Walking through Buxton a couple of years ago, I passed the offices of the law firm set up by Tim Brooke-Taylor’s family. I couldn’t help wondering how many small town lawyers would be able to send their sons to Winchester nowadays. (I have random thoughts like that when I’m strolling along with nothing better to think about.) Not many would be my guess, given that boarding school fees have risen at a much faster rate than salaries over the past 30 years and Winchester is one of the most expensive.
Middle-class professionals have been complaining for some time that the the lifestyles their parents enjoyed are now beyond their means. Top end boarding schools, private health insurance and family-sized houses within a short commute to London are out of the reach of many people who grew up assuming such things were normal.
Earlier this week, the FT published an interactive map showing the areas where you could afford the average house price if your household income was at the 95th percentile. (You have to register for the FT but it’s free and well worth it just to look as this fascinating map. Allow yourself at least half-an-hour to pay with it.)
In 1995, 95th percentile earners could afford to live almost anywhere, with the exception of parts of central London and the posher bits of the stockbroker belt. But by 2012, they were priced out of much of London and large areas of the South East, as well as desirable second home areas like North Cornwall.
A study by Brian Bell and Stephen Machin for the FT has found that a gulf is opening up in the earnings of middle-class professionals, with a small number of very wealthy people pulling ahead of all the rest. In many professions, mean earnings have fallen below the 90th percentile over the last 35 years.
Academics, engineers, architects and scientists have seen their pay fall in relative terms.
Even this data may understate the gap between the very rich and the rest. The earnings of those in partnerships, like the big law, accounting and consultancy practices are not publicly disclosed and are therefore not included in the ONS dataset.
Data from the World Top Incomes database tells a similar story. We are used to hearing that the top earners have increased their share of the wealth over the past couple of decades.
Even the top 10 percent has increased its share slightly.
But look at the share of the 90th to 95th percentiles and the 95th to 99th percentiles. Both have fallen. It’s the top 1 percent that push up the figures. Those just below them have seen their share of income fall.
The painful fact for many people is that their jobs no longer pay enough for them to enjoy what they had been brought up to think of as a middle-class lifestyle. They can’t afford to live in the sort of house in the sort of street where they grew up. They can’t afford to send their children to the schools they went to. And those nice leafy hospitals their parents used to go to, forget it. The super-rich can still afford these things, though, so the prices keep going up, well beyond the reach of the old middle-classes.
Priced out of fashionable London suburbs, private schools and even foreign holidays, being middle class just ain’t what it used to be. Globalisation, financialisation, recession, secular stagnation and falling wages have taken their toll on middle-class jobs and pay. Not as much as they have hit the poor, of course, but still enough to come as a bit of a shock. These days, if you are in the top 5-10 percent of earners, you are just not that posh any more.
Update: Excellent piece from Lucy Mangan in the Telegraph on the fall of the middle class. It’s long but worth the time. Thanks to Andrew Sharpe for the link.