 2010 pay in Canada has risen faster than pay in the United States and is now most likely higher.
  • Median incomes in Western European countries still trail those in the United States, but the gap in several — including Britain, the Netherlands and Sweden — is much smaller than it was a decade ago.

The findings are striking because, while the most commonly cited economic statistics such as per capita gross domestic product continue to show that the United States has maintained its lead as the world’s richest large country, those numbers are averages, which do not capture the distribution of income. The data show, in fact, that a big share of recent income gains in this country has flowed to a relatively small slice of high-earning households and that, as a result, most Americans are not keeping pace with their counterparts around the world.

(The income data were compiled by LIS, a group that maintains the Luxembourg Income Study Database. The numbers – LIS counts after-tax cash income from salaries, interest and stock dividends, among other sources, as well as direct government benefits such as tax credits – were analyzed by researchers at LIS and by The Upshot, a New York Times website covering policy and politics, and reviewed by outside academic economists.)

3 broad factors appear to be driving much of the weak income performance in the United States.

1. Educational attainment in the United States over the last three decades among Americans between 16 and 24 is not keeping pace with those in other countries between those ages.

  • This cohort is well behind their counterparts in Canada, Australia, Japan and Scandinavia and close to those in Italy and Spain.

This has made it harder for the American economy to maintain its share of highly skilled, well-paying jobs.

2. Companies in the United States distribute a smaller share of their bounty to the middle class and poor than similar companies elsewhere.

  • Top executives make substantially more money in the United States than in other wealthy countries.
  • The minimum wage is lower.
  • Labor unions are weaker.

Because the total bounty produced by the American economy has not been growing substantially faster here in recent decades than in Canada or Western Europe, most American workers are left receiving meager raises.

3. 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 United States does not redistribute as much income to the poor as other countries do and, as a result, inequality in disposable income is sharply higher in the United States than elsewhere.

*; **

Related Articles from the Vault:

1. Canadian Senior Citizens Are Among the Most Affluent People In the World.

In Canada “seniors” (what an awful word!) are the new elite. Politicians pander to them. They get tax breaks up the yin-yang. They suck up most of the health care. Their employers can’t even kick them out the door – not that most need to work. They’re rich.

2. World’s Most Prosperous Countries: Where Do the U.S., Canada and Others Rank?

3. 18 Countries Now Have More Economic Freedom Than U.S. – Here are the Details

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4. Canada is a Great Place to Retire – Here’s Why

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5. Americans & Canadians Not Included in Top 10 of Nationalities With Highest Average Wealth per Adult – Here’s Who Is

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6. How the Wealth of Canadians, Americans, Brits and Aussies Compare

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