Under Pressure: The Squeezed Middle Class
OECD flagship report: house prices grew three times faster than median household incomes over two decades, housing is now a third of middle-class budgets, and younger generations across the OECD are far less able to buy property than their parents were.
Summary
This 2019 OECD flagship report documents the economic squeeze on middle-income households across the OECD area. Housing is its central exhibit: the cost of a middle-class lifestyle has risen faster than middle incomes, and housing — the largest middle-class expenditure item — has led that divergence, with pointed consequences for the youngest cohorts.
Key Findings
- Prices outran incomes three-to-one. "Despite large within-country variations, house prices have been growing three times faster than household median income over the last two decades" (p. 24).
- Housing dominates the budget. Housing absorbs "around one-third of disposable income" for middle-income households, "up from around a quarter in the 1990s" (p. 24).
- The young can't buy in. "Current and future generations are less able to purchase property than their parents" (pp. 24–25); "in a wide range of countries, they are far less likely to purchase property than their parents were" (p. 146). The report calls wealth accumulation toward ownership "an increasingly unrealistic prospect for many young people."
- Each cohort's middle-class chances shrink. "Since the baby boomer generation, the middle-income group has grown smaller with each successive generation" (Figure 1.7) — 70% of boomers were middle class in their twenties versus 60% of millennials.
Scope and Limits
The report is a cross-country descriptive synthesis, not a causal study; magnitudes vary widely between countries, and the OECD attributes rising urban housing costs to the "geographical polarisation of jobs" pushing up prices in large urban areas rather than to any single mechanism. It does not decompose the price rise into land versus structures — that step comes from other work, such as Knoll, Schularick & Steger.
Bears On
See Also
Sources
- OECD (2019), Under Pressure: The Squeezed Middle Class, OECD Publishing, Paris, https://doi.org/10.1787/689afed1-en — used for the prices-vs-incomes ratio, the housing budget share, and the finding that younger generations across the OECD are less able to buy property than their parents. PDF