The American Middle Class Is No Longer the World’s Richest

http://www.nytimes.com/2014/04/23/upshot/the-american-middle-class-is-no-longer-the-worlds-richest.html?smid=tw-upshotnyt&_r=1

by jbardnz • 12 years ago

165 194 12 years ago

nytimes.com

remon2• 12 years ago

Doesn't comparing income after tax make it a bit of an apples and oranges comparison to begin with? Those taxes don't disappear. Those taxes buy services (national healthcare and free education comes to mind) that US middle class citizens would have to pay for with their net income. Would be interesting to see a quality of life comparison (if such a thing can be reliably quantified)

jnbiche• 12 years ago

Agreed. So the actual situation in the U.S. is actually worse than it is portrayed here -- which is already not a pretty picture.

twoodfin• 12 years ago

It's really not that bad. The U.S. / French per capita difference in 2010 looks to have been about $5000, if I squint at the graph. That's $20,000 after taxes for a family of four. U.S. out-of-pocket costs for health care[1] and education[2] aren't nearly that high, especially if, as the article claims, they're only counting real cash income and not employee-paid health premiums and other benefits.

[1] http://www.bls.gov/news.release/cesan.nr0.htm

[2] https://www.salliemae.com/assets/Core/how-America-pays/howam...

mcv4• 12 years ago

Excellent point. So while the US middle class seems to be one of the richest in the world according to the graphs, they're actually doing a lot worse than that, due to the lack of government services.

a8da6b0c91d• 12 years ago

I think when you factor in purchasing power parity it goes the other way. Food and non-coastal housing in the US is pretty cheap.

Also, it's much cheaper to live well in a certain style in the US away from the coasts than in Europe. Bubba has a large house, two trucks, a few acres of land, ATVs, a hunting cabin, and hunting licenses. Francois has a small house, pretty much no land, and a single small sedan. Francois might make more money in absolute terms but Bubba would never agree to swap.

bertil• 12 years ago

There is no “before tax” values for any other similarly wealthy country: tax data collection elsewhere is done after most taxes, actually significantly more tax, that pay for free and better public education, free and better healthcare, etc. In anything, an after tax over-estimates US middle class wealth compared to Europe and Canada.

vaadu• 12 years ago

Free education? That only comes by learning from other people's mistakes. If a classroom and professional teachers are involved it's anything but free. They cost big bucks.

danbruc• 12 years ago

School and university are free, i.e. already paid with taxes, in Germany. The same goes for health care, although it is technically not a tax.

viraptor• 12 years ago

Free, as in everyone paid for it collectively (via taxes) and you don't need to pay directly to the college/university anymore. Not free as in noone pays.

Avshalom• 12 years ago

They are paid for by tax, the graphs however are post tax.

saalweachter• 12 years ago

National healthcare and free education? What country are you talking about again?

flexie3• 12 years ago

Exactly. The income includes retirement and unemployment benefits but doesn't include other public benefits such as public healthcare, public education, public transportation. Being "after tax" it discounts for taxes that are usually higher in Europe but it doesn't discount for expenses that Americans generally have to pay with their income after tax but which many or most Europeans pay via tax (or don't have to pay at all) such as health care, college, third or fourth family car, higher cost for religious activities, higher cost for litigation, higher cost for private security etc.).

It is difficult to make good comparisons without taking the public spending into account or deducting for the part of the private income that Americans must allocate to expenses that are paid over the taxes Western European countries.

For most Europeans the value of free or almost free public benefits such as public healthcare, public education (from kindergarten to university), public transportation, low crime rate etc. is substantial.

Having lived in three European countries (Scandinavian, Iberian and now in the Balkans) and in the US (New York) I have maintained for years that American median wealth seems smaller than Western European wealth and that there is a huge public investment backlog in the US: Roads, airports, subways, railroads, hospitals, schools etc. is very outdated in many places (probably because much of it was built decades before similar infrastructure in Europe).

