'Middle class earners' - struggling to cope financially and can no longer afford comfortable living standards despite having household incomes of between £60,000 and £120,000- Guardian

[fluffykittens208]

https://www.theguardian.com/business/2024/mar/04/middle-class-workers-mortgages-bills-tax

Excerpts:

'Scott was just one of scores of middle-class earners who shared with the Guardian how they are struggling to cope financially and can no longer afford comfortable living standards despite having household incomes of between £60,000 and £120,000.
A report last month from the abrdn Financial Fairness Trust highlighted how Britain’s insecure jobs market and high housing costs are leading to the growth of a precarious middle class. These households are struggling to maintain a decent living standard on joint incomes as high as £60,000 a year. That compares with the median gross annual earnings for full-time employees of £34,963 last April.'

“It does seem that the only way to be on a middle income and doing OK at the moment is to be a Dink and living in the north.”

'Although respondents with children reported more precarious finances than those without, millennial childless couples say they barely have any disposable income either.'

Personally we am coping ok with a household income of £120k and still eat out/have a lot of city breaks, but I wonder if that is only because of our specific circumstances

1. small 2 bed flat in zone 3 London so we don't have a car and where it is possible for DH to cycle to work. Would probably always stay in a flat even if income doubles so it makes more sense to stay in zone 3 if living in a flat.
2. were able to live at DH's mum for 3 years while working in London and bought in 2019. We were able to overpay a mortgage on 2% interest during the pandemic and plough our pandemic savings into it which means the new mortgage rate isn't as painful.
3. fertility problems so we are still DINKY and unlikely to have more than 1 child (am already 32 this year).

As a disclaimer i don't think the chancellor should cut taxes despite us all feeling the cost of living crisis as 40% of tax revenue comes from NI and income taxes so if they cut taxes, they would have to cut services and I have no desire to pay for healthcare privately in my old age.

But it feels very strange to read about people struggling in the news on our household income, probably means that the income threshold to be 'comfortable' (without very specific circumstances that lower your cost of livin) is much higher! Would hazard around £150k to £250k now. Basically we are going to be a hugely unequal society where only the top 5% can expect all the middle class fixtures and the rest of us have to pick and choose or live a life of penury and no luxuries i.e. car or property in expensive location; 2 children and no savings or 1 child and savings. Far luckier than those in the bottom 50% obviously but i am not sure how you can say you are middle class when the only reason you can afford to eat out and have nice holidays is cos you purposefully cut back on things people used to expect if you were doing semi well i.e. 2 kids in a suburban semi and a car on the driveway.

It would cost more to administrate means testing than it would save in giving out the benefit.

I do believe that to be bollocks. If means testing is really so so expensive, I'd like my child benefit back please.

To, the COL crisis is now affecting wealthier and wealthier people - these people should be the real drivers of our economy, the ones who are out spending.

Those living off 20k a year can scoff at these people all you like, but you need them to generate the taxes that we all need for our public sector.

If they are feeling financial pain then we are all screwed.

Of course mot. But as a single parent that’s where I am.

I just have to get on with it. CoL has had a massive impact on my standard of living. I really have had to cut to bare bones.

It's the childcare that's the killer for those on the higher salary range. Only 15 hours free if you earn over £100k, think it amounted to about £300 discount per month when my DC were there.

If you have two or more DC in nursery, your money goes nowhere, though things should get much much better once they are in full-time education (assuming they are in state, not private).

@LightSwerve surely that's just CoL, made worse by Covid and inflation, particularly supermarket prices skyrocketing.

I sort of agree, people aren't on the breadline on those salaries.

But they can be under financial stress - you achieve a certain income, pick a home and mortgage accordingly, have kids etc - if your disposable income then gets squeezed then it becomes harder to afford things you took for granted, and the kids and house and some lifestyle elements like kids' hobbies etc can't just be stopped.

It's not as stressful as not being able to feed or house your family, but still stressful.

