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US middle class loses its mojo

By Judy Martel · Bankrate.com
Tuesday, April 29, 2014
Posted: 2 pm ET

The middle class in the U.S. is slipping more toward the low end of the wealth gap, while other developed countries surpass ours in affluence.

A study by The New York Times finds that increases in salary among the lower and middle classes in Europe and Canada have resulted in more affluence in those regions, while the U.S. middle class, traditionally one of the most robust in the world, sinks into the lower class.

Using surveys conducted over the past 35 years, the study shows that despite economic growth in the U.S., most Americans haven't seen an increased standard of living because their salaries have stagnated.

Middle-class Canadians now earn more after taxes than their counterparts in the U.S., while Britain, the Netherlands and Sweden -- historically lower in middle class salaries than the U.S. -- are closing in.

Only the super rich are getting richer

A recent study by University of California, Berkeley, shows that among the richest 1 percent of the U.S. population, only 1 percent of that group is gaining wealth. The remaining wealthy and upper middle classes are mostly keeping their heads above water.

For the uber-rich, gains in housing values and the stock market have super-charged their net worth. The rest of the U.S. population relies mostly on salary, which hasn't seen much growth since 2000, according to the New York Times study.

In 2010, median per capita income was $18,700, an increase of 20 percent since 1980. However, most of that growth came between 1980 and 2000. Median income from 2000 to 2010 is virtually unchanged after adjusting for inflation.

By contrast, salaries rose 20 percent in Britain and Canada from 2000 to 2010 and 14 percent in the Netherlands.

Bankrate conducted its own analysis of the widening income gap from 1992 to 2012. Read which age groups have been hit hardest.

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