Global mid­dle class is all around

Over 50% of world pop­u­la­tion soon will be in cat­e­gory

South Florida Sun-Sentinel (Sunday) - - Money - By Heather Long and Les­lie Shapiro The Wash­ing­ton Post

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 mid­dle­class 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 mega-rich. To­gether, the two groups make up a ma­jor­ity of hu­man­ity in

2018, a shift with widereach­ing con­se­quences for the global econ­omy — and po­ten­tial im­pli­ca­tions for the hap­pi­ness of mil­lions of peo­ple.

Q: So how much money does it take to meet Kha­ras’ def­i­ni­tion of mid­dle­class?

A: It de­pends on where you live and on how ex­pen­sive things are where you A woman looks at a cell­phone at a mall in Bangkok, Thai­land, which is among the na­tions poised for a mid­dle-class surge.

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.

Q: What about the U.S. mid­dle class?

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.

Q: Where are these new res­i­dents of the mid­dle class com­ing from?

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.

Q: So what does it look and feel like, around the world, to be a part of the global mid­dle class?

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 bat­tery-pow­ered 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.”

Q: Does more money and more stuff make us hap­pier?

A: The con­sen­sus among re­searchers is that day-today 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.”

BRENT LEWIN/BLOOMBERG

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