Better to be Poor in Europe than in U.S.; Better to be Middle Class in Canada than in U.S.

Sunday, April 27, 2014
(photo: Torrey Wiley)

Of the 16 teams that qualified for this year’s Stanley Cup Playoffs, only one, the Montreal Canadiens, is from Canada. The rest are from the United States, which some would say means Americans have beaten their neighbors to the north at their own game.

 

But Canada has outpaced the United States in a contest of which Americans always proudly declared ourselves the winners: whose middle class is faring best?

 

Median per-capita incomes in the United States and Canada were about tied in 2010 at $18,700 after taxes, but Canada’s figures have improved since then, according to The New York Times. This comes even though the United States is still the world’s richest country. However, increasing income inequality in the U.S. has caused median incomes to drop even as average incomes increase because of huge gains at the high end of the scale.

 

Poor people in the United States fare even worse, as they are far behind the median incomes of those living in Canada and much of Europe. A U.S. family at the 20th percentile of the income distribution makes far less money than a similar family in Canada, Sweden, Norway, Finland or the Netherlands. The income data were compiled by LIS, a group that maintains the Luxembourg Income Study Database and studies income levels worldwide.

 

Pay has risen much faster in Canada and Western Europe than it has in the United States. Even though U.S. companies are doing well, they’re not sharing the wealth with their workers. And the money Americans do have is buying less.

 

“The idea that the median American has so much more income than the middle class in all other parts of the world is not true these days,” Harvard economist Lawrence Katz told The Times.

According to a study by The Third Way, the costs of things those in the middle class are most concerned about, housing, health care, college for their children and retirement, are rising much faster than wages.

 

Educational attainment is rising at a slower rate in the United States now than in other nations, putting American young people behind in the race for technological jobs. And other nations are more aggressive about redistributing wealth to the less fortunate than Americans are, taxing the wealthy at higher rates and insuring better benefits for those with lower incomes.

 

Even Sweden, with its extensive social welfare system, has seen its per-capita gross domestic product grow faster than it has in the United States. Part of that growth is fueled by the large number of college graduates in Sweden, which allow that country to compete better for high-tech jobs.

 

Not all European countries are doing better than the United States, of course. Nations with weaker economies, such as Portugal and Greece, have struggled.

-Steve Straehley

 

To Learn More:

The American Middle Class Is No Longer the World’s Richest (by David Leonhardt and Kevin Quealy, New York Times)

The Four Middle-Class Tickets (Third Way)

Comparing Income by Country (by David Leonhardt and Kevin Quealy, New York Times)

Retailers Adjust to Rich Getting Richer and Middle Class Fading (by Noel Brinkerhoff, AllGov)

Comments

rosemerry 2 years ago
Not a surprise to anyone outside the USA. We in the civilised democracies(!) have health care for all, decent public education and housing, sick leave and holidays and maternity leave paid and a realistic minimum wage.

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