The middle-class path to a financially comfortable life feels more uncertain for many Australians as inflation and house prices take a toll.

Across Australia, households on six figure incomes are struggling to pay the rent or mortgages – let alone afford little luxuries. Others are delaying retirement or working extra jobs to pay the bills.

A 73-year-old woman who had planned to be comfortably retired by now has gone back to work as a schoolteacher so she can help her son afford his mortgage repayments. An 80-year-old woman who owns her unit says she can’t afford strata fees and repairs.

A social worker has taken a second job, clocking on for 20 hours overnight twice a week, to “try to build a little buffer”. And a 30-something chef has started up an extra business mowing lawns: “We aren’t as hard done by as some but I’ve decided to start a side hustle so we can support the lifestyle we used to have.”

Another has decided to sell-up and move to a cheaper location outside Sydney: “People keep saying wait it out and things will get better but how do we feed our kids and pay the mortgage? This is the reality for many of us.”

These are the voices of Australia’s middle class: a cohort typically defined by steady jobs, tertiary qualifications and a foot on the property ladder.

Nestled between the blue-collar “working class” and monied “upper class”, this well-trodden and aspirational path to a financially comfortable life is becoming uncertain and for many the “fair go” Australia is famous for feels increasingly out of reach.

As the world of inflation, work and money changes at breakneck speed, does the idea of a “middle class” remain relevant in 2024? And who gets to claim — or aspire to — membership? 

Show me the money

If you had to find your place on Australia’s class scale, how would you decide?

Defining what we mean by “middle class” is tricky, says Peter Whiteford, a professor at the Australian National University’s Crawford School of Public Policy and specialist in income distribution.

Most of us think about social classes in financial terms and that is one important way of doing it.

The widely accepted modern definition describes middle class people according to where they sit on the spectrum of wealth allocation.

It looks a bit like this: The average Australian weekly income is currently around $100,000. The median salary, the point at which 50 per cent earn more and 50 per cent earn less, is lower and includes the wages of part-time workers. It sits around $65,000.

In technical terms, being a middle-income earner means you are bringing home between 75 per cent and 200 per cent of that median income. So that’s $48,000 to $130,000 and equates to a salary in the 50th to 90th percentile.

The top 10 per cent of salaries belongs to the upper class and those in the bottom 50 per cent are considered the working class.

How does that compare with the way most of us define ourselves? Are we realists?

In the past decade, Professor Nicholas Biddle, an economist and public policy expert who is head of the ANU’s School of Politics and International Relations and Dr Jill Sheppard, an expert in comparative political behaviour at ANU, have twice investigated these ideas with a group of 4,000 Australians. The answer has stayed remarkably similar, with very little change in the way participants saw themselves.

The statistics go against that popular rhetoric of the collapse of the middle class, which Biddle says has been shown to affect Australia less aggressively than it does in the US and UK. Income inequality here is comparatively lower and it is also stable. Australia does fall slightly behind countries in Europe. 

The research aligns with figures from the Australian Bureau of Statistics that suggest the wealth pie has changed little since 2015. But the difference between the “haves” and the “have nots” remains stark — particularly for those at the top and the bottom who experience comparatively little mobility across the income distribution. That’s fine if you are at the top, as demonstrated in new statistics from the Productivity Commission. Not so for those who experience intergenerational poverty.

Yet there more to being middle class than the size of your bank balance. It’s also about how we see ourselves — and each other.

Celebrities and cashed-up ‘bogans’

Bogans. Latte sippers. Ladies who lunch. Australian culture still unfortunately thrives on judgement, allowing free rein to deride each other for our perceived class in a way that is rightly outlawed when it comes to race and gender, says Dr Steve Threadgold, associate professor of sociology and anthropology at the University of Newcastle. 

But it also sends another message: Money isn’t the only way we decide who fits where.

Cate Blanchett, squillionaire Oscar-winner, describes herself as middle class. So does Kamala Harris, superstar litigator-come-US vice president-come-presidential hopeful as she pitches her campaign squarely at the self-described middle class voters of America.

If these high earners at the pinnacle of their elite careers are middle class then what does that mean for the rest of us?

It turns out that the class you were brought up in is hard to shake off and most of us continue to see ourselves in that way whatever our future circumstances.

“I sympathise,” says Threadgold. “As someone who is probably a very well-paid academic these days, I have fairly working-class values because that’s my background.”

But Threadgold’s class dichotomy helps expose another important way we think about class that has nothing to do with economic status.

Whiteford from ANU agrees: “There’s a degree of arbitrariness about it,” he says, pointing out a sociologist might define membership of the middle class by the kind of work you do; an economist would be persuaded by income and tax bracket, while a demographer would look at a statistical breakdown to decide who fits where.

An anthropologist might investigate the sort of social group you align yourself with, defining middle class more by interests and associations than work or income.

These are all ideas lifted from the clever mind of French sociologist Pierre Bourdieu who explained class using social and cultural “capital”, as well as economic.

