Life in Canada, Home of the World’s Most Affluent Middle Class

 




This item and the underlying study pretty well confirms my sense of general trends over the past twenty years and particularly this past post crash six years.  In the USA, the middle class was targeted by fraudulent lending which has triggered the severely over sold housing markets and massively destroyed both fictive savings and real savings.


 So far Canada has avoided severe capital destruction through either any form of significant reckless lending schemes and the longer term effect of universal medical insurance.  There still remains areas to improve, but even there we fare better than the USA.


It needs to also be noted that our lower non participants also do generally much better as well.  It is still seriously imperfect but doing better is also part of the landscape.


Add in the minor fact that Statistics are generally manipulated as well and you really have to take a look yourself.  Do that and you find far too many clear pockets of real poverty in the USA which are rare in Canada.  Throw in the massive police build up and crime culture on top of that and those statistics are grossly misleading.  Remember that a mansion on a hill is not an economy.
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Life in Canada, Home of the World’s Most Affluent Middle Class

APRIL 30, 2014

 http://www.nytimes.com/2014/05/01/upshot/canadians-have-plenty-of-concerns-but-also-a-sense-theyre-better-off.html

The Canadian middle class may now be the world’s richest, but it has its anxieties, too.

Members of the middle class in Canada worry about whether they can afford college for their children and whether their children will find jobs afterward. Housing costs are a major concern, as are everyday costs for transportation and mobile-phone plans. Middle-class Canadians worry about inequality.

Yet many also believe that they’re better off than their American counterparts.

We reported last week that median income in Canada appears to have surpassed median income in the United States, based on more than three decades of international income surveys analyzed by LIS, a research group, and by The Upshot. As recently as 2000, median income in the United States was significantly higher. The data also show that lower-income families in Canada and much of northern Europe now make more than their American counterparts.

To get a sense for how these trends are affecting Canadians, we set out to interview members of the middle class. Most, of course, have no firsthand way of comparing their experiences with American ones, and they were quick to acknowledge as much. Yet in a globalized world, people do know about more than just their own neighborhood.
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And interviews suggest that many members of the Canadian middle class prefer the situation on their side of the border.

“When you have a family to raise and you are middle class, you are on a treadmill,” said Deborrah Mustachi, a 52-year-old educational assistant for the Catholic school board in Markham, a Toronto suburb. “It’s very difficult to save when you have to live for today.”

Yet, Ms. Mustachi added, “I think people in the U.S. seem to struggle more.”

Canadians have little doubt that they face less financial stress about medical costs than Americans. 

Many also credit their labor unions for the size of their paychecks; union membership rates are higher in Canada. Canadians also know that the American housing bubble and bust were more severe than their version.

“We got to keep our houses,” said Gregory Thomas, 39, an actor and house painter who lives with his wife and two young children in Toronto. “As an outsider, it seems like the aspirational section of the middle class — those who are constantly trying to get a little bit higher — they really got decimated in the States.”

Mr. Thomas added: “We read about Arizona, Florida, Colorado, these places where housing prices just tanked. That didn’t happen here.”

It’s possible that Canadian home prices may have some declines ahead of them, which could reverse the relative positions of the middle class. But many of the other forces that have caused Canadian middle-class incomes to grow more quickly are less ephemeral. Young Canadian adults, for example, are now more educated than their American peers.

Beyond obvious economic issues like education and housing, Canadians also notice cultural differences that seem to affect living standards.

“Our family values are huge,” said Ms. Mustachi, who has three grown children with her husband, William, 60, a millwork department manager at a Lowes outlet. “From what I see on TV, I don’t get a sense of that in the States.”

She acknowledged that her impression might stem from the shows she watched, including “Judge Judy,” but she is right that family structure in the two countries is different. About 68 percent of American children live with two parents; about 80 percent of Canadian children do.

The Canadian middle class also seems to have an accurate impression of the differences between the rich in the two countries: The American rich still have a big lead over the Canadian rich, as the LIS income surveys and other data show.

“If you have money in the United States, you’re probably better off,” said Kyle McGreal, 35, a general grocery warehouse worker who lives with his wife and two children in Caledonia, Ontario. 

“But a lot of Americans are struggling.”

Or as Mr. Thomas said, Americans “may get more on their plate when they go to Denny’s, but they don’t have more when they go home.”


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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 over 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 over the past 35 years, offer some of the most detailed publicly available comparisons for different income groups in different countries over time. They suggest that most American families are 

Although economic growth in the United States continues to be as strong as in many other countries, or stronger, a small percentage of American households is fully benefiting from it. Median income in Canada pulled into a tie with median United States income in 2010 and has most likely 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.

The struggles of the poor in the United States are even starker than those of the middle class. A family at the 20th percentile of the income distribution in this country makes significantly less money than a similar family in Canada, Sweden, Norway, Finland or the Netherlands. Thirty-five years ago, the reverse was true.

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. With a big share of recent income gains in this country flowing to a relatively small slice of high-earning households, most Americans are not keeping pace with their counterparts around the world.

“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 is no longer the case, Professor Katz added.

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. The same measure, by comparison, rose about 20 percent in Britain between 2000 and 2010 and 14 percent in the Netherlands. Median income also rose 20 percent in Canada between 2000 and 2010, to the equivalent of $18,700.