In America I felt like we would have to struggle just to make it into what felt like "middle class life". In Western Europe middle class life is a base from where people build their lives.

the_watcher• 12 years ago

So is the correct way to look at "middle class wealth" to take top line incomes and then determine a list of "middle class services" and then subtract the average cost paid for those services in each country? This has long been a pet peeve of mine in country v. country comparisons.

icebraining• 12 years ago

"Iberian"? We're two countries, you know. And I wouldn't say middle class life is the base here in Portugal, especially since the crisis hit hard.

mynewwork2• 12 years ago

To counter your anecdote with my anecdote, I've observed the complete opposite.

An American professional will easily afford a car (and two cars for a 2-adult household), will be able to go out to lunch regularly and go out to dinner when they please. If they want to see a specialist for a medical issue they'll have an appointment in a day.

A Danish professional may not have a car at all for a few years out of college and will likely struggle to have a second car for their partner even as a senior-level employee. They will bring their lunch every day and rarely if ever go out for dinner. Their medical issues will take weeks or months to be seen if deemed non-emergency and they'll have less choice in which doctor they see.

It's probably easier to be at the bottom of society in western Europe than in the US, but for anyone in the American middle class their quality of life would go down substantially if the moved to Scandinavia.

ry0ohki3• 12 years ago

But then I suppose you'd also need to compare the quality? Is the free healthcare paid for taxes as good as the paid healthcare after taxes? I'm not saying it is or it isn't, just makes it hard to compare. If someone doesn't take advantage of the free education what then?

Also so much of US taxes goes to military, which countries like Canada benefit from, in a sense our military spending subsidizes Canadian healthcare.

phillmv2• 12 years ago

That argument might've held sway prior to the collapse of the Soviet Union, but I don't think that's been true for the past 25 years :).

steve_benjamins2• 12 years ago

Most Western countries (not Canada) have opposed the last few major American conflicts, so "subsidizing" is an awfully generous way of putting it.

terrywilcox• 12 years ago

"in a sense our military spending subsidizes Canadian healthcare"

In the nonsense sense, yes. Your military spending subsidizes American defence contractors, who subsidize American politicians.

"Free" healthcare beats no healthcare. In 2007, 33 million Canadians had "free" healthcare. In 2007, 45.7 million Americans had no healthcare. It's nice to see Obamacare getting people coverage.

Rather than try to spin the story to make America look good, it would be more constructive to consider why America is declining and what it can do to reverse that trend.

In the software world, we're better at fixing bugs when we stop calling them undocumented features. That philosophy can work in the real world too.

vidarh5• 12 years ago

The WHO tends to rank US healthcare quite poorly compared to most other developed countries. Last report I saw, it placed around 37th place worldwide, and pretty much all of the countries above the US have universal, government funded healthcare systems.

It's worth pointing out too, that the US government actually pays more per capita for healthcare than most governments that provide universal healthcare, so US taxpayers pay more and need private insurance..

yequalsx• 12 years ago

This claim is only true if Canadian military spending were to increase if the United States decreased its military spending and if such increase in Canadian military spending came at the expense of its healthcare spending. Do you have evidence that this is the case? In the 90s there was a downsizing of the U.S. military. Did Canada correspondingly increase it's military spending? I don't know but I doubt it.

Given that the U.S. healthcare system ranks behind many countries with public healthcare and that the U.S. spends way more as a percent of GDP on healthcare than any other country it's quite reasonable to believe that taxpayer healthcare is as good as paid healthcare after taxes and is cheaper.

mildtrepidation• 12 years ago

Would be interesting to see a quality of life comparison (if such a thing can be reliably quantified)

The fact that it can't be reliably (more specifically, objectively) quantified is why we see so many nearly-worthless income comparisons instead: The content mill has to run, and less responsible journalists are often happy to print arbitrary crap masquerading as information rather than tackling hard topics with hard work (or just accepting that some things can't be accurately compared and moving on to things they can actually address in a meaningful way).

netcan• 12 years ago

The absolute comparisons of "inflation adjusted, PPP adjusted, after tax" income is hairy. But the directions of change should be still useful.

The US is still flatter.

VLM4• 12 years ago

The trend over time is still a story. WRT services provided, the USA has not advanced (very much) and the rest of the world has not backslid (very much), so its a fair comparison over time.

Also even if the perfect median Canadian vs the perfect median USA is open for debate, for absolutely everyone below median, the graphs indicate its a virtual certainty they'd be better off emigrating out of the USA.

