A:

For decades, the United States boasted the honor of having the richest middle class. However, as of 2015, Canada has the wealthiest middle class of any country in the world.

The most common figure used by researchers and economics professors when comparing middle class economies across different countries is median annual income, standardized to U.S. dollars. In 1980, the U.S. was the only country in the world with a median annual income above $15,000; Canada was second at just over $14,000, while developed European countries such as Britain, the Netherlands, Norway, Sweden and France all hovered around the $10,000 mark. Some of these countries, such as Norway and the Netherlands, began making steady gains on the U.S. beginning in the 1980s, while others, such as Canada, mostly tracked the U.S.' middle class growth until the late 2000s, when they started making large gains on the world's superpower.

While the middle class incomes of Canada and most Western European countries continued to rise, even during the deep global recession that began in 2009, the U.S. saw its median annual income fall during the late 2000s and early 2010s. The only other aforementioned country to experience a similar decline was Britain. The middle class in Canada, on the other hand, continued to amass wealth robustly during the recession, albeit at a slightly slower pace than in years prior.

As of 2013, the U.S.' economy is still over nine times larger than Canada's. The U.S. gross domestic product (GDP) that year was over $16.8 trillion, while that of its northern neighbor came in at only $1.8 trillion. Middle class citizens in the U.S. haven't reaped much benefit from their country's economic prosperity during the 21st century. The wealthy have benefited from most of the post-2000 wage growth in the U.S., while middle-class and lower-class wages have stagnated and even declined.

Several factors have allowed Canada to pass the U.S. in middle class prosperity. First, American educational attainment has dropped precipitously in comparison to other developed countries. While Americans over 55 are highly educated and literate compared to their Canadian and European counterparts, the same cannot be said for those in the 16- to 24-year-old age bracket, who rank near the bottom for all rich countries in educational attainment.

Additionally, the private sector wage gap between high-level executives and entry-level workers is massive in the U.S., especially when compared to Canada and developed European countries. This is why economic indicators such as GDP can be misleading when trying to discern which country's citizens are doing the best economically. The U.S. boasts impressive economic numbers, but a large number of its citizens do not benefit from them.

Finally, the U.S. government takes more of a laissez-faire approach toward promoting income equality than the Canadian and European governments, which redistribute wealth much more proactively. The result is a much smaller gap between rich and poor in countries such as Canada, which translates to a more robust and prosperous middle class.

RELATED FAQS
  1. What is the difference between Class A shares and other common shares of company's ...

    Discover how a company can break down its common stock into multiple classes and how these classes differ from one another ... Read Answer >>
  2. The difference between Berkshire Hathaway's Class A and Class B shares

    Price is the primary difference between Berkshire Hathaway's Class A stock and Class B stock, but there are other distinctions. ... Read Answer >>
  3. What emerging markets are best suited for investing in the aerospace sector?

    Discover the best emerging markets suited for investing in the aerospace sector and how middle class growth best positions ... Read Answer >>
  4. Which countries are most productive in terms of GDP?

    Countries around the world constantly compete with one another to be the most innovative and productive. Read to see which ... Read Answer >>
Related Articles
  1. Investing

    The Finances Of The Global Middle Class

    Here's a look at the salaries and expenses of the middle class around the world.
  2. Insights

    Is The Middle Class Really Disappearing?

    Find out exactly what "middle class" means and whether it's really getting rarer.
  3. Insights

    Slip Slidin' Away: America's Shrinking Middle Class

    A new study from the Pew Research Center provides evidence that the American middle class is shrinking.
  4. Personal Finance

    Which Income Class Are You?

    Which income class do you belong to and what defines the middle class?
  5. Insights

    Breaking Through The Middle Class

    While there is no easy way to the top, understanding some basic economics will help you you move up the economic ladder.
  6. Insights

    Is the U.S. Economy Really Improving?

    The U.S. economy might be improving for some, but not for the majority. Here's why.
  7. Investing

    The Economics of Mexico's Middle Class

    Lean about Mexico’s expanding middle class society and the causes for its change from electronics to the manufacturing industry.
  8. Investing

    What are Class B Shares?

    Class B shares are one classification of common stock issued by corporations.
  9. Trading

    The Canadian Dollar: What Every Forex Trader Needs To Know

    Canada is becoming an increasingly viable alternative to the U.S. dollar, making it more important in the forex market.
  10. Investing

    6 Signs That You’ve Made It To Middle Class

    A government task force pinpointed the six financial aspirations that characterize life in the middle class.
RELATED TERMS
  1. Share Class

    A designation applied to a specified type of security such as ...
  2. Multiple Capital Structure

    The classification of a company's stock and bond offerings into ...
  3. Middle Market

    Definition of middle market
  4. Asset Class

    A group of securities that exhibit similar characteristics, behave ...
  5. Class A Shares

    A classification of common stock that may be accompanied by more ...
  6. Dual-Class Ownership

    A type of share division in which companies issue shares that ...
Hot Definitions
  1. Return On Equity - ROE

    The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability ...
  2. Bond

    A bond is a fixed income investment in which an investor loans money to an entity (corporate or governmental) that borrows ...
  3. Whole Life Insurance Policy

    A life insurance contract with level premiums that has both an insurance and an investment component. The insurance component ...
  4. Compound Annual Growth Rate - CAGR

    The Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer ...
  5. Capital Asset Pricing Model - CAPM

    A model that describes the relationship between risk and expected return and that is used in the pricing of risky securities. ...
  6. Internal Rate Of Return - IRR

    A metric used in capital budgeting measuring the profitability of potential investments.
Trading Center