Social capital (that’s who you know, the status of your social circles) and cultural capital (things like how you dress, your accent and education) are equally important. And if you already know about Bourdieu’s work then that’s a tick in the cultural capital column for you.

It helps to explain why an actor bouncing between theatre gigs or a sessional academic with a PhD who might each make just $55,000 a year could be considered middle class while a tradie, traditionally seen as a working-class profession, may be running a business that brings in a $250,000 income and places them among the economic upper classes.

“Certainly some tradespeople today would be in the top 10 per cent of earners,” says Threadgold. “But they are very much seen as having working-class tastes and are written about like that throughout much of the media.”

Middle-class power

The social and cultural capital of the middle classes gives them a special place in modern democracies, Threadgold believes, and helps explain why people like Blanchett and Harris are so keen to align with them.

We need to care about the “managerial middle”, Threadgold says — highly educated professionals who are “the keepers of our cultural values”.

“They’re the ones that get to make the world in their own image in terms of cultural influence in places like politics, the media, education and in the professions. It’s their tastes, it’s their morals, it’s their opinions,” he says. “They tend to dominate the various institutions where those kind of things are decided and defined.”

But the middle class has not always held such sway. It wasn’t that long ago that the middle class didn’t exist at all.

A little history lesson is in order says Dr Christopher Sheil, a social historian from UNSW, in order to understand what is going on.

In the old days, class was linked to the Marxist idea of a relationship to what was being produced by society, he says. 

And for generations there really were only two classes – the upper classes who owned everything and the working classes who were employed to do everything. But the industrial revolution that spanned the mid-1700s until the mid-1800s saw an explosion of mass production. Suddenly there was a need for managers and accountants to run the factories and oversee teams of workers.

A new tier was added. The middle class was born. Through the next 100 years the middle class continued to expand.

The 1950s to the mid-1970s was “capitalism’s golden age”, says Sheil, who argues that the power of the middle class peaked in Australia during the era of disco and rock’n’roll: free university education, women’s liberation, social protests and support for Indigenous rights rose alongside the mining boom and growing engagement with Asia.

Rigid class structures broke down as the beginning of movements to free Australians from gender, racial, religious and socio-economic restraints allowed more people to fight against discrimination and move tiers. Countries like the US traded on its image as a “land of opportunity” and Australia continued to welcome migrants from all over the world who were looking for a fresh start.

“It’s such a great achievement. Probably one of the greatest achievements in history to create a propertied middle class to share the wealth. That’s great social progress,” says Sheil.

As the 1970s came to a close, it was clearer than ever that the fight against many forms of structural inequality had begun. 

Yet it wasn’t to last.

“From the mid-70s all that went into reverse,” Sheil says. “Wealth inequality started to grow again.”

And not everyone had been swept up in its benefits: It is essential to underscore that the result is far from perfect. Discrimination remains in place. The intersectionality of race and gender, for example, are still not separate from experiences of disadvantage. It’s an important and complex topic too big to be addressed here. 

By the end of the decade, inflation, interest rates and unemployment meant the golden era was dimming and pressure on the middle class began to ramp up again.

Enter the housing crisis

Here we are in 2024. While the impact of interest rates, inflation and the cost of living has been acute in recent years, the so-called “hollowing out” of the middle class isn’t a new debate and as Professor Biddle from ANU has pointed out, statistics show it is less impactful in Australia – notwithstanding the validity of weekly budget struggles. 

Instead, what is emerging as significant in Australia is the effect of house prices and the national conversation around who owns where they live.

“A really interesting dynamic has emerged between class and housing circumstances,” says Biddle.

His most recent research, with colleague Jill Sheppard, looked at how Australian study participants thought about their financial wellbeing and housing status. It suggests that over the past decade the relationship between class and those who own or rent a home has shifted.  

Research conducted in 2015 found the figures were almost even: 54 per cent of those with a mortgage felt middle or upper class and 52 per cent of renters did so. But eight years later, the research shows 63 per cent of those with a mortgage are likely to classify themselves as middle or upper class and only 41 per cent of renters claimed middle class status. 

“If you are able to get a foot in the housing market then you are more likely to see yourself as middle class,” Biddle says.

In theory this means that residents of a city like Sydney – with it’s cripplingly expensive property market – would have fewer self-identifying as middle class than cities like Perth where housing is, on the whole, more affordable.

“Conditional on your income and your family background, if you’re living in a high house price area you are more likely to be pushed into the rental market which means you are more likely to see yourself as being of working class,” Biddle says.

But of course it’s complicated – city dwellers with the ability to draw down assets from other family members or those able to earn more in a large city, may be able to offset the lower housing costs on offer in a smaller or regional city, for example.

Yet the association between housing and class remains strong. While housing is “objectively more expensive” than in the past, the prominence of the public conversation about house prices has also built the perception it is a more significant class signifier. As a result, how you fit as a home owner, mortgagee or renter is “more a part of your identity”, he says.