Spooky232• 12 years ago

They do from my perspective.

I live in New York. I have a $200k house with over $6k in taxes, most of which for schools and public safety. Educational programs are flat or being cut, but employee expenses have ballooned over the last 10-15 years. The fully loaded cost of a $80-100k teacher includes about $25k in pension contribution, $15-20k in healthcare, etc. For the police/fire department, it's even crazier (they have 20 year retirement)

My personal experience is better than most. We have a good household income, and I've been promoted a few times in the last 10 years. On average our household compensation increases by 7%.

But... my net spending power is flat or down a little. Why? Property taxes up 30% since 2006. Health insurance up 150%. Food up ~30%. Utility bills up 50% (NY fail).

Iv• 12 years ago

When I started looking for a job hey told us, at my French university, that I should aim for 50% to 100% more salary in US for the same "life standard". Having to pay for your kids education and for every medical act quickly adds up.

refurb5• 12 years ago

That's a bit of hyperbole. Yes, if you want your kids to go to a top private university, be prepared to pony up $200K. However, if you want them to go a state school, it's MUCH less.

And in terms of medical costs, for most people, private insurance covers a vast majority of medical expenses.

unclebucknasty• 12 years ago

Doesn't comparing income after tax make it a bit of an apples and oranges comparison to begin with?

True. OTOH, as long as they are using the same measure as before, then the report has meaning on a relative scale.

Would be interesting to see a quality of life comparison

This would be interesting. I would like to see one world-wide (for instance, Americans may have been wealthier than Europeans for decades, but we also work harder).

It is hard to quantify, but even the comparison of a subjective measure of overall contentment could be revealing.

edj• 12 years ago

Would be interesting to see a quality of life comparison (if such a thing can be reliably quantified)

The Economist attempted to quantify quality-of-life and rank nations using the metrics they developed [1]. Their quality-of-life index is a bit out of date - almost 10 years old now - but interesting nonetheless.

1: https://en.wikipedia.org/wiki/Quality-of-life_Index

remon2• 12 years ago

That seems a questionable measurement. In their reasoning quality of life goes up if a "variable taking value 1 if country has either high rate of church attendance or trade-union membership" goes up. There is not a developed country in the world where church attendance or trade-union membership is going up. That said, interesting read.

cpwright• 12 years ago

My takeaway: our median income is still higher than pretty much everywhere except Canada, which has caught up with the US.

jebus989• 12 years ago

Hey yeah when you ignore all the results for the 50% of the population below the median, things look pretty rosy! USA USA!

mhurron• 12 years ago

And of course the size of your take home check is all that matters. It doesn't matter that you then have to pay for a number of services that other parts of the world paid for with their pre-tax income.

pessimizer2• 12 years ago

As long as you never get sick, lose your job, or go to college.

cylinder7• 12 years ago

What about after-tax median income after student loan payments and self-purchased health insurance? What about all the monthly payments the rest of the developed world gets to support their raising of children in the middle class? What about the costs of transportation that are imposed on Americans when their European counterpart takes subsidized rail to work?

mcv4• 12 years ago

According to the graphs, the US middle class is actually still doing pretty good. I was expecting it to do a lot worse than that of many European countries, but there's only a few countries that have overtaken the US middle class, and then just barely.

Puts all those articles about the weak US middle class in perspective.

The real travesty is at the bottom. The worst 10% are actually doing worse now than 30 years ago. The few groups above that didn't benefit at all from the enormous economic growth of the past decades. The extreme growth of the wealthiest 10% is simply outrageous by comparison. But the middle class isn't doing quite as badly as I expected.

rayiner• 12 years ago

Simply tying some European countries isn't really that great a performance when the U.S. is so much more productive overall. For example, our PPP GDP per capita is 20-25% higher than Canada's. So if Canada edges us out in terms of median income, even just barely, that's not a great showing.

rbehrends• 12 years ago

Well, it's necessary to remember what GDP actually measures, and that's the sum of all economic transactions. This does not necessarily make a country richer or improves its quality of life. For example, if the US healthcare system operated on the same level of efficiency as the average European one, the US GDP would instantly shrink by at least 5% (probably quite a bit more). There are lots of things that the US does inefficiently (not always a bad thing, some inefficiency is the price of freedom).

