Yahoo Finance Middle class struggles in the U.S. and abroad
Six years after the U.S. economy emerged from the Great Recession, jobs growth is on a tear. Last year was the best year for job creation since 1999. In January, 257,000 jobs were added to the U.S. economy. (On Friday, the Labor Department will release figures for February.) Consumer confidence is at multi-year highs; gas prices are near multi-year lows.
But many Americans aren’t necessarily feeling better. “There’s a real psychological split,” says Lizzie O’Leary, host of Marketplace Weekend. “So Americans, particularly the middle class--and it’s borne out by the numbers-- feel like they are treading water, trying to figure out like is there a way for wages to move forward," she says. Wage growth in the U.S. is still weak (though better than it has been in recent years). According to The Wall Street Journal, private-sector wages have grown at about a 2% pace for the past five years. "We don’t really see the kind of major wage gains we’d like to see,” O'Leary says.
But some of the lowest paid workers at some of the country's biggest retailers are getting a pay raise. Wal-Mart (WMT) announced last month it's raising wages for its lowest-paid hourly workers to $9 an hour by April. The owner of TJ Maxx (TJX), Marshall’s and Home Goods followed suit with a similar announcement last week. In order to retain workers, other retailers may be forced to do the same.
But even if wages begin to grow again, Americans are doubtful about their personal economies. According to a Pew Research Center poll from October, only 30% of Americans believe when today’s children grow up, they will be better off than their parents are. O’Leary says she hears that sentiment from her listeners each week. “We asked people this week on our show, ‘Where do you fall on the economic ladder?’ A lot of people felt like they were slipping backwards,” says O’Leary.
O’Leary just returned from Brazil where she reported on real life in a very different economy there. (Her report is part of a six-part series for Marketplace and the BBC on paths to prosperity in different economies.) Despite a beaten down economy (unlike that in the U.S.), many in Brazil are hopeful about their economic future. In that same Pew study, 72% of Brazilians say their children will be better off financially than their parents are.
[Get the Latest Market Data and News with the Yahoo Finance App]
That may be in part because the middle class in Brazil has exploded over the last decade or so. Nearly 50 million Brazilians entered the middle class between 2003 and 2014, according to the Organization for Economic Cooperation and Development.
But times have changed. The Brazilian economy has been teetering in and out of recession for four years. And its problems are numerous: Economic growth has fallen off a cliff after a collapse in soy, oil and iron prices, which fueled explosive growth in the wake of the global financial crisis; there is high inflation, and job losses are at the highest level in six years. The country’s currency, the real, has dropped the most among major currencies over the past six months. The country is also facing a severe drought and its most populous city, Sao Paulo, is running out of water. To make matters worse, its state-run oil company, Petrobras, is mired in a money laundering scandal.
Despite all of this, hopes are high for the middle class in Brazil, says O’Leary. “A lot of people are nervous but they still sort of feel like so much has changed in the past decade,” says O’Leary. “They have faith they are going to have better lives, they just don’t know quite how they are going to get there. Because there are a lot of really, really big roadblocks in the way.”
In her reporting, O’Leary says she met a lot of regular middle class families whose lives have improved but “they’re staring at all these massive obstacles, trying to figure out what to do next.”
More from Yahoo Finance
A surprising way to make money in gold
