
The American Middle Class Is No Longer the World’s Richest - jbardnz
http://www.nytimes.com/2014/04/23/upshot/the-american-middle-class-is-no-longer-the-worlds-richest.html?smid=tw-upshotnyt&_r=1
======
remon
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)

~~~
ry0ohki
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.

~~~
phillmv
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 :).

~~~
jerf
No, it's certainly been true. Many world economics have avoided military
buildups by piggy-backing on the back of the US buildup. In fact I've seen
credible arguments that it has actually contributed to world peace
significantly to have the US building up the way it has, yes, even despite the
wars the US sometimes engaged in, by making it not worth it for anybody else
of significant size. The rule about "democracies not going to war" may in fact
have been false... it may merely have been Pax Americana happening to coincide
with a lot of democracies.

As America becomes "enlightened" ( _heavy_ scare quotes) and withdraws its
military umbrella, a strange world is left behind... how does Europe feel
about having effectively no military with which to counter Russia's growing
imperial ambitions? It's officially all smiles (or forced grins) while they're
stuck depending on Russia now, but I'm sure wheels are spinning behind closed
doors even now. If the US elects another President with ambitions to back off
the foreign involvement even more, or if the situation deteriorates enough
more on this one's watch, what are the odds that Europe has to start building
up? And how many other places will have to follow?

And how will a social-benefit-addicted continent react to having to fund a
military again? They certainly won't be able to maintain the current level of
social commitments everywhere.

Maybe the US shouldn't be enforcing Pax Americana depending on your own
personal values, but don't think for one second it hasn't had its benefits
even outside of the US, and don't think that the end of Pax Americana is
somehow going to occur with a burst of rainbows and puppies, where we go from
one dominantly-powerful military to zero. The number can _only_ go up.

~~~
arethuza
"effectively no military"

That's a slight overstatement - the countries of the EU spend 38% of what the
US spend on it's military - which given the arguable massive overspend of the
US doesn't look completely unreasonable to me.

[http://en.wikipedia.org/wiki/Military_of_the_European_Union](http://en.wikipedia.org/wiki/Military_of_the_European_Union)

Now of course what Europe doesn't have is strong unified leadership in these
areas - which, given our history, is probably no bad thing although not the
greatest thing to have at the moment.

Russia spends less that the UK and France combined on defense:

[http://en.wikipedia.org/wiki/List_of_countries_by_military_e...](http://en.wikipedia.org/wiki/List_of_countries_by_military_expenditures)

~~~
jerf
The real difference between militaries is projection power. The US can
credibly project most of its power all over the world. The European military
certainly exists, but it's projection capabilities are greatly less than the
US', even on a per-dollar/per-Euro basis. It could defend itself against a
straight-up Russian attack (which is precisely why that will not be happening
anytime soon), but it leaves Europe without pieces when Russia is playing
chess on the world stage [1]. If Europe would be starting to assert itself
more thoroughly in the world, against credible threats, it would need to spend
a great deal more money to do so.

[1]: Diplomacy is not chess, but it has chess-like elements (along with the
poker-like elements). Trying to play diplomacy without the ability to threaten
anything, even with no real intent or prospect of following through on the
threat, leaves you with a proportionally much weaker portion.

------
mcv
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.

~~~
viggity
> 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.

~~~
swalkergibson
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.

------
cylinder
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...](http://www.cis.org.au/images/stories/policy-
magazine/2010-summer/26-4-10-david-alexander.pdf)

~~~
17Crash
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.

------
ThePhysicist
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.

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

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

------
pinaceae
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.

~~~
Roboprog
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.

~~~
VLM
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.

~~~
drpgq
Maybe three down football wouldn't go over so well either.

------
marincounty
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
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.

~~~
brohee
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...](http://en.wikipedia.org/wiki/List_of_countries_by_intentional_homicide_rate)

------
petilon
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.

~~~
randomdata
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
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...](http://www.ey.com/CA/en/Services/Strategic-Growth-
Markets/G20-Entrepreneurship-Barometer-2013-Entrepreneurship-culture)

------
alexeisadeski3
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...](http://en.wikipedia.org/wiki/File:Total_health_expenditure_per_capita,_US_Dollars_PPP.png)

------
simon_
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?

------
CalRobert
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?

------
eumenides1
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.

------
rm999
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.

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

~~~
jebus989
Hey yeah when you ignore all the results for the _50%_ of the population below
the median, things look pretty rosy! USA USA!

------
ddoolin
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.

~~~
smacktoward
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](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.

~~~
emerod
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.

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

------
refurb
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"?

~~~
randomdata
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.

~~~
refurb
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.

------
codegeek
"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.

~~~
nasmorn
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.

------
logicchains
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.

------
yukichan
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.

------
hoggle
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
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.

~~~
hoggle
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](https://news.ycombinator.com/item?id=7628811)

~~~
xrange
Can you give us a Swedish perspective on the Wallenberg family? Who apparently
"In the 1990s indirectly controlled a third of Swedish GNP."

[http://en.wikipedia.org/wiki/Wallenberg_family](http://en.wikipedia.org/wiki/Wallenberg_family)

~~~
hoggle
Sorry, I'm actually from Austria I don't really know anything about that,
interesting though.

------
dragonwriter
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.

~~~
humanrebar
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...](http://www.gallup.com/poll/159029/americans-likely-say-belong-
middle-class.aspx)

~~~
dragonwriter
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.

~~~
humanrebar
For me to agree with you, I would have to agree with the premise that we know
better about class labels than Americans at large. I would not presume so
much.

If 100% of Americans consider themselves "middle-class", it doesn't bother me.
At the end of the day it's all semantics and disagreeing about what "middle-
class" means is not interesting.

You clearly have some opinions about shortcomings of the American labor
market. Perhaps there's a better way to phrase your concerns that would
further the discussion in a more substantive direction.

~~~
dragonwriter
> You clearly have some opinions about shortcomings of the American labor
> market.

Not that are relevant to this discussion -- I just have a belief that there is
a difference between _being_ middle class (the class between the working class
and the capitalist class, at least, in the usual definition applicable in
post-feudal economies) and _identifying_ as middle class.

Historically, the working class being larger than the other two combined is
the norm and America's brief period with a very large middle class was
something of an aberration resulting from the rapid application of agriculture
by a small population to a large land area before that agriculture was
effectively consolidated by large commercial entities.

------
zwieback
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.

------
kfcm
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?

~~~
humanrebar
> 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).

------
bernardom
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.

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

