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The middle class has fallen far short of recovering from the recession that followed the economic meltdown of 2008, according to new data.
“Today, there are nearly 2 million fewer jobs in mid- and higher-wage industries than there were before the recession took hold, while there are 1.85 million more jobs in lower-wage industries,” the National Employment Law Project noted. The project based its conclusion on data from the US Bureau of Labor Statistics.
Some of the project’s disturbing conclusions include:
- 41 percent of the jobs lost in the recession were in high-wage industries, yet only 30 percent of those jobs during the recover were similar.
- 37 percent of the jobs lost in the recession were in medium-wage industries yet only 26 percent of the jobs in the recovery have been in that category.
- 22 percent of the jobs during the recession were low-wage. But they’ve accounted for 44 percent of those in the recovery.
That means many of the people who fell out of the middle class during the recession won’t be getting back into it. What’s even more disturbing is that America’s middle class is worse off than those in many other countries.
American Middle Class Behind the Rest of the World
Middle class Americans may now have lower incomes than their neighbors in Canada and that gap is growing, The New York Times reported. The Times’ reporters crunched some numbers from the Luxembourg Income Study Database and found that the difference between American Middle class incomes and the rest of the world is shrinking.
“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,” Harvard economist Lawrence Katz told the newspaper. “In 1960, we were massively richer than anyone else. In 1980, we were richer. In the 1990s, we were still richer.”
The average income in Canada rose around 20 percent between 2000 and 2010 but not in the United States, where the income stayed about the same. The average household income in both countries was around $75,000 but most experts now think the average income in Canada is higher than in the US. The average individual income in both nations is around $18,700 after taxes are taken out. Only higher-income Americans were making substantially more than their counterparts north of the border.
Another interesting discovery is that the American middle class isn’t doing much better economically than many Europeans. The rate of growth in the average income in Britain, Spain, the Netherlands, Germany and Ireland was higher than in the United States between 2000 and 2014.
The Wealthy Now Driving the Economy
The erosion of the middle class is now affecting the economy and hastening what some have called the retail apocalypse. It also means that the wealthy now dominate the economy.
Researchers found that the richest 5 percent of Americans accounted for 38 percent of consumer spending in 2012, compared to 28 percent of consumer spending in 1995.
“As a retailer or restaurant chain, if you’re not at the really high level or the low level, that’s a tough place to be,” PricewaterhouseCoopers Analyst John Maxwell told The New York Times. “You don’t want to be stuck in the middle.”
Since 2009, around 90 percent of the increase in consumer spending has been among the households with incomes in the top 20 percent.
Do you believe the middle class is disappearing in America? What signs have you seen? Let us know in the comments section below.