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Home Publications Blogs Beat the Press The American Middle Class Is Doing Much Worse Than the NYT Says

The American Middle Class Is Doing Much Worse Than the NYT Says

Wednesday, 23 April 2014 13:10

The NYT had a very interesting piece in its Upshot section that showed the trends in after-tax per capita income at each decile cutoff in the United States, alongside the trends in several other wealthy countries. It showed that the United States was at or near the top at every decile cutoff in 1980. However, it had fallen back sharply in the bottom five deciles. It ranked first in per capita income for the top five deciles with the gap between the United States and other countries growing further up the income ladder. In short, the rich are getting much richer in the United States and they are doing so in a way that is out of line with the patterns in other wealthy countries.

While this is not a pretty picture to those who would like to see everyone benefiting from growth, the actual story is even worse than shown in the NYT piece. Most of the countries in the analysis have seen a sharp reduction in the length of the average work year since 1980, the United States has not. For example, in France the length of the average work year was shortened by 17.6 percent between 1980 and 2012, the most recent year for which data is available. In Canada the reduction in the length of the average work year was 6.4 percent over this period, in the Netherlands it was 9.6 percent, and in Finland 11.1 percent. By comparison, the average work year shrank by just 1.3 percent in the United States.

This shrinking of the average work year corresponds to the increase in vacation time in other countries, with workers in many countries now enjoying 5-6 weeks a year of paid vacation. Workers in other wealthy countries can also count on paid sick days and paid family leave when they have children or a sick family member in need of care.

These guarantees and additional leisure translate into real improvements in living standards in which workers in the United States largely did not share. In 1980 workers in the United States worked somewhat less than the average for OECD countries. In 2012, they worked somewhat more. 

The NYT piece emphasized that low and moderate income workers in other countries now typically have more after-tax income than their counterparts in the United States. However they also have an institutional structure that allow them to better manage the demands of work and family. And, they enjoy more leisure.

Comments (8)Add Comment
Tax Cut
written by Tyler, April 23, 2014 2:13
I don't understand why Obama does not propose a tax cut for the middle class. It's an election year, so the GOP would have to support it.
written by foosion, April 23, 2014 7:37
Obama is likely not proposing a middle class tax cut because it would decrease government revenues, the GOP may or may not support the tax cut (remember they weren't fans of a payroll tax cut), then they will scream about the deficit and slash govt spending that benefits the middle class.
Tyler, I have an alternative explanation
written by ifthethunderdontgetya™³²®©, April 23, 2014 9:02
Obama doesn't give a fig about the middle class.

This would explain why he's filled his Administration with corporatists, just as Bill Clinton did. Bill Clinton made $100 million for selling out the Democratic voter.

You think Obama didn't notice?

This comment section is hilarious.
written by David, April 24, 2014 1:07
Tyler & ifthethunderdontgetya™³²®©(fun name), both of you don't really get something.

First, Tyler, the last thing we need is MORE tax cuts. We need to tax the rich, and by rich I really mean the corporations and the hedge funds. Bring in trillions of dollars of stashed wealth in off-shore tax havens. Take that money and invest in social care. This whole tax cut mania is a by-product of a very conscious propaganda campaign that began during the 70s and really reached mainstream with the Reagan administration.

As for the other guy, Obama's white house hosting of the young 1r;s(really 0.1r;s) is nothing new, it's part of the political process. If Obama didn't care, why did he introduce minimum wage legislation? Wooing the ultra-rich to invest their cash in stuff that helps the economy is the best Obama can do now, since the GOP won't pass anything through the house.

Not going to sit here and pretend Obama is an uber-liberal, but part of the reason why this country has seen its declines is that people somehow think the two parties are equal at fault: they are not. The Dems are pretty terrible, but not even close to the GOP. Once the GOP is roundly defeated, there will be a need for an internal cleansing of the democratic party. But until then, pretending Obama "doesn't care" isn't helping anyone, it is only helping people buying into the idea that both parties are equal at fault.

This is dangerous moral relativism and acts as a way to disconnect people, which in turn allows the GOP agenda to push through with minimal resistance. Is it hard to walk and chew at the same time for you? Realizing that the democratic party needs massive overhaul while at the same time blocking the GOP at every turn?
written by Kat, April 24, 2014 7:47
I'm sorry, but I could not less this pass:
As for the other guy, Obama's white house hosting of the young 1r;s(really 0.1r;s) is nothing new, it's part of the political process.

If it looks bad, it is because it is bad. The White House does not need to be hosting a self esteem project for the rich, young, and clueless. I would venture to guess if one of these individuals wants to take on "human trafficking" they're not going to organize a movement to end the war on labor movements in Latin America, or call for an end to our commodities dumping, or to stop the TPP. These things cannot be achieved by "impact investing".
written by Yastreblyansky, April 24, 2014 7:54
David is right. You can learn right at this site http://www.cbpp.org/cms/?fa=view&id=3151 that middle class taxes are already more or less at historic lows. In addition to the measures he recommends to raise revenues, maybe the most important is to go back to taxing capital gains at par with wages. I cannot understand why their money is supposed to be so much better than ours, but the policy clearly encourages a division between a 1% rentier class and a working class of everybody else.
Tax Cut
written by Tyler, April 24, 2014 8:25
The only fiscal stimulus Obama could get through the House is a tax cut. A tax cut for the middle class is a lot better than doing nothing at all. It would definitely stimulate the economy. Numerous studies have shown that middle-class tax cuts are effective fiscal stimulus.
Another way in which the American middle class is doing worse
written by Kosta, April 24, 2014 12:26
Great comment in pointing out that the American middle class is working longer hours than those in other industrialized nations while still seeing their after-tax wages shrink in comparison to those same cohorts. But another factor that should be considered is that the American middle class receives less government benefits than their peers in other countries.

Case in point the comparison with Canada, whose median wage now exceeds the U.S. The median wage earner in Canada receives substantial benefits, such as free health care, for which the median American wage earner must pay for out of his or her after-tax income. So in fact the median wage earner in Canada is substantially better off than the median wage earner in the U.S. This is just one more way in which the American middle class is being eroded.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.