Incredible data from the LIS, an organization that maintains the Luxembourg Income Study Database, has confirmed that the United States no longer has the wealthiest middle class. According to in-depth statistics spanning back to the 1970s, the middle class of one of the richest nations has finally sunk lower than its economic counterparts.
While the U.S. continues to outpace others in economic growth, the problem is where that money seems to be concentrating. Median income in Canada is already projected to surpass the U.S., and countries trailing continue to improve faster. The gap of income inequality is beginning to yawn wider in the United States, and is now beginning to swallow the middle class.
For the poorest in the country, however, this has been a cold reality for decades. Over the past 30 years, families in the lowest percentiles have actually seen a decline. As of 2010, the only country measured with poorer citizens in the fifth percentile of income distribution was Spain. Even at the 20th percentile, the United States is now behind Canada, Sweden, Norway, Finland and the Netherlands, five countries that trailed the U.S. in 1980.
However, the most breaking story is right at the median—the very middle class. For the first time, the burgeoning 50th percentile of Canada is intersecting, and likely already surpassing, the deflating middle class of the U.S. After being adjusted for inflation and taxes, the income of the middle class seems to have been stagnating for the past 10 years while other developed nations continue to grow.
Bear in mind that while all of this decline is occurring in the bottom 50%, the richest in the U.S. have maintained a comfortable lead among wealthy countries. It is a lead that, not surprisingly, is even more comfortable among the very highest earners. but this is now a luxury of the minority for the first time in history. As Harvard economist Lawrence Katz stated:
“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…1960, we were massively richer than anyone else. In 1980, we were richer. In the 1990s, we were still richer.”
The concrete reasons behind these changes and trends may be debated, but certain characteristics are clearly visible. One is that the wealthiest citizens of the U.S. make and expect more money than the wealthiest of similar countries. Only exacerbating this problem is the United State’s notorious unwillingness to help the poor and destitute, as illustrated in the bottom 5%.
It is in this way that the candle continues to burn at both ends economically. One has to wonder if Canada will be the last country to surpass the middle class of the U.S., or if the flood waters of American poverty are just beginning to reach their feet.
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