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. Why would a company have multiple share classes, and what are super voting shares?

    Before investing in a company with multiple share classes, be sure to learn the difference between them. Read Answer >>
  3. How are a mutual fund's C shares different from A and B shares?

    Learn how a class C share differs from a class A or B share in relation to a mutual fund. Read Answer >>
  4. 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 >>
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. Investing

    China's Middle Class: An Inside Look

    Discover the catalysts for China's improving middle class population, from global demands of its consumer goods to unoccupied real estate.
  4. Insights

    The Decline of the Middle Class: An Inside Look

    Find out what is behind the decline of the middle class in America and how the hourglass economy may effect consumption.
  5. Investing

    3 Reasons Canada's Economy Matters in 2016

    Discover why Canada's 2015 recession matters and why the United States is particularly dependent on a healthy Canadian economy.
  6. Retirement

    Which Fund Share Class is Best for Retirement?

    Mutual funds are a popular investment for retirement. Here's how to choose the best share class when investing in them.
  7. Insights

    Why Are the Top 1% Are 70% Richer Than The Bottom 90%? Ask the Fed

    Does America have a middle class any more?
  8. Investing

    Norway, the Safest Oil Economy?

    Norway is one of the most stable oil-producing countries in the world. But for how much longer?
  9. Managing Wealth

    America's Compensation Gap Shows No Signs Of Slowing

    The gap between the rich and the poor and middle classes is rapidly increasing in America. Historically this is not a good sign, as a strong middle class has been the backbone of the U.S. economy ...
  10. Investing

    Diversification: It's All About (Asset) Class

    Frustrated stock pickers rejoice - asset class selection is simpler and safer.
RELATED TERMS
  1. Middle Class

    Middle class refers to individuals who fall between the working ...
  2. Working Class

    Working class describes persons in jobs that provide low pay, ...
  3. Class B Shares

    A classification of common stock that may be accompanied by more ...
  4. Sweet Spot

    The sweet spot is the point at which an indicator or policy provides ...
  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. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  2. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
  3. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
  4. Relative Strength Index - RSI

    Relative Strength Indicator (RSI) is a technical momentum indicator that compares the magnitude of recent gains to recent ...
  5. Dividend

    A dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
  6. Inventory Turnover

    Inventory turnover is a ratio showing how many times a company has sold and replaces inventory over a period.
Trading Center