Squeezed middle? What squeezed middle?

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squeezed or not?

The 'squeezed middle', stuck in the hell of the 'cost of living crisis' has become a political cliche. We have visions of miserable middle managers forced into fraying suits and a diet of baked beans, while their depressed family wanders the aisles of the local supermarket dreaming of the days when they could afford Parma ham and fresh avocados.

But a new report claims this is a fallacy - and that the middle classes are just fine.

Coping

The report, from The Social Market Foundation, looked at families who were in the middle 20% of the income spectrum at the start of the financial crisis. It then tracked them up to the last date for which there are figures - 2012. These are the families who were earning between £26,100 and £41,200.

Social Market Foundation Director, Emran Mian, said that far from the tragic wasteland envisioned by the political leaders: "In reality the middle has coped surprisingly well since 2007-08." The study showed that 42% of them moved up from the middle of the pack to the fourth and top income brackets, while 40% stayed where they were, and only 18% drifted down the income brackets.

How?

The think tank then looked at how they had achieved this - and discovered that rather than sticking rigidly with their working patterns, and struggling to make ends meet, many saw the main carer of the family return to work. The households in the middle income bracket were far more likely to have two earners rather than one by the end of the period. It meant than rather than see household wages fall after inflation, most of them stayed roughly the same. Many managed this with the help of the grandparents - and 20% more of them were making use of free childcare for children under the age of 2 by 2012.

Their spending patterns have changed to, so that despite food inflation, spending on food has stayed the same. Many middle class households have the same kind of week as David Cameron has had this week - mixing it up with Waitrose and Asda.

And it has been an enormous help that the biggest drain on many of these households has been far less onerous during the downturn. Over half of middle income households own a home with a mortgage, so low interest rates have helped keep housing costs down.

Mian said: "Families in the middle have adapted to evade the squeeze. The super-consumers among them have beaten the market, managing their costs so that they rise by less than inflation. We should expand access to consumer data so that everyone can see how they've done it."

Warning

However, they did warn that for many who are currently in the middle, things didn't look great. They highlighted that those who had fallen from higher income brackets into the realms of the middle earners were struggling with their outgoings. Mian said: "Our work shows that 10% of families in the middle were behind on their rent or mortgage. These are likely to be the people who have tumbled down the income distribution during the recession."

It seems, therefore, that while everyone is being squeezed at the moment, the vast majority in the middle are managing just fine with it. It may be the 'squeezed upper' who are having the most difficulty in coming to terms with their new reality.