Squeezed in America: The U.S. middle class underperforms its peers

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A new analysis that shows the U.S. middle class is no longer the world’s richest should alarm more than just those in the nation’s dwindling middle.

Decades-long trends that have shifted the nation’s wealth to the top and widened the gap between rich and poor have undermined democracy. They also have weakened the consumer-driven economy.

No one understood the importance of a healthy middle class better than Henry Ford. In 1914, he more than doubled the wages he paid his workers. The $5, eight-hour workday was a bold strategy to lower employee turnover and enable them to buy Ford cars.

Today the idea that the economy needs workers with money to spend appears lost on politicians and executives. The pay gap between the nation’s CEOs and average workers is 10 times greater than it was a generation ago.

A recent New York Times analysis showed that only a small percentage of households fully benefit from U.S. economic growth. Lower- and middle-income workers in other industrialized nations have received significantly larger raises over the past three decades.

After-tax middle-class incomes in Canada — way behind the United States in 2000 — now appear to be higher, the newspaper reported. The poor in much of Europe earn more than the nearly 50 million poor Americans.

America’s middle class, once the envy of the world, provided a model of how shared prosperity could fuel an economic engine. No more.

At $7.25 an hour, the minimum wage has lagged far behind inflation in recent decades and lost 30 percent of its purchasing power.

Raising it to $10 and expanding earned income tax credits would inject millions of dollars into the economy. Low-income workers would use the money to buy food, clothing and other necessities.

Lawmakers should pose this question about every policy and program: Does it benefit working Americans? Those that do will also fuel the nation’s economy.

Meet the Editorial Board.

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