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Just how well Canada’s middle class is doing is a matter of perspective

In the battle for the votes of the middle class, Stephen Harper has just heard what he wants to hear: Canada's middle-income earners make more than those in the United States.

The New York Times's new website, the Upshot, broke the bad news to Americans Tuesday that their middle class is no longer the wealthiest in the world: Canada's has caught up.

To Mr. Harper it had to sound pretty good. It's the kind of statistic that strikes the heart of Canada's political debate as we head to a 2015 election.

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NDP Leader Thomas Mulcair has toured the country complaining that life isn't affordable for ordinary Canadians. Liberal Leader Justin Trudeau has declared himself the champion of a middle class that's now struggling to make ends meet. Mr. Harper, however, has had a different take on Canada's economic performance: We're doing better than others.

Every politician loves those hard-working middle-class families, because almost every voter counts themselves as part of the middle class. Mr. Mulcair and Mr. Trudeau have engaged in squabbles over who really feels middle-class pain, with the NDP Leader arguing, in effect, that Mr. Trudeau is too spoiled to get it. There's little doubt that Canadians are feeling anxious about their economic prospects, and opposition leaders are trying to channel it against Mr. Harper.

But Mr. Harper can take some comfort from these figures and employ them as a shield. Canada's middle class is doing relatively well.

In fact, it helps Mr. Harper tell the economic story that has always worked for him: These are uncertain times, and he and the Conservatives will steer Canadians away from the worst. A new statistic won't make voters stop worrying about losing their jobs or paying their debts, but it does bolster the best argument he will have for his economic management: being middle-class is tougher in other countries.

There are some other positives, too, even if the overall picture is far from a portrait of a booming economy with burgeoning incomes.

The figures were compiled by Luxembourg-based LIS, which maintains comparative data on incomes in many countries, adjusted into constant dollars and using purchasing power parity to remove fluctuations of currency exchange rates. It's counted after taxes and government transfers.

The LIS found that the median per-capita income in the United States stayed almost flat between 2000 and 2010. Over the course of the same decade, the adjusted median income in Canada increased by almost 20 per cent, to an equivalent amount. The New York Times notes that means Canada has the highest median income of any large country. (There are smaller nations, like Luxembourg, with higher median incomes.) One reason that Canada's median income has caught up to the United States is that there is less inequality north of the border. Affluent Americans, like those in the 95th percentile of income earners, earn more than those in the same percentile in Canada; at the lower end, when comparing those in the 20th percentile, Canadians earn more. In other words, the rich are getting richer faster in the United States, but the ordinary Jane is doing better in Canada.

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But it's not all cause for celebration. Canada's chart-topping was caused by the stagnation of U.S. incomes, not rapid growth in Canada's. One of the co-authors of the LIS research, Branko Milanovic, noted that the Canadian middle class has lost ground to China's, even as it gained on America's.

(And of course, things can change. The data for the comparison ended in 2010, when the U.S. was in a deeper recession than Canada. American incomes may rebound as their economy improves.) But even as Canadian middle-class incomes gained on the U.S., their growth was tepid. And it was weakest in the middle of the middle class, the middle percentile – incomes in that group rose by an average 1.3 per cent per year, said economist Brenda Lafleur, director of the How Canada Performs project for the Conference Board of Canada.

Still, Ms. Lafleur said, Canadians do have to recognize that compared to other big Western economies, incomes in Canada have done relatively well.

So why aren't they happy? Ms. Lafleur believes it's because those income increases aren't keeping up with Canadians' expectations of a consistently rising standard of living. They're small enough to be ignored. It takes more education to earn the same level of income. And many Canadians see their children having a harder time and facing the prospect they won't really be better off than their parents.

That's not exactly a bullish feeling. When the political debate comes next year over who really has middle-class interests at heart, Mr. Harper can cite statistics, but he'll be doing it to defend against some economic angst. The question is whether Canadians will be relieved that things aren't worse.

Follow me on Twitter: @camrclark

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