Also, world's smallest violin but the way tax works means your take home pay on £60k is less than you might imagine. It's definitely not 3x what you'd get on £20k.

There are lots of places that are profiteering.

Supermarkets being one
fuel another.
Childcare costs are frightening.

Are childminders also profiteering?

Childcare is a problem - there are big profitable overseas chains/private equity moving in to profit whilst paying the workers there a pittance which our Government have to do then top up with benefits housing UC etc. Some foresight would have created a state run childcare system for all ages ago. From cradle to grave isn’t it?

It is not cradle to grave! The baby boomer generation are just discovering that there is absolutely nothing for them in terms of care that they won't have to fund themselves.

A younger generation wouldn't even recognise the idea - they've been saddled with private debt from the outset of their adult lives.

Debt without assets is a chain; keeps you working for someone else.

The main problem is the fiscal drag - people dragged into the 40 per cent tax bracket due to inflation whilst our Government deliberately didn’t raise the thresholds. That coupled with the cut off points for child benefit/personal allowance is creating big anomalies for some.

The whole tax system needs simplifying and we need to get away from in work benefits. People should have to work at least 80 per cent to get in work benefits and their children should be well looked after in free childcare. The lowest earners need to earn more.
The other problem is many youngsters not working due to mental health when in many cases, good work would help them. There should be lots of incentives for employers hiring these people. In London in Pret A Manger I have seen lots of autistic people working recently. We need more and more of this.

Those saying dental plans are a luxury are completely misguided.

I begrudge having to pay it, but I have no choice. It is cheaper than paying for every dental bill that comes in. There are no NHS dentists in my county.

Having to go private for mine or my children’s teeth is not a choice for everyone by any means.

That’s very true. I’m looking forward to when DS leaves nursery and starts at private school as my costs reduce significantly at that point. Nursery is way more expensive than pre-prep private school fees which just feels wrong.

A lot of it is about people absolutely stretching themselves financially though.

I live in a flat, I could probably afford a house but it would push me right to the limit money wise. So I'll stay in the flat. We all know what the situation is with cost of living and prices are not going to come down. So it's more sensible nowadays to live somewhere smaller and accept that you might not have your "dream" home but not have to worry so much about money. I know some people have no choice as south east prices are insane but a lot do.

To get away from in work benefits you need to raise wages and lower rents. I work full time, earning £24k, have zero childcare costs and still get in work benefits as the state says my salary is not enough to live on for one adult and one child. There's nothing more I can do apart from try and increase my salary which I am doing but unfortunately I got made redundant last year and had to start a whole new career.

Why does it feel wrong? The staff/child ratios are much smaller in a nursery and that’s where the majority of costs come from. The hours are longer too.

And the lowest earners can't just "earn more" these jobs need doing by SOMEBODY. Who will do all the minimum wage jobs then?

It wouldn’t. Just give it to pensioners who don’t pay tax. Job done.

@Beezknees right but you have the luxury of making that choice while the COL crisis is underway.

People who bought houses before interest rates started rising - you would have been an extremely prudent person to have gone for a smaller property just in case interest rates went crazy. And if you have a family, need to be near a particular school or transport, you can't always choose as freely.

When we bought a house in 2016 our budget was about £250k. The mortgage advisor kept trying to push us to borrow more and go for £350k. Even with a smaller mortgage, we've had to find a bit extra chunk of money to cover interest rate rises.

Short version - well done, you're making a logical decision not to overstretch yourself with a COL crisis going on. Some people don't have the option of living somewhere small or are tied into financial arrangements from years ago.

Yes, I appreciate that. I was more talking about people who are making these decisions nowadays. Obviously there's nothing you can do if you were tied in years ago.

The UK middle class is in decline (economically, politically and culturally), same with France and Germany. The US middle class is about a decade further along that decline curve than we are so it's instructive to look to them to understand what our culture, economy and politics might look like over the next few years (although it's not a direct comparator and I always think it's daft when people pretend we're the same as the US, there are vital differences).

the middle class as a phenom is incredibly new and recent in the history of human civilisation, I would argue it's actually an anomaly, and is a symptom/indicator of a fast growing and (artifically?) stimulated economy. The UK economy has very low productivity for a number of long term secular reasons stemming back to WW2, which broke the UK economy and everything since then has arguably been a sticking plaster.

