Study shows Israel’s middle class is shrinking

Politicians looking for electoral support from Israel’s middle class in last Tuesday’s elections may have been barking up the wrong tree; a study released Monday by the Adva Center for equality and social justice in Israel found that the middle class in Israel is shrinking, falling from 30.8 percent of households in 1992 to 27.8% in 2010.

In comparison, in the last decade the proportion of the middle class in Denmark was over double (62.8%) that in Israel. Nordic countries were not the only ones to best Israel in middle-class robustness, however. France, Germany, Canada, Russia, the United States and the United Kingdom came out ahead, as did debt-ridden and economically shaky countries including Greece, Italy, Spain and Ireland. Mexico and Brazil came in just behind.

The study, conducted by Noga Dagan-Buzaglo, found that the social gaps were increasing, with greater disparities between the median middle class income and those of the rich and poor.

While median income across the entire economy grew 24% from 1992-2010, it didn’t grow evenly; the upper class grew by 27%, the middle by 24% and the lower class by only 18%.

“In many ways, it is reminiscent of the sociological characteristics normally associated with the working class in Western nations,” the report said.

The upper class, which represented 37.8% of households, earned 65.5% of all household income in 2010, according to the study. That figure was up from 1992’s share of 61.8%, and most of it in the highest echelons of the upper class. The middle class, on the other hand, lost some of its share of the country’s wealth, falling from a 24.7% share to a 21.3% share.

A report last year by Bank of Israel Deputy Governor Karnit Flug that broke the middle class down by sector found that in 2010 it was dominated by non ultra- Orthodox Jews, at 88.4%.

Only 9% were Arab and 2.6% ultra-Orthodox. Among all of Israel’s Arabs, only 15.6% were middle class, while 80.4% were lower class.

Among the ultra-Orthodox the picture was even more dire: 13% middle class, and 81.2% lower class.

Breaking down the characteristics of the middle class, the Adva study found that lower ends of the echelon had greater percentages of one-income households, whereas two-income houses tended to be higher up in the rankings.

The change exhibited an economic shift since 1992, when two salaries were not necessary to achieve a middle- class income. In terms of employment, the middle class consisted mostly of skilled workers in manufacturing, construction, sales and services.

The most notable entries to the upper class since 1992 came from households headed by mizrahi Jews (from Arab countries) and former Soviet residents.

But the biggest distinguisher between middle and upper class in Israel confirmed what years of international research have shown: education is the best predictor of wealth.

About a quarter of the middle class had graduate educations, as opposed to about half of the upper class.

Returns on education, however, were greater for men than women, according to the study.