The richer the rich, the poorer the poor: Millennials are squeezed out of the middle class

 The richer the rich, the poorer the poor: Millennials are squeezed out of the middle class

Millennialswages are 67% higher than they were in the 1970s, but they cant keep up with the increase in spending.

The latest report from the Organization for Economic Co-operation and Development (OECD) shows that the middle class in developed countries is disappearing.

Since the Baby Boomer Generation, born between 1943 and 1964, the middle class of every generation has been shrinking.

The most tragic is undoubtedly the Millennials, who were born between 1983 and 2002, who are much harder to become middle class than their parents.

According to the OECD report, 70% of the baby boomers in their 20s are middle class, but only 60% of the millennials consider themselves middle class.

On the whole, the global high class remains stable, the middle class gradually shrinks, and the lower class continues to expand into the mainstream trend - the richer the rich, the poorer the poor.

Why did the middle class shrink in developed countries?

First, lets figure out what the middle class is.

The Organization for Economic Cooperation and Development analyzed the economies of 36 member countries and China, Russia, Brazil and South Africa. The final definition is that the middle class refers to people whose annual income is between 75% and 200% of the countrys median annual income.

In the United States, for example, people whose annual income is between $23416 (about RMB 157,000) and $62442 (about RMB 419,000) can be classified as middle class.

According to American media Quartz, from the baby boomers to the X generation (the generation born in the mid-1960s to the late 1970s) to the Millennium generation, the proportion of the middle class shows a downward trend.

In addition, the economic influence of the middle class has also declined significantly. According to the OECD report, middle class income has risen by only 0.3% annually in the past decade, compared with 1.6% annually before the economic crisis.

Housing costs are the main cause of pressure on the middle class. Currently, housing costs account for one-third of middle-class household expenditure, compared with only one-fourth in the 1990s.

Income is rising slowly, far behind house prices, education and other spending. Naturally, the middle class is getting smaller and smaller.

However, the situation varies from country to country.

In the United States, although the middle class is also shrinking, part of it is becoming a low class, but a larger part is entering the high class; in Britain, the low class and the middle class are shrinking, but the high class is expanding; but in Spain, the middle class is shrinking mainly because people are falling to the low class.

CNBC, the US media, said that this was a direct reflection of income inequality in these developed countries. In the past 30 years, basic wages in many developed countries have barely risen, while consumption levels have been rising. At the same time, the original rich are getting richer, and the low-yielding and middle-class naturally shrink accordingly.

According to the OECD report, current research shows that the top 10% of people have nearly 50% of the wealth, while the bottom 40% have only 3% of the wealth.

The Difficulties of the Millennium Generation

Although the middle class still accounts for more than half of the population of OECD countries, it is an indisputable fact that the middle class is disappearing.

Among them, the Millennium Generation of developed countries has been squeezed out of the middle class.

According to the Guardian, as the Millennium Generation, it is now between the early and mid-thirties of age, when they are struggling, but they are much less likely than their parents to become middle class.

For example, the proportion of Millennials buying a house is much lower than that of their parents in the same period. In the United States, house prices are now 39% higher than they were 40 years ago. As a result, the Millennium generation rents more and more houses and buys them later and later.

According to Business Insider, the consumption concept of the Millennium generation is different from that of previous generations. They pursue high consumption and firmly believe that they should be better for themselves, so they also face more loans.

In addition, although the wages of the Millennium generation have risen by 67% over those of the 1970s, all kinds of spending have risen much faster. High housing prices, high consumption and the impact of the Great Depression make it increasingly difficult for the Millennium generation to accumulate wealth.

The OECD report writes, Being a middle class has always been the pursuit of people. For many generations, being middle-class means living in a comfortable home and living a decent life. However, the pursuit is not as stable as it used to be.

Some analysts say that middle class shrinkage is not a good thing. The OECD recommends that governments review their tax systems and reform housing, education and other fields.

The government should listen to the concerns of the people and protect and improve the living standards of the middle class, OECD Secretary-General Angel Guria said. This is essential for promoting sustainable economic development and ensuring social stability.

Source: Author of New Beijing News: Xie Lians Editor-in-Charge: Li Hang_BJS4645