No 47: Farewell to the middle class?

Bad news for rebuilding the welfare state

Though the size of the global middle class is growing, their political power is shrinking in the face of austerity.
Banksy's 'Shop til you drop' mural in London's West End, January 2012. (QuentinUK/Creative Commons)

by Zoë Irving

On Tuesday 22nd May 2019, the United Nations Special Rapporteur on extreme poverty and human rights released the final report on his country visit to the UK. His conclusion that the evaporation of the UK’s social contract is revealing a Hobbesian lived reality is backed up with reference to much of the research familiar to those engaged in social policy. Nevertheless, the Conservative government contests his conclusions as being ‘politically biased’, as though austerity has ever been anything but. This UN report provides an appalling indictment on the effects of a decade of, at best, a failed debt recovery project, or, at worst, a strategy to cement the interests of the wealthy and powerful. But there are still more dimensions to the legacy of austerity that are equally as troubling as its immediate impact.

One of these is the extent to which austerity has decapacitated the mobilising forces that are essential to welfare-state-building and, in particular, the middle class. Although a sociologically nebulous category, the middle class has historically been a significant ally in the development of welfare states in the global North, Latin America and Asia. The middle class tends to capture disproportionate benefits from the welfare state and contributory benefits in particular, but this is why its politics matter: it has power in voicing and securing demands for more and better public services, defending existing provisions and protecting universalism.

Middle class buy-in is central to the integrative function of state welfare, and middle-class flight underwrites both residualisation and the general decline in scope and generosity of social policies.

Is the middle class really in decline?

On income measures, the global middle class, currently estimated at 47.11 per cent of world population, is projected to reach 63.42 per cent by 2030. Some claim that this heralds a ‘tipping point’ in social progress because the middle class drives consumption and innovation (and hence growth), and political change because the middle class boosts tolerance and trust (and hence democracy). Progress is expected to come especially in and from China, India and the wider Asian world region because this is where most of the emerging middle class is to be found. The middle class is also expected to accelerate its own expansion — generally, the higher the median income, the greater the population share of the middle class, except in the US (disproportionately small) and central European countries (disproportionately large), adding a further dimension to its desirability.

In the fifth report in its series on inequality, the OECD expresses concern about the decline of the middle class and weakening of its economic power, observing that between 1985–2015 the share of income ratio of the middle to upper income class declined from 3.9 to 2.8. This squeeze has tightened since the financial crisis, and over the decade of austerity since 2010, while the top 10 per cent have gained, average OECD median incomes have hardly changed. Globally, as Branko Mianović shows, post-crisis income growth in the OECD middle class has lagged behind that of the global middle class as well as the global rich. The problem is not just that the global Northern middle class are now slightly less privileged in relation to the super-rich, however.

The optimistic projections on the emerging middle class have to be treated with caution as others have pointed out: much of this class is precarious, remaining ‘close to poverty’, and in the case of Africa this applies to approximately 60 per cent. In the post-2008 crisis global North, it is this kind of precarity that austerity has similarly visited on the middle class, which the OECD worries is showing signs of fracture. Mirroring the global South, it is more clear now that in the OECD, the middle income class is at greater risk of ‘sliding down’. Numerically this isn’t giving the ‘99%’ empirical as well as symbolic meaning, but there are still consequences for demands on social policy as social risks seep deeper into households previously more immune.

Demobilising the middle class

In the same way that Andre Gorz’s ‘Farewell to the working class’ was more than a comment on the changing nature of work, the possibility of a disappearing middle class is much more than a sociologically interesting phenomenon. A weakening of economic power is always accompanied by a weakening of political voice, and in this case, a voice that has demanded well-funded, comprehensive welfare provision.

The middle class is shrinking because the costs of middle-classness have risen and the pathways to achieving it are blocked. It generally requires two high-skilled earners in a household but this advantage is challenged by debt-laden higher education; the unaffordability of owner-occupation; stagnant wages; deskilling and the contraction of middle-ranked jobs with security, prospects and pensions; precarious self-employment; rising care costs; household indebtedness and the impossibility of accumulating wealth through saving. The toughening of barriers to social mobility also highlight the intergenerational dimension since the current better-off middle class tend not to be of working age or to have children.

But in the midst of austerity, it is not simply the case that becoming and staying middle class is more difficult. Those who are, are seeking to maintain their status by opting out of public welfare to pursue private options: the household spending share on private health, for example, has increased in 14 out of 18 OECD countries with data. Spain has seen a 10 per cent increase in private health insurance enrolments since 2012. Private provider expansion and transnational markets in health and education have also debilitated the pressure for welfare state building outside the OECD, as those with greater means opt to pay for health and education services at home and abroad rather than agitate for better public provision. Austerity has depleted middle-class jobs and unionisation in the public sector, but the declining association of the middle class with its services leaves it evermore defenceless.

The lesser hardships of the better-off under austerity are also obviously not as life-limiting and acute as the hunger, poverty and early death of those most affected by the post-crisis welfare assault. But the ratcheting down of lower-middle and middle-middle-income security while the upper-income middle gradually disengages from the public sector is imperilling the potential recovery of the welfare state.

Why preserving the middle class matters

In social policy, a defence of middle-class advantage is problematic, but neither is its loss any cause for celebration. Saying farewell to the middle class is far more dangerous than simply identifying it as a further symptom of the greater polarisation between rich and poor; it’s the burning of a strategically significant bridge that offers a route back to the fundamental solidarities (not just the efficiencies) that underpin the welfare state.

In the same way that the welfare states of the Nordic countries, built with cross-class alliances had provided a model of aspiration for twentieth-century welfare states, the lowering of the international bar by welfare states in the global North reduces global pressures to do more and better social policy. In a national context, the politics of the 21st century ‘middle class’ are as divided as its income deciles. Pre-austerity, redistribution was relatively palatable. In 2019, the incentives to hang on to every penny are much more apparent. The idea of middle-class ‘fear of falling’ has not tended to produce the same political response that shared economic risks of destitution generated in the face of nineteenth-century poor laws and there is no reason to assume that privilege would automatically be expanded by the privileged in the future.

When welfare state rebuilding becomes a real prospect, shoring up the slipping lower-middle and middle-middle class has to form an early part of a strategy, and in a recent article, Remo Siza presents a range of ideas on what could be done at the individual level. Jobs and education are obvious areas for policy solutions linked to social re-mobility and future social class re-integration, but fundamentally it is social spending in general and the solidaristic commitment to it which need to be revived. More than individualised interventions, this needs a change of hearts and minds on the necessity of public ‘debt’ for social spending, tax as a treasure not a burden and an accurate public understanding of the true distribution of the costs and benefits of the welfare state beyond being a net payer or net beneficiary in the tax-benefit system.

Foremost in this, is bringing the disengaged middle class back into the public realm because raising taxes at the top is the most urgent element of reform and has to be the catalyst for long-term change. Transforming the narrative on tax as a societal charge and a public good also, therefore, has to start at the top. It is reported that the philanthropic impulse amongst Ultra High Net Worth Individuals is strengthening through the collective setting of ‘a new standard of generosity among the ultra-wealthy’. This imagined benevolence has to be converted from a tax-deductible ‘moral commitment’ to preferred causes to a concrete liability for public welfare that is trickled down to the ‘haves’ whose commitment is faltering. Re-engaging buy-in is essential because advanced welfare states can’t afford to lose the support of the middle class, and emergent welfare states can’t expand without them.

Zoë Irving lectures in Comparative and Global Social Policy at the University of York UK. She is co-editor of Journal of International and Comparative Social Policy.

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