Middle classes losing out to ultra-rich

A new wave of economic research is painting a troubling portrait of inequality in developed economies: the middle class, long considered the backbone of stable, prosperous societies, is being hollowed out as wealth continues to concentrate in the hands of an ever-smaller elite. The data is stark, consistent across continents, and carries serious implications for social cohesion and democracy.

According to analysis published by the OECD, the share of income going to middle-income households has declined over the past 30 years in most advanced economies, even as overall GDP has grown. Housing costs, stagnant wages, and rising costs of healthcare and education have eroded the financial security that once defined middle-class life. Meanwhile, the top 1% of earners have seen their wealth accelerate dramatically, fuelled by rising asset values, low interest rates, and favorable tax structures.

The psychological and social effects are significant. Studies show that perceptions of economic unfairness are strongly correlated with political polarization, distrust in institutions, and social fragmentation. When people feel the system is rigged against them, they are more likely to seek radical political alternatives — a dynamic visible in electoral shifts across Europe and North America.

Economists and policymakers are debating solutions ranging from wealth taxes and inheritance reform to strengthening collective bargaining and increasing investment in public services. What’s clear is that the status quo is unsustainable. A society where the rungs of the economic ladder are too far apart for most people to climb risks becoming one where the very idea of upward mobility — so central to modern social identity — becomes a fiction.