The ‘squeezed’ middle class
OECD warning: younger generations have a difficult time maintaining their standard of living.
Dr. Sch.- W. – 05/2019
70% of baby boomers belonged to the middle class in their younger years (in
their 20s), the figure for younger generations is only 60%. This warning was
issued by the Organisation for Economic Cooperation and Development (OECD) in a
study entitled ‘Under Pressure: The Squeezed Middle Class’. The middle class
includes those who have an effective income of between 75% and 200% of the
national median. In Germany, depending on the calculation method, singles with
a net income of around €1300 per month would belong to the middle class. Affluence
looks altogether different. In Austria, for example, this amount would classify
a person as a low-income earner.
The OECD warns in
particular that over the same period of time the cost of living for the middle
class has risen faster than inflation would suggest. This is mainly due to the
steep rise in housing costs. The proportion of a middle-class household’s disposable
income spent on housing in the 1990s was a quarter; today it is a third. Over
the last two decades, rents have risen three times faster than median household
incomes. One in five middle-class households spend more than they earn, raising
the risk of over-indebtedness, even more so than those on lower or higher
OECD believes that there is a need for a comprehensive action plan for the
middle classes, ranging from better access to public services and social
protection through to loans and tax relief. This stands in surprising contrast
to the other mainstream social policies of international organisations – including
the EU – which tend to favour low-income or marginalised people.
Click here for the full report (read-only).