The middle class across many markets is full of dreams but many realize that it is difficult to achieve many of them of late. Ipsos researchers say this is in part because the social contract that most in the middle class grew up with – that hard work equals advancement and social mobility – is fundamentally broken.
“There is a brewing crisis coming,” says Oli Sweet, Ipsos’ head of ethnography.
Financially, they say the top 10 per cent of earners around the world have seen their incomes rise dramatically since 1985. “The middle class hasn’t experienced that same level of growth,” says Christie Moorman, senior vice president, online communities with Ipsos in the United States. “For many middle-income earners, they’re not really able to achieve that upward mobility and they struggle sometimes to even maintain that middle class financial stability they enjoyed historically.”
Living paycheck to paycheck
In the U.S., she adds, Americans living in middle class households have also dropped 10 per cent since 1971. Two in three are living paycheck to paycheck. “Some of this is true even for those making six figures,” she adds. Just 36 per cent say they believe their children will reach a higher standard of living.
That said, although social rules are being rewritten, Moorman also says the moral essence of what it means to be middle class – that is, earning your status through determination and hard work – is still very robust. The concept, however, is under strain. “Today it’s becoming more and more about just hanging on or striving to maintain what you have,” she says. “It’s really critically important when you’re communicating with the middle class that you acknowledge some of the challenges that they’re facing, that you reflect some of those middle-class values.”
The researchers then broke down those values into five social rules which seem to govern middle classes globally.
The social rules include:
- The rule of work: The assumption that work should pave the way to social mobility.
- The rules of spending: The way you spend your money defines your character. “This changes across different markets,” says Sweet. “The UK and Canada have a very similar outlook in terms of being thrifty and modest. That thriftiness can almost become competitive among the middle classes where they like to showcase how they’ve not spent that much money on something.”
- The rule of display: Look decent, even classy, but never boastful. Maya Ilic, vice president of global communities innovation notes that in Canada, understated and minimal displays of wealth are seen as a virtue.
- Rules of care: How you care for dependents, including children and elders. Canada is noted in this area as having a population which outsources a lot of its care relative to their counterparts around the world.
- Effort reward rule: The belief that institutions ought to reward effort proportionally.
“In countries like China, Japan, and Brazil, we still see a strong link between hard work and collective or generational progress. At the far end in France and Spain, many feel the system no longer rewards people like them, reflecting a bit of skepticism or even a sense of institutional betrayal,” Ilic says. “Two factors shaping these attitudes are economic growth and employment levels. When these are strong, belief in the effort reward deal is likely higher.”
Lack of social mobility
Socio, political and economic factors rewriting these rules include a lack of social mobility, rising cost of living, generational wealth transfer, housing crises and populist governments.
“When we look at the rule of work as the bedrock,” Sweet says, “we’re starting to see that effort is actually being taken for granted. Wage stagnation means that the middle classes have to work even harder just to stand still.”
Nanzala Mwaura, Ipsos chief growth officer in Sub-Saharan Africa, also warns that there is going to be a new group of clients going forward that will, for the first time, have less than their parents did. “Prepare for that,” she says.