Two new rungs on Australia’s class ladder

A decade ago the ANU’s Biddle and Sheppard investigated what class looked like in Australia by asking what Biddle describes as “a battery of questions” on social class. What they came up with was more complex than the old “lower, middle, upper” class divisions most of us are familiar with. 

Their research found Australians were bound by a network of five social classes that emerged as follows: 

• Established working class – 24 per cent: lowest economic, social and cultural capital with parents who have jobs that are low on occupational prestige.
• Established middle class – 26 per cent: average on economic, social and cultural capital with parents who also worked in average jobs.
• Mobile middle class – 25 per cent: above average education, economic, social and cultural capital.
• Emerging affluent class – 11 per cent: a group that is new in Australia. Members report above average social and cultural capital but low savings and few property assets. Economically they are only just above the established working class but have greater economic potential.
• Established affluent class – 14 per cent: high household incomes, above average education and diverse social networks. Their jobs are low on prestige despite coming from families where their parents worked in high prestige occupations. 

Australia’s five classes reveal how we are different to a country like the UK that has two additional class stratum – a band of so-called elites at the top of the pile and a struggling working class known as “precariat” due to the precarious nature of their economic security, particularly lack of reliable work.

One of the wealthiest groups to fit into the middle class demographic in Biddle and Sheppard’s research is the “emerging affluent class”. Their wealth lies in social and cultural capital as well as income potential from high-status professions.

The presence of this group helps explain why some of Australia’s wealthy middle class may feel the cost-of-living squeeze more acutely.

Sheil from UNSW says that while many middle-class Australians would agree they are far better off than others, the sensation of feeling squeezed is genuine.

“The only way the top 10 per cent can increase their wealth is by squeezing the 40 per cent below because the bottom 50 per cent have got virtually nothing,” Sheil says. “They are losing out in status and wealth share and that creates tension.”

When Sheil says the bottom 50 has nothing, he doesn’t mean this group is destitute. He means the cost of living leaves little surplus wealth, even for those who have made it onto the property ladder. In effect debt and expenses cancel out income. So for the upper income cohort looking to expand wealth will have little luck with the bottom 50.

“For many, their debts and mortgages would outweigh their real assets,” Sheil believes.

Meritocracy, democracy and the future

Australians are more likely than Americans or Britons to label themselves middle class. That is in part because of the Gini coefficient – a statistic that measures inequality – which shows societies like the UK display greater disparity on that scale. The UK’s seven strata class structure bears that out.

Yet beyond the clear concerns over economic wellbeing, Sheil raises a hotly contested debate over the link between meritocracy and democracy.

“In the long run the risk is that if the general faith we live in a meritocracy is undermined then everything’s at risk,” he argues. “Democracy is undermined.”

While arguing that he does not necessarily subscribe to the theory (“Surely in a democracy the 90 per cent will outfight the top 1 per cent?”) he notes a genuine reason for concern.

“Once the generalised belief in a meritocracy disappears then the whole democracy becomes unstable. That’s the nightmare scenario,” he says.

We can see these ideas being played out in the US election campaign.

It is likely to be part of the thinking behind Kamala Harris and the Democrats’ robust pitch to the middle-class vote.

Even Donald Trump hitches much of his political rhetoric to the concerns of those who feel increasingly locked out of spheres of wealth and influence. And yes, the irony of voting for a billionaire to represent the struggling bottom 50 per cent is not lost.

“But it’s about being recognised,” Sheil counters. “Trump has identified those who feel alienated and he’s [made migrants the enemy] and he’s given voters a solution. It’s quite compelling [politics].” 

Notwithstanding growing wealth inequality in Australia when it comes to home ownership, income inequality is more stable here than places like the UK and US, Whiteford says. And that’s great news – as long as you have a job.

“In Australia we often say ‘oh, we don’t have classes’ and think of that as a very English thing,” he says. “While income isn’t as unequal as Britain or the US it is still above the OECD average in terms of inequality.”

With the “coming of the billionaires”, Sheil believes any attempts to attack the middle class is misguided.

“It’s hard to get empathy from people who feel they themselves are under threat,” he says. “If you were to drive the 40 per cent and the bottom 50 per cent further apart it would exacerbate social disharmony.”

A better solution, he argues, is to help the 40 per cent to raise their consciousness and “draw some empathy for the bottom 50 per cent”.

But for a middle-class Aussie family with two working parents and a mortgage, wondering if Christmas will break you, that might be cold comfort. 

“If you’re working long hours, you might feel it is difficult to get ahead,” says Whiteford. “So even though the middle class is objectively better off than lots of other people you feel that pressure. You put in a lot of work to maintain your income but you are not going ahead.”

It’s no wonder we feel more divided than ever.

Credits

Words: Catherine Taylor

Visuals: Gabrielle Flood, AP, Reuters and Unsplash

Editor: Leigh Tonkin