Posted on 04/22/2014 3:48:02 PM PDT by rickmichaels
OTTAWA – There is a middle class crisis, but it’s happening south of the border, not in Canada, according to a New York Times report on incomes around the world.
The newspaper says an analysis it conducted with the LIS data centre shows that while Canadian median income per capita trailed the U.S. badly at the turn of the century, it had caught up by 2010 and now likely is ahead.
And overall, the study shows Canada tied with the U.S. for the highest per capita median income of the countries compared, including Germany, France and Britain.
The median income numbers represent the mid-point of income distribution so that one half the population will be above and one half below. The levels are per person in a family, which includes non-earning children and in some cases spouses.
During the decade, the median per capita income in the Canada rose 20 per cent to reach the U.S. equivalent of US$18,700 after taxes (C$20,607) — or about US$75,000 for a family of four. At the same time, median income remained stagnant in the United States between 2000 to 2010.
The Times speculates that Canada’s middle class has likely surpassed the U.S. since 2010 as incomes have grown faster in Canada since then.
“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,” the newspaper noted.
“But those numbers are averages, which do not capture the distribution of income. With a big share of recent income gains in this country (the U.S.) flowing to a relatively small slice of high-earning households, most Americans are not keeping pace with their counterparts around the world.”
The middle class crisis has become a hot political issue in Canada. Liberal Leader Justin Trudeau has pressed the issue almost daily in question period, while NDP Leader Tom Mulcair has also pledged to work to reduce income disparities.
The Times report does not directly refute Canadian critics of income inequality since the catch up is mostly due to stagnant middle class incomes south of the border, more than robust growth here.
Still, Employment Minister Jason Kenney took to Twitter to trumpet the report.
“Canada is officially home to the richest middle class on the planet,” he retweeted, and, “If Justin Trudeau is interested in evidence-based policy on the middle class, he should read this,” among other messages.
In recent weeks, Kenney and other government ministers downplayed the income inequality problem by referencing a February Statistics Canada report showing that median net worth rose almost 80 per cent to $243,800 between 1999 and 2012, although much of that increase was due to home values.
But David Macdonald, an economist with the left-leaning Centre for Policy Alternatives, says the Times study used different methodology in order to compare a diverse range of countries and that Statistics Canada data show median incomes rising at a slower pace than reported by the newspaper.
“Picking the U.S. in 2010 also discounts the fact there was a major global recession whose epicentre was the U.S. and hurt a lot of the big European countries as well,” he said. “This was at the worst times for the U.S. middle class.”
He adds that Canadian families are among the most indebted with a record high household debt of about 164 per cent of after-tax income.
The Times report does suggest that whatever income inequality exists, the gap has grown appreciably wider in the U.S. than in Canada.
While Canadian median income has caught up, at the 95th percentile Americans still make 20 per cent more than their northern counterparts with annual after-tax income of US$58,600 per person, not including capital gains.
On the other hand, Canada and Western European countries do much better than Americans at the low-end of the income distribution.
The Times cites several factors in the recent trend, including that educational attainment has risen more slowly in the U.S. than in many other advanced countries, top corporate executives make substantially more in the U.S., and U.S. corporations distribute a smaller slice of their earnings to their workers.
“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,” the paper states.
yea, but they have a lot of additional taxes to support their social programs
You know you suck when Canada is kicking your ass...
I read most of the NY Slimes article — it was more propaganda in support of “income redistribution”.
They mention after-tax income but I don’t think that accounts for the Canadian VAT.
I was in Montreal recently but had left my jeans at home. So I went to Sears and bought some plain-looking Levi 505’s. The price? Even at the sale price of 40 percent off, they cost me 54 US dollars!
Next time I’ll remember to pack my jeans.
Thank the rat party with gop help
This is news? Obviously Canada’s middle class isn’t numerically larger than America’s, but why would anybody think that a larger percentage of Canadians couldn’t be “middle class” (whatever that means) than Americans?
A lot of this has to do with the fact that Canada is gung-ho in exploiting it’s natural resources, specifically oil and timber.
Their beer and liquor is better than ours, too.
It’s a socialist country.
Staying classy, eh!
I’ve also read that Chileans have a higher average net worth than Americans now...
“This is news? Obviously Canada’s middle class isn’t numerically larger than America’s, but why would anybody think that a larger percentage of Canadians couldn’t be “middle class” (whatever that means) than Americans?”
There are three kinds of people. Those who are good at math and those who are not.
Which country in the Western world isn’t?
Just like there are 10 kinds of people, those who get binary numbers and those who don’t.
I assume a big influence is national debt.
Since every US citizen starts with $55,000 negative net worth just with their share of the national debt.
Chile has about $2200 per person debt.
Until George Soro's works his magic up their with his environmental justice type group, oh yes, I hear he is up their.
Also their balanced budget over a number of years didn't hurt. I wonder if their environment of no Home Mortgage Deduction helped and do they or don't they have an internal Trojan Horse aka the Community Redevelopment Act and do to them what it did to us as they had no collapse like we did in 2008...
“I assume a big influence is national debt.”
Chile privatized ownership of their Social Security system 30 years ago. Each Chilean owns their account. We don’t.
Nor do we know if we will get it.
As an American I can only dream about how that SocSec account would look today if my 42 yrs of “contributions” had been invested at market benchmarks....
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