As Robert Kennedy once put it:

"Too much and for too long, we seemed to have surrendered personal excellence and community values in the mere accumulation of material things. Our Gross National Product, now, is over $800 billion dollars a year, but that Gross National Product - if we judge the United States of America by that - that Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children. Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile. And it can tell us everything about America except why we are proud that we are Americans."

viggity• 12 years ago

The extreme growth of the wealthiest 10% is simply outrageous by comparison

Is the bottom decile worse off because the top decile is better off? I don't think so, I think everyone is better off with Gates, Jobs, Page, Brin making tons of money. Wealth is not a zero sum game. Don't get me wrong, I want to see a world where everyone can support themselves and provide for their families. I just don't think having super rich people prevents that from happening, I think it is just the opposite. The Gates Foundation is a million times more effective than any gang of UN Bureaucrats.

swalkergibson2• 12 years ago

Well, if you consider that the top decile is the reason why American factories close up shop and all of the bottom decile loses their jobs as a result of cost-cutting measures by the top decile to increase their own bonus package, then yes, the bottom is worse off because of the top.

jsutton• 12 years ago

There are super wealthy who actually use their wealth to make the world a better place; then there are super wealthy who use their wealth to stack the odds ever in their favor, at the expense of everyone else.

Unfortunately, it seems most of the super wealthy are part of the latter group.

jaegerpicker• 12 years ago

It's actually a good bit worse than the article makes it out to be because it's after tax income. Almost all of the European countries that have been gaining on the US have substantially more services paid for by their tax dollars. So their income is far less stressed than in the US.

RivieraKid3• 12 years ago

I was expecting it to do a lot worse than that of many European countries

I would say that the median quality of life is slightly better in western Europe. The charts compare income after taxes – but the taxes pay for services like free healthcare and free education (in some countries, you even get paid for studying).

Another important note is that Americans work more hours per year.

pdonis• 12 years ago

The worst 10% are actually doing worse now than 30 years ago.

But that is largely due to the fact that the bottom 10% are more likely to be new immigrants now than they were 30 years ago. If you correct for that, by only doing the comparison with the same pool of population (people who lived here 30 years ago or their descendants), the inequality is quite a bit smaller.

abrahamsen• 12 years ago

I agree. The middle class of other parts of the world catching up to rising US[] is a good thing from any perspective except for the most cynical realpolitik subscribers. Even from a pure US centric point of view, it provides a larger market for US goods.

However, the poor doing worse than 30 is really bad. Even if you believe that a high gini coefficient is needed to encourage upward mobility, a falling living standard for the poor indicate that it is not working.

[] I'd really like to see the comparison in income after tax+education+health care. Health care and education is more or less mandatory for the middle class, and the details of how it is financed (tax, savings, insurance) shouldn't affect the comparison of living standard.

mcv4• 12 years ago

Even if you believe that a high gini coefficient is needed to encourage upward mobility, a falling living standard for the poor indicate that it is not working.

Yeah, social mobility in the US is pretty low nowadays. I don't have any numbers at hand, but wasn't there a recent story on HN about how most European countries had more social mobility than the US now?

Trickle down doesn't work. Money flows up. The poor spend it immediately (because they need it to pay for stuff they need but can't buy, which is what makes them poor), whereas the rich can afford to hoard it.

ddoolin• 12 years ago

I had no idea that the bar for middle class was so low. Most of us here are nowhere near middle class status. Not that it matters, but before now I would've considered myself and most of us to be.

pmorici• 12 years ago

Outside of the handful of major metro areas you can get a respectable house for around 100k and a really nice one for perhaps 200-300k. Can you even buy a trailer home in the Valley for 100k?

Edit: I went and looked on Redfin and most trailer homes in the valley go for quite a bit over 100k there are maybe 4 listings for trailers for 100k or less.

http://www.redfin.com/CA/Sunnyvale/1050-Borregas-Ave-94089/u...

nilkn• 12 years ago

Per capita income is per person. So if a family of four -- two adults and two children -- live in a neighborhood where the per capita income is $20k, then the expected income of that family is $80k. In other words, it counts children who don't even earn an income.

As such, median per capita income is always going to be considerably lower than, say, median HHI.

