Global middle class is all around
Over 50% of world population soon will be in category
The world is on the brink of a historic milestone: By 2020, more than half of the world’s population will be “middle class,” according to Brookings Institution scholar Homi Kharas.
Kharas defines the middle class as people who have enough money to cover basics needs, such as food, clothing and shelter, and still have enough left over for a few luxuries, such as fancy food, a television, a motorbike, home improvements or higher education.
It’s a critical juncture: After thousands of years of most people on the planet living as serfs, as slaves or in other destitute scenarios, half the population now has the financial means to be able to do more than just try to survive.
“There was almost no middle class before the Industrial Revolution began in the 1830s,” Kharas said. “It was just royalty and peasants. Now we are about to have a majority middle-class world.”
Today, the middle class totals about 3.7 billion people, Kharas says, or 48 percent of the world’s population. An additional 190 million (2.5 percent) comprise the megarich. Together, the two groups make up a majority of humanity in 2018, a shift with wide-reaching consequences for the global economy — and potential implications for the happiness of millions of people.
A: It depends on where you live and on how expensive things are where you live. Kharas’ definition takes into account the higher cost of meeting basic needs in places such as the United States, Western Europe and Japan than in much of the developing world.
In dollar terms, Kharas defines the global middle class as those who make $11 to $110 a day, or about $4,000 to $40,000 a year. Those are per-person numbers, so families with two parents and multiple children would need a lot more. It’s a wide range, but he adjusts the amounts by country to take into account how much people can buy with the money they earn. For example, earning $12,000 for a family of four in Indonesia would qualify for the global middle class, but it would not in the United States.
A: The median household income in the United States is just over $59,000. That’s right in the middle for America, but it ranks in the 91st percentile globally for a family of three, according to Kharas’ research.
“Americans have a hard time realizing the American middle class is, in a global perspective, pretty high up,” said Anna Rosling Rönnlund, who founded the Dollar Street project to photograph families and their lifestyles around the world.
A: Kharas estimates 140 million to 170 million people are moving into the middle class every year. (More-exact estimates are difficult to come by; not all countries keep uniform records, and in some places the data are years out of date.) India and China have been driving much of the middle-class boom in recent years. Now, Kharas said, Southeast Asian countries such as Thailand and Vietnam are poised for a middle-class surge.
A: Dollar Street, the project from Sweden’s nonprofit Gapminder foundation, has photographed the daily lives of more than 250 families around the world. Their subjects include a family of five in Burundi who lives on $324 a year and a family of five in China pulling in $121,176 a year. The photos show the people and their homes, eating utensils, toilets, toothbrushes and transportation, allowing people to compare lifestyles around the world.
Dollar Street recently photographed Angga and Yuli Yanvar, a couple in their early 30s with two young children, part of the rising middle class in Indonesia. Angga is a social worker and Yuli is a teacher. The family has a refrigerator, electricity and a motorbike to get around, and their children have several toys, including a batterypowered minicar. They are saving money to purchase a home and car, goals that appear realistic given that they earn just over $12,000 a year in income.
What immediately jumps out in the photos is how remarkably similar daily life is around the world, with the exception of the very rich and poor. The vast majority of the families have electricity, running water in their home, children that attend school and some sort of transportation.
That lines up with Kharas’ research. “These people in the global middle class have a lot of things in common,” he said. “They like having air conditioning, a refrigerator, a car or motorcycle to get around, and they like going on vacation and not having to work every day.”
A: The consensus among researchers is that day-to-day mood doesn’t improve much after about $75,000 a year in the United States. There’s not much noticeable improvement in mood after that, even when homes and bank accounts get larger. That said, people also tend to feel better if they are moving up the income ladder, which helps explain why the middle class in the United States and much of Europe is upset after years of stagnating income.
Ronnlund and her team have witnessed some of these trends with the Dollar Street project. They don’t ask specifically about happiness, but they did ask every family they photographed about their favorite things and what they would like to buy if they got a bit more money.
One poor family held up a plastic bucket as their favorite possession because it was the difference between life and death for them. They dreamed of getting a phone or better bike. Middle-class families valued things that made their life better, such as air conditioning or a refrigerator, and they longed to own cars or homes. Wealthier families prized items such as specialty alcohol, exotic plants or fancy stuffed unicorns.
“I thought it would be easiest to photograph wealthy people, but it’s been the opposite,” Rönnlund said. “Richer people have a harder time inviting people into their home as is. They want to stage it so they look good and present the social media version of themselves.”