Germany’s Middle Class Has Shrunk Slightly

The middle class in Germany has shrunk slightly over the last ten years. While 65 percent of the population belonged to the middle class in 2007, only 63 percent did so in 2019. This decrease is due to both upward and downward social mobility, finds a study conducted by the ifo Institute on behalf of the Hanns Seidel Foundation. “Although the decline since 2007 appears relatively moderate, it is considerable compared with other European countries. In 2007, Germany’s middle class still ranked 9th in size and was thus in the top third, but by 2019 it had fallen to 14th, putting it in the midfield,” says ifo researcher Florian Dorn.

In a European comparison, the middle class in Germany bears one of the highest tax and contribution burdens. “With a marginal burden of some 50 percent of gross income in the German tax and transfer system, people with middle incomes are effectively left with only half of any additional euros they earn. This means that, for the middle class, additional work and greater performance pay off only to a very limited extent in net terms,” says Prof. Andreas Peichl, Director of the ifo Center for Macroeconomics and Surveys. He goes on to say that people with middle incomes are at the edge of their ability to bear the burden. At the same time, the German tax and transfer system makes it hardly worthwhile for people with low incomes to take on additional work.

More than 80 percent of Germans classify themselves as belonging to the middle class. In fact, statistically speaking, about 26.1 million households in Germany belonged to the middle class in 2019. At 63 percent, this represents less than two-thirds of all households. For their calculations, the authors use the OECD criteria, which define the middle class as those who have between 75 and 200 percent of the median income at their disposal. For single people, this corresponds to a net disposable income (including transfers) of between EUR 17,475 and EUR 46,600 in 2019. For couples without children, the range is between EUR 26,212 and EUR 69,900. Couples with two children statistically belong to the middle class if they have an income between EUR 36,698 and EUR 97,860.