(Apologies if you already knew all this--I had to make a guess as to which figure from the article specifically you were referring to.)

smacktoward2• 12 years ago

In the US, the mean annual wage across all occupations in 2013 was $46,440. (Source: http://www.bls.gov/oes/current/oes_nat.htm#00-0000)

My experience is that most college-educated people don't really understand this, because they look at themselves and everyone they know and extrapolate their definition of "the middle class" from what that population makes, which skews their perspective considerably. So you get discussions about how people making $100,000/year or $250,000/year are "middle class," when statistically speaking they are very much not.

pessimizer2• 12 years ago

And the median is about $10k less than that.

The important thing I try to always remember is that it's the 'middle' class, not the center class. Civilization can't survive with mostly middle management and mechanics - somebody has to actually do something at some point, rather than designing something, directing something, or fixing something. The middle class is a buffer between the bulk of people who work with their bodies, and the tiny number of people who try to maximize the ratio of those people's output vs. their compensation.

The middle class has never characterized America, it's just the class that writes all of the characterizations.

eloisant• 12 years ago

Well, that's one thing about middle class: almost everyone think they're part of it.

emerod• 12 years ago

One useful economic definition of middle class is obtained by applying Frederick Strobel's distinction between those who are labor-dependent those who are capital-enhanced.

The middle class are the ones who fluctuate between the two categories: They have to keep working, but as long as they do, they have some surplus income. If they spend too much and go into debt, their surplus income goes away, and they have to work more.

This is useful because it explains how some can consider themselves to be "working class" or "middle class" and yet have income that is both above average and above median. They still have working class (or middle class) anxieties, mostly because of their local economy or their bad spending habits.

throwaway0010• 12 years ago

It's not. This article is using the "American" definition of middle class, which most others refer to as "working class." Conflation between what we used to call middle class, and what we call middle class today is a huge source of confusion in pop economics.

http://en.wikipedia.org/wiki/American_middle_class

lilsunnybee2• 12 years ago

And yet some of us only wish we could reach that bar. :-(

marincounty• 12 years ago

Wait until the divide between thee rich-middle/poor class becomes so great we turn into Mexico; where the rich are kidnapped while sipping coffee, and the police could care less.

The rich take so much for granted. By the way a lot of you tech guys are considered middle class now; but with the low barrier to entry of this world--I see a vast shift to the poverty level in just a few years.

theandrewbailey• 12 years ago

In the modern USA, the rich wield too much political power to be kidnapped and ignored by police. Also note that the USA doesn't have a severe gang problem like Mexico does.

And low barrier to entry? Maybe, but I keep hearing all the time about companies not being able to find the talent and experience in people that they need/want.

smacktoward2• 12 years ago

The running gag from Archer springs to mind. "Do you want a severe crime problem? Because extreme income inequality is how you get a severe crime problem."

brohee• 12 years ago

USA doesn't have a severe gang problem only if you look the other way (which is easy to do, as wealth is, it isn't distributed equally). Those Mexican gangs all have subsidiaries in the USA for a start...

Violence in the USA is not on the civil war level of Mexico, but still three times the level of neighboring Canada... See e.g. http://en.wikipedia.org/wiki/List_of_countries_by_intentiona...

thecolorblue• 12 years ago

Not that I have many facts to back this up economically, but I think at some point the top percentile have invested interest in either paying the bottom percentiles more or making it easier for them. Everyone at the top 10% somehow relies on the other 90% to consume something they create. Look at what Henry Ford did to pay his workers more, in the hopes they would buy their own Model T. Buy I'm an optimist, so add salt to taste.

petilon• 12 years ago

Canada's more liberal immigration policy, which is attracting educated and highly skilled immigrants, may have something to do with their doing so well. Over time the average education level and IQ of Canadians should end up higher than Americans.

Thankfully the US still attracts the very best immigrant entrepreneurs, such as Elon Musk.

randomdata2• 12 years ago

Canada does not have a strong entrepreneurial culture, however. While there is a fairly new program for startups, the immigration policy is generally geared towards bringing in people for traditional jobs, which tends to have the opposite effect on incomes.

