American Middle And Lower Class Now Lagging Canada, Europe

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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.



About the Author

Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)valuewalk.com