The Fall From Grace of the American Middle Class, By the Numbers

Thursday, 12 Jun 2014 09:52 AM

By John Morgan

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America's middle class has fallen to mediocre levels — the U.S. median income only qualifies for 19th in the world now, below Japan, Australia and most of Western Europe.

The bottom line is that the average Spaniard or Italian — not to mention the typical middle class denizen in 17 other countries — has more to his or her name than the average U.S. citizen does, according to CNNMoney.

Using data culled from the latest Credit Suisse Global Wealth report, CNNMoney reported Americans' median wealth is only $44,900 per adult — meaning half have more than that, and half have less.

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"Americans tend to think of their middle class as being the richest in the world, but it turns out, in terms of wealth, they rank fairly low among major industrialized countries," said Edward Wolff, a New York University economics professor who studies net worth.

The U.S. middle class was damaged greatly by the housing collapse that began in 2008. The median wealth of families was $77,300 in 2010, a nearly 40 percent drop from 2007, according to Federal Reserve statistics.

Americans are also slipping behind in building wealth because wages have stagnated for more than a decade, CNNMoney noted. Median household income was $51,017 in 2012, down from $56,080 in 1999, according to the Census Bureau.

Kenneth Thomas, a political science professor at the University of Missouri, St. Louis, said other reasons why the U.S. middle class is faltering is the decline of unions, the offshoring of U.S. jobs to other countries and increased use of technology in the workplace.

Although the United States has fallen to the middle of the pack when it comes to median income, the Credit Suisse Global Wealth report showed it is home to the highest global share of the super rich.

"Compared to the rest of the world, the USA has a high proportion of the population with wealth above $100,000, and the percentage becomes even more disproportionate at higher wealth levels. The USA has by far the greatest number of members of the top 1 percent global wealth group, and accounts for 42 percent of the world's millionaires," the report stated.

"The number of UHNW [ultra-high net worth] individuals with wealth above $50 million is nearly eight times that of the next country, China."

In a column for Yahoo, author Rick Newman suggested the extraordinary wealth of the U.S. ultra-rich might be skewing some economic numbers higher than they actually are.

"This may help explain why the economy seems to be gaining strength — on paper — yet millions of ordinary people feel like they're falling behind," Newman said.

He noted that although Americans' total net worth recently hit a record high of $81.8 trillion, consumer spending is lukewarm, home buying has hit a new trough and an "alarming portion" of adults are no longer looking for jobs.

"Polls show widespread pessimism that's out of sync with an economy supposedly heading into its fifth year of expansion," Newman added.

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