What did happen in the mid-2000s was a rise in commodity prices. By 2010 we were seeing record high prices for some commodities. Commodities are what Canada does and it stands to reason that incomes for everyone will tend to rise as demand for extracting those commodities increases.

Marcus316• 12 years ago

I'm not sure how true this is anymore. There have been numerous changes in the last decade that have made the environment very entrepreneur-friendly. It's still a mixed bag, true ... but things do look like they're on an upswing here. Link below is to a 2013 report (Canada at a glance)

http://www.ey.com/CA/en/Services/Strategic-Growth-Markets/G2...

mpg33• 12 years ago

Canada does not have a strong entrepreneurial culture, however.

I agree..also we do not have the same level of capital available to fund new ideas.

However I think that the longer the internet is around which allows (for the most part) the same ideas, information and tools to everybody the less cultural differences are going to matter as everything is becoming border-less and super competitive...the only differences will be languages and local regulations.

eumenides1• 12 years ago

I think it would be better to break up the data into a per state comparison with Europe countries. I think of the states as vastly different from state to state. NY vs Florida for example.

CalRobert• 12 years ago

It would be interesting to see these graphs for discretionary income, or at least income compared to cost of living. I moved to Europe and part of that means I no longer need to own a car, saving a good deal. I also find I spend less on energy and rent (but perhaps that's because I lived in very expensive places in the US before; the bay area and Santa Monica). I _feel_ much wealthier than I was before, but I wonder how much of that is due to lower overhead? Would the average person experience the same?

codegeek• 12 years ago

"Median per capita income was $18,700 in the United States in 2010 (which translates to about $75,000 for a family of four after taxes), up 20 percent since 1980 but virtually unchanged since 2000, after adjusting for inflation. "

This is incredible. Since 2000, there is no increase in median per capita income after adjusting for inflation ? Statistics like this bring in the 1% question at times and the comparison between the really rich and the rest of the population.

antidaily• 12 years ago

Indeed. And it's not like profits aren't waaay up. http://i.imgur.com/gs8WsLk.png

nasmorn• 12 years ago

Also multiplying the median income by four seems absurd. My children certainly don't bring home the bacon like that. I seriously doubt that the median family of fours income is anywhere near 4 times the median personal income.

pinaceae• 12 years ago

and why should it be the richest? anything special about it being "American"?

i would wager the the stats aren't the full truth. it lists german middle class below, which is hilarious - income alone doesn't mean shit in countries with top notch public infrastructure and well organised health care. that US middle class family needs to pay health insurance on top, if their kids want to go to college an ever increasing tuition, pretty likely need multiple cars to get anywhere and have less vacation time.

if more US citizens would travel their view on how much they're getting ripped off would change drastically. US immigrants from india, china, africa still get an improvement, but for northern Europeans, incl the Swiss, Austrians, moving here is a step down in a lot of factors.

"world's richest" - haha.

pradocchia3• 12 years ago

if more US citizens would travel their view on how much they're getting ripped off would change drastically.

For many Americans, especially the richer ones that can afford a trip to northern Europe, it would be a case of cognitive dissonance: "gosh everything is so nice here / here is not America / America is the best / I can drive my SUV in America / these Europeans are crammed into tiny cars / thank god I'm an American!" or whatever the chain of reasoning is that gets you back to "thank god I'm an American!" from the world-crushing "gosh everything is so nice here".

Roboprog• 12 years ago

Germany had to re-assimilate East Germany during the time of the graphs, as well. I suspect that accounts for the downward spike and then recovery in their incomes.

VLM4• 12 years ago

I have occasionally thought, not kidding either, that the only hope for the future for most Americans is being invaded by Canada, perhaps after one of our periodic financial collapses.

Other than the Hockey and Poutine thing, I can't imagine the general public having anything to complain about in that scenario.

simon_• 12 years ago

The gap between the US and the rest of the West is clearly (if you look at the charts) closing due to rapid catch-up growth from the others, not decline in the US.

