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2nd-class middle class?

In mid-income tiers, U.S. not No. 1 anymore

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 during 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.

The numbers, based on surveys conducted during the last 35 years, offer some of the most detailed publicly available comparisons for different income groups in different countries over time.

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

Median income in Canada pulled into a tie with median U.S. income in 2010 and most likely has 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.

In European countries hit hardest by recent financial crises, such as Greece and Portugal, incomes have, of course, fallen sharply in recent years.

The income data were compiled by LIS, a group that maintains the Luxembourg Income Study Database. The numbers 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.

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.

The findings are striking because 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. But those numbers are averages, which do not capture the distribution of income.

“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,” said Lawrence Katz, a Harvard economist who is not associated with LIS. “In 1960, we were massively richer than anyone else. In 1980, we were richer. In the 1990s, we were still richer.”

That no longer is the case, Katz added.



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