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NextGen Magazine


OECD Report Says Middle Class Shrinking Worldwide, Millennials Less Likely to Be Middle Class

Chris Gaetano
Published Date:
Apr 11, 2019

A report from the Organisation for Economic Co-operation and Development (OECD) has found that the number of middle class people is shrinking around the world, and younger people are having a difficult time even entering it. The OECD defines "middle class" as those whose household earnings are between 75 percent and 200 percent of the median national income.

The share of such people fell from 64 percent in the mid-1980s to 61 percent in the mid-2010s. In general, according to the report, wealthier countries have larger middle classes with two converse exceptions. One is the United States, which, despite having the fourth largest median income in the world, has only the 31st largest middle income class of all OECD countries. By contrast, the Czech Republic, the Slovak Republic, Hungary and, to a lesser extent, Poland and Slovenia all have middle classes larger than one might expect from their median income levels. The statistic becomes more drastic if we factor in only the working age population. Page 80 of the report shows that 71 percent of working age households in the mid-'80s were middle class, versus 67 percent in the mid-2010s. 

There's also a generational component. The report said that by the time baby boomers reached their 20s, 70 percent were middle class; by the time millennials reached their 20s, that figure had gone down to 60 percent. 

The report says this is indication of widening global inequality, noting that at this point the top 10 percent in income distribution controls half of all the world's wealth while the bottom 40 percent account for just 3 percent of it. Contributing to this has been rising costs of items such as  housing, education and health care, as well as falling incomes. It noted that, between 2008 and 2016, real median incomes grew by 0.3 percent compared to 1 percent between the mid-'80s and mid-'90s, and 1.6 percent between the mid-90s and mid-2000s. Still, even during this time period, median incomes did not outpace the growth of upper class incomes. Over the past three decades, OECD-wide, median incomes grew by one-third less than those in the top 10 percent. 

Another study came to similar conclusions regarding the growth rate of elite incomes. It said that, between 2009 and 2015, the incomes of the wealthiest 1 percent of Americans grew faster than the incomes of the lower 99 percent in nearly every state in the country. In nine states, the top 1 percent accounted for half or more of all income growth in this time period.