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America’s middle class shrinking, yet thriving in these European countries
What’s going on with America’s middle class?

Some members of America’s middle class are getting richer and moving up in the world. But millions of lower income people are also getting left behind. The share of people in the middle class in the U.S. is less than in any of 11 countries from Western Europe, according to a new report by the Pew Research Center, a nonprofit think tank in Washington, D.C., and has fallen to 59% in 2010 from 62% in 1991. “The American experience reflects a marked difference in how income is distributed in the U.S. compared with many countries in Western Europe,” the report said. “

American economic growth has been a double-edged sword for many Americans. In 2010, households in the U.S. were more economically divided than households in the selected Western European countries analyzed by Pew. The U.S. is the only country in which fewer than 60% of adults were in the middle class. However, compared with those in many Western European countries, a greater share of Americans were lower income (26%).

Despite all the left wing rhetoric, the USA is no less mobile than it was previously:


Quote:The study, by a clutch of economists at Harvard University and the University of California, Berkeley, is far bigger than any previous effort to measure social mobility. The economists crunch numbers from over 40m tax returns of people born between 1971 and 1993 (with all identifying information removed). They focus on mobility between generations and use several ways to measure it, including the correlation of parents’ and children’s income, and the odds that a child born into the bottom fifth of the income distribution will climb all the way up to the top fifth.

They find that none of these measures has changed much (see chart). In 1971 a child from the poorest fifth had an 8.4% chance of making it to the top quintile. For a child born in 1986 the odds were 9%. The study confirms previous findings that America’s social mobility is low compared with many European countries. (In Denmark, a poor child has twice as much chance of making it to the top quintile as in America.) But it challenges several smaller recent studies that concluded that America had become less socially mobile.

This result has caused a huge stir, not least because it runs counter to public perceptions. A recent Gallup poll found that only 52% of Americans think there is plenty of opportunity for the average Joe to get ahead, down from 81% in 1998. It also jars with other circumstantial evidence. Several studies point to widening gaps between rich and poor in the kinds of factors you would expect to influence mobility, such as the quality of schools or parents’ investment of time and money in their children. Cross-country analyses also suggest there is an inverse relationship between income inequality and social mobility—a phenomenon that has become known as the “Great Gatsby” curve.

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