Analysis: America's Middle Class Falters As Nation's Richest Rise

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Analysis: America's Middle Class Falters As Nation's Richest Rise

Report shows low and middle income earners falling behind comparable countries

The income inequality gap between the wealthy and those considered to be lower- and middle class is skyrocketing in the U.S. compared to other countries historically known to be less affluent, according to a new analysis published Tuesday.

The findings are based on a joint analysis conducted by the New York Times and researchers at the Luxembourg Income Study Database which looked at 35 years of data collected by the Europe-based research institute. According to the reporting, posted on the Times new website The Upshot, U.S. financial growth is surpassing those of other wealthy nations but the financial gains of that growth is being enjoyed mostly by the top tier of wealthiest Americans while working class and less affluent people get left further and further behind.

Growth in lower- and middle-income tiers in the U.S. is quickly falling behind other economically "advanced" countries, as average residents in comparable countries have received "considerably larger raises over the last three decades."

The Upshot reports:

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. [...]

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.

Among the reasons listed for this growing disparity, the research found that the number of people who are able to get an education in the U.S. has quickly fallen behind other "industrialized" countries over the last 30 years. As a result, less and less people have found work in well-paying positions.

Further, disparities in wages have grown wider in the U.S. compared to other countries. As U.S. companies are awarding bigger pay checks for top executives, the minimum wage has remained remarkably low and labor unions have been weakened.

The final reason given is that, compared to other countries, wealthy U.S. citizens pay far less taxes, while the U.S. "does not redistribute as much income to the poor as other countries do," the report states. "As a result, inequality in disposable income is sharply higher in the United States than elsewhere."

Similarly, a recent report by the AFL-CIO found that the average CEO in the United States made 331 times more money than the average worker in 2013 and 774 more than minimum wage workers.

The average U.S. CEO made $11.7 million in 2013 while the average U.S. worker earned $35,293.

Likewise, as Bill Moyers and Michael Winship point out in an op-ed published Tuesday, "The evidence of income inequality just keeps mounting."

According to recent report by Oxfam, they note, the wealthiest one percent have held 95 percent of economic growth since 2009, the years following economic crash.

Connecting this growing disparity to problems within Washington, Moyers and Winship write:

Recently, researchers at Connecticut's Trinity College ploughed through the data and concluded that the US Senate is responsive to the policy preferences of the rich, ignoring the poor. And now there's that big study coming out in the fall from scholars at Princeton and Northwestern universities, based on data collected between 1981 and 2002. Their conclusion: "America's claims to being a democratic society are seriously threatened... The preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy." Instead, policy tends "to tilt towards the wishes of corporations and business and professional associations."


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