Again if we look at other countries in Europe in particular where the middle class declines for whatever reason, you tend to get more social friction and more productivity declines, which is what I think we are seeing in the UK now.

Just my opinion!

I've seen the argument about having no sympathy for the middle classes for stretching themselves... I have a lot of sympathy for them... People in their 30's and 40's being ripped off to buy over-priced sub-par starter homes for £750,000 so that they can live in commutable distance to London (that not so long ago would have cost around £200,000)... High earners having the audacity to dare to have kids for themselves, and despite paying often over £40,000 in tax (lots of which goes to pay for other people's kids) having to then stump up even more to pay for their own nursery costs, whilst their own kids are forced to have a significantly worse life as a result. It honestly astounds me. This so called race to the bottom approach - is not good or productive for the UK. I hope anyone that is stating this kind of insulting nonsense has never tried to block housing from being built in their local vicinity "because it spoils the view in my garden etc." or isn't on benefits...

Also just so you know the UK is currently in a recession due to low-growth, largely because the middle class earners that some of you begrudge so much are (as you wanted) cutting-back. This is causing a contraction of our economy and has the potential to be highly damaging. The reality is that the current over-inflated and bloated state and tax system is damaging productivity and the country. It is also causing brain-drain and a crisis where people are not having kids, which will be disastrous for the country in about 20 years from now.

The reality is that people in highly qualified jobs expect a certain standard of lifestyle, to do so the country needs to stay competitive globally in order to keep them - (which it hasn't been doing). It is easier than ever for the UK's highly skilled workers to leave and go work in another country, or retire early (as lots have been doing in no part thanks to IR35). All of this is part of the reason that the country has been experiencing a period of little to no growth and severe economic issues. There are of course other things such as Brexit that feed into this, but the reality is that the UK has had significant growth issues since 2008, and living standards in real terms are still lower than they were in 2008. This coupled with an even more squeezed middle will cause terrible damage to our economy, and resultantly harm everyone but especially the vulnerable, as well as businesses etc. it's also interesting to note that even Labour has noted what a problem this all is, and is calling for economic growth. The high-tax, high-welfare and low-growth model can't and won't be able to continue for ever (or even that much longer) - it's also kind of ironic that the Conservative government has taken on such a model given that they are meant to want a smaller state, and lower taxes!

https://www.theguardian.com/business/2023/mar/20/uuk-workers-wage-stagnation-resolution-foundation-thinktank

I would guess the majority of people on this thread have made some sort of cut back even if it’s just less luxury goods or eating out less.

I know 17 big nightclubs shut down in the UK last month, that’s a lot of job losses plus all the allied trades, pubs, taxis, takeaways.

So as much as MC hardships are unpalatable for many no money trickling down as less spent on anything but the basics is a problem.

If everybody leaves from London and moves somewhere cheaper - you will have both price rises everywhere else and nobody to pay for the overinflated state (and your benefits). I for one am sick to the back teeth of my life suffering to pay for ungrateful people's benefits, and I know for a fact that I am not the only one.

But people on low wages leaving London aren’t going to drive up prices.

I couldn’t have swooped into the West Midlands and bought a house for half a million. Our budget was 150k, just like a lot of the people who already lived here. We earned no more than local people. We didn’t come in an buy a house a local couldn’t afford.

My posts about leaving London because you have to were about those on average or low wages. Not about those on 100k plus.

(And we only managed to do it as dh job at a London Local authority went remote when they sold off their building to housing developers for profit).

And who owns the supermarkets, can give out meagre pay rises but correspondingly earn that back from inflating their prices, easy to do with little competition! Price profit inflation is not due to wage gains from excessive worker power; It is due to profit gains from excessive corporate power.