Paris, April 11 (IANS) Middle-income households are disappearing in developed countries around the world, according to a new study by the Paris-based Organisation for Economic Co-operation and Development (OECD).
The study, titled “Under Pressure: The Squeezed Middle Class”, laid out a litany of problems affecting middle-income households, warning that “this could have serious consequences for nations’ economic growth and social fabric”, CNN reported on Thursday.
“Today the middle class looks increasingly like a boat in rocky waters,” OECD Secretary-General Angel Gurría said in a statement.
“Governments must listen to people’s concerns and protect and promote middle-class living standards.”
According to the study, the share of people in middle-income households in developed countries fell from 64 per cent in the mid-1980s to only 61 per cent by the mid-2010s.
However the declines were larger in several countries, including the US, Israel, Germany, Canada, Finland and Sweden, it added.
In the US, just over 50 per cent of the population is middle class, much smaller than most other developed countries.
The report considers households earning between 75 per cent and 200 per cent of the median national income as middle class.
Rising income inequality is part of the reason for the trend. Over the past 30 years, median incomes in OECD countries increased a third less than the average income of the richest 10 per cent, the report found.
At the same time, costs are going up faster than inflation in the world’s richest economies – making it harder for the middle class to keep up.
Home prices, in particular, have been growing more than a third faster than median household income in recent decades. The middle class spent 32 per cent of their budgets on housing in 2015, compared to 25% in 1985.
In the study, the OECD offers some suggestions for addressing the middle class squeeze, many of which match the talking points of progressive US candidates, CNN reported.
They include lowering taxes on the middle class and increasing them on the wealthy, developing more affordable housing, helping young adults build wealth, containing the cost of education, child care and health and improving workers’ skills and training.