The Myth of the Middle Class Squeeze: Employment and Income by Class in Six Western Countries, 1980-2020

The public debate regularly depicts the middle class as the victim of employment polarization and income stagnation. This narrative of a squeezed middle class suggests that people both above and below fared better in terms of employment and incomes. However, this narrative ignores basic insights from class theory and lacks empirical evidence. Based on the Luxembourg Income Study, we trace the evolution of employment and income by class for France, Germany, Poland, Spain, the UK and US, 1980-2020. Over this period, employment of the upper-middle and middle class swelled by 10 to 20 percentage points, while the ranks of the working class dwindled everywhere. Working-class households also made consistently smaller income gains than middle-class household in all countries except Poland. Between 1980 and 2020, real labor income of the working class declined in Germany, stagnated in the United States and grew by less than one percent annually in France and the UK. While the promise of doing better than their parents and grand-parents held for middle-class households, it has broken down for the working class – most clearly so in Germany and the US. The great economic loser of the last four decades was not the middle, but the working class.

Authors

Moawad, J., Oesch, D.