HOW DOES THE U.S. COMPARE?

David R. Francis in a column in the Christian Science Monitor reports that "The OECD ranked the after-tax income of the average worker in the United States as 15th among its member nations. The richest middle class, if measured in terms of the purchasing power of their income, was Britain."

He notes that this isn't true because supervisory workers were left out:

In the past, the OECD had been using a proxy for the middle class based on the "average production worker." This concept focused on full-time workers in the relatively declining manufacturing sector, which tends to be unionized in the US and better paid on average. The OECD's new measure is based on the "average worker," which captures all sorts of private-sector jobs including mining, utilities, construction, retail, hotel/restaurants, financial services, real estate, and other areas.

So this new system ought to provide a fairer comparison.

But 15th place?

Not likely, figures David Grubb, an OECD economist in Paris. He points out that the US and Canada included in the statistics that it sent to Paris the wages of nonsupervisory workers, and not those of higher paid supervisory workers and salaried professionals. When that statistical difference is corrected, the rank of the American middle class would move up from 15th. How far is uncertain.

The data below of for the Private Sector, year 2000 == 100, Seasonally Adjusted, 4th Quarter 2006. Here's the definition of the data:

Hourly earnings correspond to seasonally adjusted average total earnings in manufacturing and private sector paid per employed person per hour, including overtime pay and regularly recurring cash supplements. However, the definition may vary from country to country, particularly with respect to workers covered, treatment of bonuses and retrospective wage payments, size of reporting unit and finally the sector covered. Intercountry comparisons should therefore be made with caution.

From OECD MEI Dataset:

COUNTRY		WAGES
Japan		97.534
Germany		112.8
Austria		113.5
Sweden		121.208
United States		121.313
Belgium		121.8
France		122.9693
Portugal		123.4309
European Union		124.007
Denmark		124.1012
Luxembourg		124.4311
New Zealand		124.7906
Finland		127.1411
United Kingdom		127.5333
Spain		129.6324
Poland		133.3912
Australia		134.2782
Ireland		140.6
Czech Republic		149.6966
Iceland		154.9168
Korea		159.9884
Slovak Republic		177.6
Hungary		192.3765

To compare apples to apples, a Dataset for both the U.S. and Canada is from the Manufacturing Data, year 2000 == 100, Seasonally Adjusted, Second Quarter 2007. Canada is a bit behind the U.S, 117.7 to 120.2.

We know that the wingnuts always claim that taxes should be cut and that the U.S. is overtaxed. The NY Times reported in October that for overall taxes as a percentage of GDP, the U.S. ranks 17th in the OECD:



There is clearly a very weak link between taxes and income. Note that Sweden has almost twice the tax rate of the U.S. but is almost equal in terms of income. In the Times article, Christopher Heady, head of tax policy for the OECD, notes that:

...he cited Sweden, which “has the highest tax-to-G.D.P. ratio in the O.E.C.D., just over 50 percent, and yet it is one of the O.E.C.D. countries with the strongest economic performance over the past 20 years or so.”

That example, he said, showed that “a lot depends on how this money is spent.”