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Under Pressure: The Squeezed Middle Class

image of Under Pressure: The Squeezed Middle Class

Middle-class households feel left behind and have questioned the benefits of economic globalisation. In many OECD countries, middle incomes have grown less than the average and in some they have not grown at all. Technology has automated several middle-skilled jobs that used to be carried out by middle-class workers a few decades ago. The costs of some goods and services such as housing, which are essential for a middle-class lifestyle, have risen faster than earnings and overall inflation. Faced with this, middle classes have reduced their ability to save and in some cases have fallen into debt. This report sheds light on the multiple pressures on the middle class. It analyses the trends of middle-income households through dimensions such as labour occupation, consumption, wealth and debt, as well as perceptions and social attitudes. It also discusses policy initiatives to address the concerns raised by the middle class, by protecting middle-class living standards and financial security in the face of economic challenges.

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Overview

This introductory chapter gives an overview of the entire report drawing on the analyses carried out in the four subsequent chapters. The report looks at the multiple pressures on the middle class, in terms of their economic situation, their living expenses, and labour market insecurity. It documents that in many OECD countries, middle incomes have grown less than upper incomes and in some, they have not grown at all. The costs of some goods and services, such as housing, which are core for a middle class lifestyle, have risen faster than real median incomes. The report sheds light on the rising job insecurity for middle-income households in rapidly transforming labour markets, where middle-income jobs face high risk of automation. Finally, it discusses policy measures and initiatives to address the challenges with which middle-income households contend - boosting incomes, coping with increased costs of living, improving the fairness of taxation and building skills of middle-class households.

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