As US President Barack Obama is engaging in another free trade agreement in Asia – agreements accused of lowering wages for Americans and creating negative trade imbalances – the US middle class is, for the first time, losing its distinction as the wealthiest.
Lower salary increases in US
A New York Times analysis highlights the fact that lower- and middle-income categories have received noticeably lower salary increases over the last three decades when compared to their Canadian and European counterparts. Median income in Canada tied the US in 2010 and has most likely surpassed it since, the report stated, with Europe quickly catching up.
The report notes that the poor in the US are now significantly worse off than the middle class. A US family at the 20th percentile of the income distribution makes “significantly less money than a similar family in Canada, Sweden, Norway, Finland or the Netherlands,” reversing previous trends.
US Federal Reserve measures American wealth based on asset prices, not income
While the US Federal Reserve is said to measure wealth in terms of asset prices – the stock market and housing among them – many middle and working class families have missed this boat and depend primarily on their income to determine their wealth status.
The report highlights how a “small percentage of American households is fully benefiting from (US economic growth),” and that “most American families are paying a steep price for high and rising income inequality.”
The study was reviewed by outside academic economists and the income data were compiled by LIS, which maintains the Luxembourg Income Study Database. The numbers were analyzed by researchers at LIS and by The Upshot, a New York Times website, the report said.