We're #1! Canada passes US for richest middle class

[Hatman 🍁]

The American middle class, long the most affluent in the world, has lost that distinction.

While the wealthiest Americans are outpacing many of their global peers, a New York Times analysis shows that across the lower- and middle-income tiers, citizens of other advanced countries have received considerably larger raises over the last three decades.

Middle-class incomes in Canada — substantially behind in 2000 — now appear to be higher than in the United States. The poor in much of Europe earn more than poor Americans.

http://www.nytimes.com/2014/04/23/upshot/the-american-middle-class-is-no-longer-the-worlds-richest.html?smid=tw-upshotnyt&_r=0


This has more to do with the US failing than anything Canada is doing, I think.  What's really hurting the US is the decline of the working class. The lowest 5% have actually seen their incomes drop in the last 30 years.

[RogueBeaver]

Woot.

[Lurker]

Wow. The numbers for the poor are pretty terrible - even without considering that this way of measuring probably benefits the United States.

[Smid]

But Trudeau says the middle class has been falling further and further behind under Harper...

[jaichind]

While I agree with the trends indicated in the report, I think it exaggerates the relative decline of USA medium income at the lower percentiles when compared with other advanced economies.  There are two methodological disagreements I have with the report.  

First, it seems to just to do all calculations in 2005 US dollars which I agree correctly factors in inflation.  My problem is that is does not try to adjust for shifting PPP prices between the regions of comparison.  Since the report is focused on 1980-2010 I will use 1980 and 2010 as a frame of reference. Since a lot of the countries being compared to USA in this report are in the Eurozone I will use EUR as a way to show I am talking about.  The average CPI of the USA in 1980-2010 was 3.6% while the average CPI of the Eurozone in 1980-2010 was 4.1%  But if one looks at the EUR/USD exchange rate in 1980 and compare it to 2010 (we can compute the de facto EUR rate in 1980 by using the components of various currencies that merged into EUR) we find that the rate was 1.42 in 1980 and 1.32 in 2010. So EUR strengthened 8% against the USD in 1980-2010 while its rate of inflation was actually higher.  In order words income in Eurozone in 2010 which is in EUR but then converted to USA using the exchange rate is exaggerated relative to 1980 by around 25%.  So while this does not change the fact that the high income earners in USA gained more when compared to other advanced economies relative to the low income earners, the claim that the USA low income earners lost ground in absolute terms when compared to other advance economies is most likely true but the size of the ground lost is exaggerated in the report.  

Second, this report is based on using households comparisons.  Again, USA birth rates last 30 years are significantly higher than the Eurozone and Japan.  So any comparisons of per capita disposable income would bias the results since USA households would have more non-income earning children in them.  To be fair, this report tried to take this into account by using  equivalized income as well where they claimed they found similar trends.  But they did not publish the absolute numbers of comparison for equivalized income.  I suspect that if published it would show that the gap between US lower income households and those of other advanced economies is not as large as this report suggests.  Also even equivalized income still counts partially non-income earning children. Since the report focuses on the fact that the drivers of this decline of the USA lower income household has to do with the fact that lower income earners lost ground to corporate profits (I agree with this) and lower educational attainment (not sure about this one) the best way to measure this is to measure household income for comparison would be per capita working age adult income.  That would filter out any biases due to different economies having different birth rates.

All in all, I agree with the trends indicated by this report but feel strongly that the USA lower and middle income households still compare quite favorably with other advanced economies even if it is less favorably than in 1980 and a less favorably than USA high income households.

[dead0man]

OMG!  We've got the second best middle class in the world...WHAT ARE WE GOING TO DO!?

[John Dibble]

OMG!  We've got the second best middle class in the world...WHAT ARE WE GOING TO DO!?

Invade and annex Canada, of course.

[AkSaber]

OMG!  We've got the second best middle class in the world...WHAT ARE WE GOING TO DO!?

Maybe quit doing the things which are rotting the middle class? That's just my solution. (ending the war on drugs and the mass incarceration which goes along with it, foreign interventionism, wars of choice, maintaining our empire at any cost, subsidies/bailouts/tax breaks for corporations, banks, billionaires)

But who am I kidding? The middle class has been brainwashed into thinking they must have these things in order to sustain themselves.