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

Abstract

The public debate portrays the middle class as the big losers in recent decades, while people above and below seemingly fared better in terms of employment and income growth. This narrative is both conceptually and empirically flawed. Based on the Luxembourg Income Study 1980–2020, we show for France, Germany, Poland, Spain, the UK, and the US that middle-class employment expanded, while the working class shrank. The middle class also experienced consistently larger income gains than the working class over the past four decades. The disposable real incomes of working-class households in France, Germany or the US grew by less than half a percent per year, compared to 1% or more for the middle class. Cohort analysis also shows that the promise of doing better than one’s parents held for the middle class, but vanished for the working class.