I recently wrote at Middle Class Political Economist how the median wealth of Americans is only 27th in the world, lower than 20 other industrialized democracies in the Organization for Economic Cooperation and Development, as well as six non-OECD countries. Indeed, according to the Credit Suisse Global Wealth Report for 2012, median wealth per adult is $193,653 in Australia and only $38,786 in the United States. Even European countries ravaged by the financial crisis and austerity have higher median wealth per adult than this country, including Italy ($123,710), Ireland ($60,953), and Spain ($53,292).
Should we care? You bet: median wealth reflects the increasing economic insecurity of the middle class, including the falling value of homes and retirement accounts. It gives us a clear warning of the coming middle class retirement crisis.
People often wonder how this can be true. After all, the United States has a higher gross domestic product per capita than all but four of them, and the largest single economy in the world. A big part of the answer is that GDP per capita is a measure of the mean (total divided by population), whereas the median is the figure exactly in the middle of a population distribution: half of all observations are above the median, half below.
However, to understand the situation of a typical person, the median is a much more meaningful measure than the mean when the resource is distributed unequally – as is true for income and even more so for wealth.
Unsurprisingly, a lot of the explanation has to do with inequality. In the United States, the ratio of mean wealth per adult to median wealth per adult is 6.75:1. Since the U.S. is 7th in mean wealth per adult but only 27th in median wealth, that means a lot of countries have lower mean wealth but higher median wealth, and necessarily less wealth inequality. Canada's ratio is less than 3:1 and Australia's mean wealth is less than twice median wealth – and its mean wealth per adult is higher than that of the United States.
One striking way to see this is in foreign travel. It is well-known that Americans travel abroad less than people in most other rich countries. Australians, by contrast, are pretty legendary travelers – 31 percent of the population traveled abroad in 2012 (h/t "joshcryer" at Democratic Underground). But perhaps the most stunning statistic came from another commenter at Democratic Underground, Steven Leser, who finds that only 2 percent of annual American foreign trips are to Australia (about 500,000), whereas 642,000 Australians come to the United States each year (and it may have been over 800,000 in 2012, according to the statistics linked above).
Australia only has 23 million people, compared to America's 316 million, 13 times as many. Yet more Australians visit the U.S. than Americans visit Australia.
Are you convinced yet that Australia's middle class is doing better than ours?
Kenneth P. Thomas is professor of Political Science and fellow in the Center for International Studies at the University of Missouri-St. Louis. He is the author of "Competing for Capital: Europe and North America in a Global Era" and "Investment Incentives and the Global Competition for Capital." He blogs at Middle Class Political Economist.