The most recent year in the LIS analysis is 2010. But other income surveys, conducted by government agencies, suggest that since 2010 pay in Canada has risen faster than pay in the United States and is now most likely higher. Pay in several European countries has also risen faster since 2010 than it has in the United States.

Three broad factors appear to be driving much of the weak income performance in the United States. First, educational attainment in the United States has risen far more slowly than in much of the industrialized world over the last three decades, making it harder for the American economy to maintain its share of highly skilled, well-paying jobs.

Americans between the ages of 55 and 65 have literacy, numeracy and technology skills that are above average relative to 55- to 65-year-olds in rest of the industrialized world, according to a recent study by the Organization for Economic Cooperation and Development, an international group. Younger Americans, though, are not keeping pace: Those between 16 and 24 rank near the bottom among rich countries, well behind their counterparts in Canada, Australia, Japan and Scandinavia and close to those in Italy and Spain.

A second factor is that companies in the United States economy distribute a smaller share of their bounty to the middle class and poor than similar companies elsewhere. Top executives make substantially more money in the United States than in other wealthy countries. The minimum wage is lower. Labor unions are weaker.

And because the total bounty produced by the American economy has not been growing substantially faster here in recent decades than in Canada or Western Europe, most American workers are left receiving meager raises.

Finally, governments in Canada and Western Europe take more aggressive steps to raise the take-home pay of low- and middle-income households by redistributing income.

Janet Gornick, the director of LIS, noted that inequality in so-called market incomes — which does not count taxes or government benefits — “is high but not off the charts in the United States.” Yet the American rich pay lower taxes than the rich in many other places, and the United States does not redistribute as much income to the poor as other countries do. As a result, inequality in disposable income is sharply higher in the United States than elsewhere.

Whatever the causes, the stagnation of income has left many Americans dissatisfied with the state of the country. Only about 30 percent of people believe the country is headed in the right direction, polls show.

“Things are pretty flat,” said Kathy Washburn, 59, of Mount Vernon, Iowa, who earns $33,000 at an Ace Hardware store, where she has worked for 23 years. “You have mostly lower level and high and not a lot in between. People need to start in between to work their way up.”

Middle-class families in other countries are obviously not without worries — some common around the world and some specific to their countries. In many parts of Europe, as in the United States, parents of young children wonder how they will pay for college, and many believe their parents enjoyed more rapidly rising living standards than they do. In Canada, people complain about the costs of modern life, from college to monthly phone and Internet bills. Unemployment is a concern almost everywhere.

But both opinion surveys and interviews suggest that the public mood in Canada and Northern Europe is less sour than in the United States today.

“The crisis had no effect on our lives,” Jonas Frojelin, 37, a Swedish firefighter, said, referring to the global financial crisis that began in 2007. He lives with his wife, Malin, a nurse, in a seaside town a half-hour drive from Gothenburg, Sweden’s second-largest city.

They each have five weeks of vacation and comprehensive health benefits. They benefited from almost three years of paid leave, between them, after their children, now 3 and 6 years old, were born. Today, the children attend a subsidized child-care center that costs about 3 percent of the Frojelins’ income.

Even with a large welfare state in Sweden, per capita G.D.P. there has grown more quickly than in the United States over almost any extended recent period — a decade, 20 years, 30 years. Sharp increases in the number of college graduates in Sweden, allowing for the growth of high-skill jobs, has played an important role.

Elsewhere in Europe, economic growth has been slower in the last few years than in the United States, as the Continent has struggled to escape the financial crisis. But incomes for most families in Sweden and several other Northern European countries have still outpaced those in the United States, where much of the fruits of recent economic growth have flowed into corporate profits or top incomes.

This pattern suggests that future data gathered by LIS are likely to show similar trends to those through 2010.

There does not appear to be any other publicly available data that allows for the comparisons that the LIS data makes possible. But two other sources lead to broadly similar conclusions.

A Gallup survey conducted between 2006 and 2012 showed the United States and Canada with nearly identical per capita median income (and Scandinavia with higher income). And tax records collected by Thomas Piketty and other economists suggest that the United States no longer has the highest average income among the bottom 90 percent of earners.

One large European country where income has stagnated over the past 15 years is Germany, according to the LIS data. Policy makers in Germany have taken a series of steps to hold down the cost of exports, including restraining wage growth.

Even in Germany, though, the poor have fared better than in the United States, where per capita income has declined between 2000 and 2010 at the 40th percentile, as well as at the 30th, 20th, 10th and 5th.

Stability in Sweden

More broadly, the poor in the United States have trailed their counterparts in at least a few other countries since the early 1980s. With slow income growth since then, the American poor now clearly trail the poor in several other rich countries. At the 20th percentile — where someone is making less than four-fifths of the population — income in both the Netherlands and Canada was 15 percent higher than income in the United States in 2010.

By contrast, Americans at the 95th percentile of the distribution — with $58,600 in after-tax per capita income, not including capital gains — still make 20 percent more than their counterparts in Canada, 26 percent more than those in Britain and 50 percent more than those in the Netherlands. For these well-off families, the United States still has easily the world’s most prosperous major economy.