Wouldn't it be kind of odd if the rest of the developed world did not catch up to US lifestyle standards with the spread of technology and capital?

dragonwriter6• 12 years ago

The result here is pretty interesting, but the characterization ol of being about the middle class is wrong. Median income doesn't define middle class, middle class is generally defined as elite workers (professionals and executives) that are still primarily workers rather than capitalists. Median income workers are generally working-class, not middle class.

humanrebar3• 12 years ago

Middle-class is a fuzzy concept, but more-or-less of half of Americans consider themselves middle-class or upper-middle-class.

http://www.gallup.com/poll/159029/americans-likely-say-belon...

dragonwriter6• 12 years ago

Yeah, but the days where that was arguably even approximately true -- when a majority or something reasonably close to it of Americans were in middle class (as well as professionals and executives, yeoman farmers -- a formerly very common thing in the US, but now vanishingly rare -- are part of the middle class -- as are others whose primary support is independent business that they own but which is still dependent on their labor [if it wasn't, they'd be straight-up upper class capitalists]) -- are past. Now, most of the Americans who identify as middle class are working class whose identification reflects aspiration rather than reality.

logicchains• 12 years ago

It's interesting that the graphs there exclude a few countries with higher GDP per capita than the US, such as Switzerland, Hong Kong and Singapore. I imagine the numbers for the US would look less favourable if such comparisons were made.

kfcm• 12 years ago

If this is truly the case, then we in technology must take much of the blame.

Over the past 30 years--even the past 15--automation of tasks which were once done by people in the lower-to-mid tiers of the middle class. Word processors have replaced secretarial pools. Robots have replace assembly line workers. Self-service web-sites have replaced data entry clerks. "On-line" (web, e-mail,etc) have replaced tellers, postal workers, etc.

I know I'm personally responsible (due to proposing and implementing automation projects) for replacing over 1500 people since 1995. Is this a good thing or a bad? I don't know. The Industrial Revolution killed off craftsmen, but created millions of other jobs. The question is, what will the Technology Revolution leave in its wake?

So before we start pontificating on taxes, social welfare programs, and ever increasing calls for "wealth distribution"--remember to look in the mirror and ask how many people's jobs have you eliminated today?

humanrebar3• 12 years ago

If this is truly the case, then we in technology must take much of the blame.

Except technology also saves lives, keeps people connected across large distances, makes work safer, democratizes creativity, and innumerable other benefits.

The Industrial Revolution also killed off farm jobs and many domestic jobs but baling hay by hand and scrubbing laundry with a washboard are certainly steps backward.

If the problem is that some workers cannot earn a living, then let's look a policies that solve that problem directly (like a more aggressive earned income tax credit).

Zigurd• 12 years ago

Police, prisons, prosecutors, parole officers, TSA, ICE, etc. are all part of our GDP. A lot of those jobs have replaced factory jobs, yet what do they produce? Is that really a contribution to the economy, or does our GDP number contain a lot of economic drag masquerading as "output" and "productivity." And then there is the size of our military. All that is supposedly a contribution to GDP and a positive element of productivity.

Are there alternative economic output measure that count that stuff as deadweight?

steve_benjamins2• 12 years ago

As a Canadian, I would like to suggest an alternative title :)

"The Canadian Middle Class is Now the World's Richest"

RivieraKid3• 12 years ago

Another thing besides taxes that the analysis doesn't take into account is that Europeans work less.

ThePhysicist• 12 years ago

Comparing income after taxes doesn't seem very useful to me: In many countries, especially in Europe, things like health insurance, schooling and universities, pension and many more are "included" in the taxes you pay, so even if the available income in USD is lower, the effective purchasing power will probably be on par or even higher in my opinion.

Also, these income comparisons don't take into account that Europeans usually work much less than Americans: In Germany and France most employees only work 30-40 hours per week, and have usually at least 30 days of paid vacation per year.

I wonder if there are studies that try to take these things into account.

cylinder7• 12 years ago

I think the article should have compared the US with the Australian middle class, as it would be more relatable to Americans. Australia has the lowest tax burden amongst developed countries, a fair, means-tested welfare system that targets those who actually need it, and a highly innovative, effective government that remains smaller than the US government. Australia strikes a good balance between capitalism and social welfare, IMO. Link to sources below[1].

And Americans, especially if they live in the northeast or California, pay very high income taxes, and get almost nothing in return compared to other developed nations. We have to pay high university tuition in cash, and don't get healthcare, either. So keep in mind while an American will use that after-tax income to pay back student loans and purchase expensive health insurance (self-employed, anyone?), the Australians and Europeans et al aren't.

