Monday 11 December 2017

The middle class expansion: US think tank reports sharp rise in numbers living in middle-income households in Ireland

Middle-class households in Ireland experienced a gain of 71pc in their median income from 1991 to 2010 (Stock photo)
Middle-class households in Ireland experienced a gain of 71pc in their median income from 1991 to 2010 (Stock photo)

Charlie Weston Personal Finance Editor

There has been a strong rise in the numbers of people living in middle-income households in this country, a leading US think tank found.

The Pew Research Centre said the share of adults living in middle-income households rose in Ireland and in France and the Netherlands between 1991 and 2010.

But this was in contrast to most other countries. The numbers in middle-income households fell in Germany, Italy and Spain, and many other European countries.

The research estimates that 69pc of households in Ireland can be classed as middle income. It says 19pc are lower income, and 12pc are upper income.

Back in 1991 60pc of households in this country were middle-income, Pew researchers found.

There was a fall of 7.3pc in the number of adults who were classed as lower income between 1991 and 2010.

Pew calculated that disposable income to be classed as middle-income in Ireland as $30,074, which works out at €27,632. This is after-tax income for a household of four.

The research found the median (or typical) household income of middle-income people in Ireland rose by 71pc between 1991 and 2010 to $43,564 (€40,027).

Read more: Charlie Weston: The 'coping classes' are at breaking point and badly need a cut in income tax

To qualify as upper income the researchers said Irish households would need a disposable income of more than $90,222 in 2010, or €82,892.

People on lower income saw their median household income rise by 75pc to almost $21,000, or €19,300.

The growth in incomes in Ireland in the decade up to 2010 was despite the country entering into a severe recession when the public finances collapsed and the banks had to be rescued.

That year was also when the International Monetary Fund and other bodies had to bail out the State.

Income since are likely to have been sharply curbed by job losses, pay cuts and a range of higher income taxes and the introduction of new charges and levies since 2010.

But in the run-up to 2010 there was large rises in household incomes recorded here.

Pew Centre researchers noted: “Ireland and the UK posted the most rapid growth and biggest expansion of the middle-income tier from 1991 to 2010.”

It added that income growth for lower-income households and upper income ones in Ireland also outpaced other countries.

Middle-class households in Ireland experienced a gain of 71pc in their median income from 1991 to 2010.

This was well ahead of the increase of 48pc for the middle class in Norway, or the increase of 37pc in Luxembourg and 35pc in the UK.

The Pew Research Centre is a highly reputable nonpartisan think tank based in the US.

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