Europe’s Middle Class Stagnant
The Middle Class is disappearing, the NYT reports. In Europe.
The European dream is under assault, as the wave of inflation sweeping the globe mixes with this continent’s long-stagnant wages. Families that once enjoyed Europe’s vaunted quality of life are pinching pennies to buy necessities, and cutting back on extras like movies and vacations abroad.
Potentially more disturbing — especially to the political and social order — are the millions across the continent grappling with the realization that they may have lives worse, not better, than their parents.
I blame Bush.
A study by the German Institute for Economic Research in Berlin found that the broad middle of the German work force, defined as workers making from 70 to 150 percent of the median income, shrunk to 54 percent of the population last year, from 62 percent in 2000.
To be sure, Europe’s middle class is still larger than the number of people at risk of falling into poverty — and, by many measures, more protected than the American middle class. But policy makers worry that could change as the European economy starts to feel the drag of an American slowdown and high inflation.
Much of the declining purchasing power of European workers can be traced to those numbers, and to policy decisions and economic developments over the last decade when globalization began to reshape Europe and the world.
In Germany, Europe’s largest economy, the decline in purchasing power began in 2000, when employers started wresting wage concessions from unions, or simply shifting jobs to Eastern Europe and China. Inflation-adjusted incomes rose from 1 percent to 2 percent in the late 1990s, but more than one million Germans lost full-time jobs during and after a recession in 2000 and 2001. Subsequently, workweeks got longer without extra pay, and from 2004 through 2007, inflation outpaced income increases for the average family.
In France, the 35-hour workweek kept average annual pay increases below 1 percent for nearly a decade, said Robert Rochefort, the director general of Credoc, an organization in Paris that researches living standards. But French hypermarkets — big-box supermarkets that dominate the retail market — kept prices high, he said.
Spain generated thousands of jobs by pumping up the housing market, but has undergone a joblessness jump since the turmoil in real estate markets while wages have been consumed by inflation.
In recent years, the American Left has pointed to similar trends in the United States and blamed deregulation, a flattened tax code, and other public policy decisions which have had the effect of letting the very successful keep more of their money while leaving those lower on the economic scale unprotected and having to compete with Third World labor. That essentially the same thing is happening in Europe, where even the most conservative governments are well to the left of any mainstream American Democrat and socialization of the economy is much more pervasive, would seem an indication that public policy is not the primary factor.