Middle Class Gained Jobs and Income; Working Class Fell Behind

The public story that the middle class has been the major loser of recent decades is both conceptually and empirically flawed. New analysis of household employment and disposable income across six Western countries shows a different pattern: middle-class employment and incomes generally outpaced those of the working class between 1980 and 2020.

📚 What Was Examined: The distribution of employment and real disposable household income across social classes in France, Germany, Poland, Spain, the UK, and the US over four decades (1980–2020).

📊 How the Evidence Was Assembled: Analysis uses the Luxembourg Income Study (LIS) harmonized microdata covering 1980–2020 and applies cohort comparisons to assess intergenerational promises of improvement.

🔑 Key Findings:

• Middle-class employment expanded while the working-class share of employment declined across the six countries studied.
• The middle class experienced consistently larger income gains than the working class over the past forty years.
• Disposable real incomes of working-class households in France, Germany, and the US rose by less than 0.5% per year, whereas middle-class incomes grew by about 1% or more per year.
• Cohort analysis indicates that the expectation of doing better than one’s parents persisted for the middle class but effectively disappeared for the working class.

🌍 Why It Matters: These results challenge a widespread narrative that middle-class stagnation is the defining economic story of recent decades. Instead, the data point to growing divergence between middle- and working-class trajectories in both employment and income, with important implications for debates about inequality, policy targeting, and intergenerational mobility.