Saturday, January 20, 2007

Disappearing Middle Class?

We hear a lot of handwringing these days about the "disappearing middle class," and how the benefits of the current economic expansion are going disproportionately going to "the rich." How does the middle class of the U.S. compare to countries in Europe?

In the graph above from the blog Back Talk, those in the lowest 10% in the U.S. have about the exact same disposable income as those in the lowest 10% in Europe. At the other end of the scale, the highest 10% in the U.S. have much higher disposable incomes than the highest 10% in Europe. All of these measures are relative to the U.S. median disposable personal income (which is set to 100).

Are only the rich making off like bandits? Well, look at the middle class (i.e., look at the median). The European in the middle makes only about 73% of what the American in the middle makes.

That's how America's economy distributes its benefits across the economic spectrum (relative to other nations). Those at the bottom of our economic ladder are similar to those at the bottom of other industrialized nations. One would imagine that, in all of these nations, the government tries to ensure that the basic needs of the poor are satisfied (e.g., adequate food, uncrowded living conditions, plumbing, electricity, etc.) without going much further than that. But as you start moving up the economic ladder, you are better off here in America. And that would appear to be true starting pretty far down on that ladder (somewhere below the median for sure).

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