[1] How Australia's Low Tax Egalitarianism Confounds the World : http://www.cis.org.au/images/stories/policy-magazine/2010-su...

17Crash• 12 years ago

This has always confounded me why people like to point to Europe as the best example for free social services. When in fact, both political parties here could be looking at Australia for their talking points.

I agree that Australia seems to have a very good balance of capitalism and social welfare programs.

bernardom• 12 years ago

The graph/animation of inflation-adjusted after-tax income over time by percentile is one of the nicest data visualizations I've ever seen. Simple, pretty, descriptive.

Dewie3• 12 years ago

Another America-not-best-at-something,-what-a-travesty. Somewhere out there, there is a bald eagle crying his salty, manly tears.

rm999• 12 years ago

How much of this can be explained by exchange rates, i.e. the falling US dollar vs other major world currencies in the last 10-15 years? Those plots are all in US dollars, so I would expect if all else is equal that non-US salaries would go up just from that.

I'm not an expert on this stuff, is the falling exchange rate in any way a symptom of the underlying issue, a cause, both, neither? Everytime I try to reason through exchange rates and the world economy I get a headache.

yukichan• 12 years ago

I'm not sure why being #1 is so important. Who cares where our position is in the ranks as long as we are happy with our state. If we aren't happy we can make improvements, but again it's not a race so how we compare to others doesn't really seem significant unless we are far behind. I suppose the real significance is the trends, but I guess that doesn't strike at the heart strings of the common person as losing at some newspaper editor's arbitrary rules for a game nobody knew we were playing.

refurb5• 12 years ago

I think measuring income using the median income is too blunt.

So if the distribution for the US looks like this:

$10K, $20K, $30K, $50K, $100K

And another country looks like this:

$10K, $20K, $40K, $50K, $60K

We're going to say the US is "poorer"?

randomdata2• 12 years ago

The people in the middle are still poorer in your example. The article doesn't suggest the richest Americans are poorer than the richest people in other countries.

refurb5• 12 years ago

My point still stands. I wouldn't define the "middle class" as the median salary. It's a band around the median. Throw in a couple higher salaries just above the median and a country could have a wealthier middle class, but the median is lower.

zwieback• 12 years ago

I'd love to see a comparison between the U.S. and all of Europe. In a way Greece and Spain are the European version of our lower income brackets. There's no real equivalent of our upper 1% in Europe but I think Americans would be complaining a lot less if the distribution at the bottom was fairer.

hoggle6• 12 years ago

I urge people to check out Sweden once in their lives, it's such an open and fair place in comparison to most countries in the world. Even though I'm reading a lot of anarcho-capitalist theory recently (yes, because I like Bitcoin) I still believe all of the liberals miss (or subconsciously omit?) some fundamental social truths which the Swedes seem to recognize pretty consciously.

Justonequestion• 12 years ago

Could you give some examples of the social truths? I'm not saying you're wrong, but I'm finding myself becoming less and less liberal and want to know what exactly you're talking about.

hoggle6• 12 years ago

To me it ultimately boils down to fairness and having a sense of "being in this together". A very good example to me is the firefighter mentioned in the article, he probably does a much more productive job (saving lives) than someone like myself who might get lucky in playing the entrepreneurial / technologist bootstrapping game by striking it rich with some cost-reducing / profit-boosting tool-building. Alas, it's problematic to make these kind of comparisons though (you could argue some tool saves even more lifes, etc).

The "smells" of extreme ideology..

In any case I still believe it's fair to try to spread the wealth more evenly as you and I couldn't even build stuff without the solid framework of society.

I answered your question somewhat in another comment in this article's thread:

https://news.ycombinator.com/item?id=7628811

alexeisadeski3• 12 years ago

I see many comments pointing out that European nations spend more on public benefits like healthcare. This is demonstrably false. The US gov't spends more on healthcare - per taxpayer - than do European nations.

The US government is simply extremely inefficient and wasteful. But the money is spent.

Here's a chart. Note that in the US, public health spending accounts for 45% of total health spending:

http://en.wikipedia.org/wiki/File:Total_health_expenditure_p...

The American Middle Class Is No Longer the World’s Richest

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