That's why the middle class is disappearing, anywhere in the world.

That's why the middle class is disappearing, anywhere in the world.

From Brex to Donald Trump, if there's anything that tells us current events, that's that the man on the street is angry and wants change. A new report by the Global McKinsey Institute, with the scary title “more poor than Tyre's Parents: The fall of the Comings in Advanced Economics” shows [...]

From Brex to Donald Trump, if there's anything that tells us current events, that's that the man on the street is angry and wants change.

A new report by the Global McKinsey Institute, with the scary title “more poor than Tyre's Parents: The decline of the Comings in Advanced Economics” shows why this is true. According to the study, the trend of falling income for middle class workers is not limited to the United States, but it is a global phenomenon that harms workers worldwide.

The report concluded that up to 70% of households in 25 advanced economies saw their income drop in the last decade. Meanwhile, only 2% of households saw a drop in revenues in the previous 12 years.

The authors estimate that this means that “, while less than ten million people were affected [by the remaining incomes at a rate or a decline] in 1993-05, this figure exploded somewhere between 540 million and 580 million people, between 2005-2014-1x1>.

To put it straight: Much of the world's population, which had been taught to expect their material wealth to grow during their lifetime and in subsequent generations, has realized that this promise was a lie. No wonder voters in the rich world are being seduced by radical politics and strange solutions, for their economic problems.

There are some warnings. First of all, McKinsey researchers have not conducted a long-term study that follows the individual tracks of individual people over many years. So while we know that the incomes of the population segments (for example, a 40 - year - old graduate) have stayed in one country or declined, individuals within these segments may have different assets. A 2015 U.S. middle class study by sociologists Thomas Hirschl of Cornell University and Mark Rank of Washington University show what change this can make. They found that because of major changes in income in life, individuals spend part of their lives as people with high incomes and the rest of their lives on the bottom of the list. Hence, it may seem like a slow, steady decline in economic fate for the middle class, cannot be felt by many members of that class, writes the world.al.

In addition, government separation is doing much to numb the effects of this trend on those suffering from it. When the number of household incomes after taxation and the transfer of income (such as social insurance payments) is considered, only about 20-25% of households in the surveyed countries saw a drop in income, or simply not increase it. And there were many differences between countries, about the number of people affected by this trend. According to the report:

At an extreme is Italy, which has experienced a severe economic contraction in the recession after the 2008 financial crisis and has since experienced a very poor recovery. There, real market revenues had remained in place, or had declined for almost the entire population. At the other extreme is Sweden, where only 20 percent of the population had unchanged incomes, or declining. In each of the other four countries focused on France, the Netherlands, the United Kingdom and the United States, with non-growing real-income segments, the rate was between 60 and 80 percent.

The authors write that the reason for this change “reflects differences in policy approaches; labour institutions such as union power and their role, or services for the unemployed; and a very different response to national economic, fiscal and monetary policies. For example, a Swedish trait that authors point to as an example, saying it helped protect workers after recession is a strong mobility of the workforce. They argue that the fact that 68% of Swedish employees belong to a union helped keep rising wages. Moreover, a job sharing scheme, where the Swedish government worked with companies and trade unions to prevent layoffs by reducing working hours rather than firing people, protected that country from the long term unemployment shock, which has reduced the potential of profits for workers in the United States.

But despite politics designed to deal with the problem of dropping wages, this report makes it clear that it is a new and growing problem in the rich world.

 

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