The press was filled with stories yesterday about the middle class 'beating the downturn'. It's a shame it didn't happen, writes Matt Broomfield.
The press was filled with stories yesterday about the middle class ‘beating the downturn’. It’s a shame it didn’t happen, writes Matt Broomfield
The Social Market Foundation, an institution which has the dubious distinction of being ‘John Major’s favourite think-tank’, recently published a report on the ‘squeezed middle’ of Britain.
The document, somewhat dramatically entitled ‘Riders on the Storm’, compares the economic welfare of middle-income families in 2007 to their status in 2011-2012 (the last years for which data is available).
According to the SMF, then middle-class households have shown “remarkable resilience” in the face of the recession. The think-tank focussed on families in the third of five income brackets in the UK, with earnings of between £26,100 and £41,200 before tax. They found that 41 per cent of families in this bracket in 2007 had risen into one of the top two income brackets by 2011-2012.
Meanwhile 40 per cent of families remained in the middle income bracket, while only 18 per cent dropped down to one of the two lower income brackets.
It seems the squeezed middle are not so squeezed after all.
This good news for middle-class families therefore seems like bad news for Labour, who have focused on the ‘cost-of-living crisis’ faced by Middle Britain as a key criticism of the coalition. The timing of this report seems especially unfortunate for Ed Miliband, who wrote in the Independent on the same day the SMF’s findings were released that “the link between [economic] growth and the living standards of middle Britain has been broken”.
Coverage of the SMF report in the Times, the Daily Mail and the Guardian is accompanied in each case by a photo of Ed Miliband looking suitably doleful. The findings “deal a blow to Labour’s campaign on the cost of living”, Francis Elliott wrote for the Times in a sentiment echoed by all three newspapers.
Yet a closer inspection of the report’s findings and methods reveals that everything is not so rosy for the middle class. For a start, they explicitly trace the survival of middle-income families to their individual resilience, rather than to any Conservative policies.
For example, families in the middle-income bracket “have managed spending on food – switching to cheaper items – to avoid the 25 per cent increase in food prices over the period”. Middle-income families are also making 20 per cent greater use of free childcare, as grandmothers and other relatives lend a hand.
This is linked to the fact that “in the group of households that climbed up from the bottom two quintiles into the middle, the proportion of double-earner households rose from 35 to 49 per cent”.
The report indicates that middle-income families are being forced into working longer hours and relying on relatives to care for their children, while scraping together enough cash to fill their shopping trolleys with less food than before.
Though commendable, this wide-spread belt-tightening hardly seems a cause for celebration.
Furthermore, the SMF’s findings are not derived from straightforward average income, but rather from what the authors excitably term a “new methodology”. In the appendices to their report, they outline the way they “use longitudinal data from the British Household Panel Survey (BHPS) and Understanding Society (US) to follow specific households over time”.
This is a fairly meaningless and anecdotal way of processing the data. There will always be individual success stories, and a degree of social churn as the economic fortunes of individual families vary.
The authors do also track the movement of households across the economic spectrum, to conclude in rather more vague and less headline-grabbing terms that “overall the households that climbed up the distribution outnumbered those that fell”.
However, it is unhelpful to discuss income in relative rather than absolute terms. So long as the middle classes’ quality of life is diminishing less rapidly than it is for those in lower-income brackets, they can be technically described as thriving. A comparison to the change in income of middle-income families prior to the recession might be more telling, but the authors fail to provide one.
The SMF acknowledges that wages have failed to keep place with inflation, with the result that by 2011-2012 the average middle-income family is 13 per cent poorer in real terms than they were in 2007. This statistic, buried on the 15th page of the report, is the real headline.
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