The New York Times commissioned a data study, by the Luxembourg Income Study Database, that shows The American Middle Class Is No Longer the World’s Richest. Our middle class income growth appear to have stagnated while other countries around the world have been catching up. This study shows our middle class has been surpassed by Canada as the most affluent in the world, with several others on a trajectory to pass us soon. David Leonhardt and Kevin Quealy write:
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.
After-tax 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.
This data covers a period of 35 years, suggest "most American families are paying a steep price for high and rising income inequality."
Although economic growth in the United States continues to be as strong as in many other countries, or stronger, 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 and has most likely surpassed it since then. 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.
This study also find that middle class incomes in Greece and Portugal have fallen sharply in recent years, providing information useful to the debate on austerity versus stimulative economic policies.
The income data were compiled by the Luxembourg Income Study Database and has been formulated into a family of well displayed and copy protected plots in this New York Times article which is worth a read.
The poor in the United States have fared even worse than the middle class. The NYT reports that a family at th 20th percentile of income distribution in the U.S. makes "significantly less" than "similar families in "Canada, Sweden, Norway, Finland, or the Netherlands," when 35 years ago "the reverse was true.
Perhaps, this last paragraph should have been the headline. It supports much of the impression we've canned in the discussions of the minimum wage, and those calling our attention to the growing disparities in income and asset inequality in the United States.
11:11 AM PT: Thanks to Laurence Lewis for this link to this Mother Jones article showing the American rich getting richer.
Report: The Rich Are Now Richer Than Ever, by Erika Eichelberger.
The report found that the top ten percent of earners took in more than half of the country's total income in 2012, the highest level since the government began keeping records a hundred years ago, the New York Times reported Tuesday. The study, by economists Emmanuel Saez and Thomas Piketty, also found that the top one percent alone took in more than one-fifth of all income earned by Americans, the most since 1913.
From the NYT:
Meanwhile, the share of people with a job or looking for a job is at its lowest level since 1978, middle class wages are flat, and working-poor wages have dipped. More depressing details from the Times:
Mr. Piketty and Mr. Saez show that the incomes of [the 99 percent] stagnated between 2009 and 2011. In 2012, they started growing again—if only by about 1 percent. But the total income of the top 1 percent surged nearly 20 percent that year. The incomes of the very richest, the 0.01 percent, shot up more than 32 percent.
The new data shows that the top 1 percent of earners experienced a sharp drop in income during the recession, of about 36 percent, and a nearly equal rebound during the recovery of roughly 31 percent. The incomes of the other 99 percent plunged nearly 12 percent in the recession and have barely grown—a 0.4 percent uptick—since then. Thus, the 1 percent has captured about 95 percent of the income gains since the recession ended.