An OECD study downgrades per-capita American income. But there are other factors to consider.
"Comparisons are odious," that is, hateful, according to a popular phrase about seven centuries old. Comparison, however, is one of the tasks assigned to the Organization for Economic Cooperation and Development in Paris, an international body of 30 of the richest countries. It tries to compare its members' economic and social data, a difficult, perhaps even odious, job.
Sometime back it broadened statistically (for comparison purposes) the definition of the average workers in its member nations while trying to examine relative tax burdens. The result was "monumental," reckons Jacob Kirkegaard, an economist at the Peterson Institute for International Economics. 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.
That ranking would surprise most Americans, who likely consider their nation the most prosperous in the world.
In one fell swoop, OECD statisticians lowered the estimated income of the average American worker by more than 10 percent and raised average incomes of other rich nations by as much as 30 percent, notes Mr. Kirkegaard.
It may well be that the comparative US standard of living is slipping. The price of oil has risen more dramatically in the United States than in other nations because of the dollar's large devaluation.
The reason for the drop is also statistical. 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.