NY Times: "Study Finds Low Incomes Constrain Half of World"

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Editors Note: While the pro-trade deficit lobby claims that 98% of consumers live outside the United States, this article shows most have little, if any, purchasing power.

UNITED NATIONS — Poverty may be down worldwide, yet that does not mean that yesterday’s poor are today’s middle class. Data analyzed by the Pew Research Center concluded that more than half the world’s population remains “low-income,” while another 15 percent are still what a report issued by the center on Wednesday called “poor.”

[ by Somini Sengupta | July 8, 2015 | NY Times ]

The share of the global poor, defined as those who lived on $2 a day or less, fell from 29 percent in 2001. Most of the people in that category, though, took “only a moderate step up the income ladder,” the report concluded: 56 percent were “low-income,” in 2011, living on $2 to $10 a day.

The report defined as “middle” or “upper-middle” income those who lived on $10 to $50 a day. Fewer than one-fourth of the world’s population met that criteria. “Even those newly minted as middle class enjoy a standard of living that is modest by Western norms,” the report said, with barely 16 percent of the world’s population living above the official United States poverty line — $23,021 for a family of four in 2011.

The report echoed some of the findings of the final report of the Millennium Development Goals, issued by the United Nations earlier this week. It said the share of people living in dire poverty — less than $1.25 a day — had fallen by more than half in the quarter century between 1990 and 2015. But the Pew study struck a more sober tone, signaling that those who had escaped poverty are still teetering on the edge of being poor, which is particularly striking in populous countries like India or Bangladesh that have virtually no safety net for those who suddenly fall ill or lose their jobs.

The report asserts that the $10–a-day threshold to define a middle-class person reflects a growing consensus that only at that threshold is a person “on a firm enough footing to not worry about mere subsistence.”

The report is likely to contribute to the policy debates over income inequality, tempering as it does previous estimates, including in the McKinsey Quarterly, on the rapid rise of the global middle class.

The Pew report noted, too, that “the gap in living standards between the world’s economically advanced countries and emerging and developing nations barely narrowed in the first decade of this century.”

In 2011, 87 percent of the world’s high-income people — defined as those who live on more than $50 a day — lived in North America and Europe, down slightly from 91 percent in 2001. Poor and low-income people are concentrated in South Asia and sub-Saharan Africa.

In terms of volume, the absolute number of middle-class people — those making between $10 and $20 a day — swelled significantly, to 784 million people in 2011, nearly twice the number from 2001.

The most visible change was in China. Its share of the global middle class quadrupled over the course of 20 years, becoming 30 percent of all middle-income people in the world in 2011, from barely 8 percent in 2001. People in South America also moved up the ladder. The middle-income population in Western Europe dipped, “as people moved into higher income brackets.”

The report studied 111 countries, using a combination of income and consumption data. It adjusted for purchasing power parity.

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