Israel’s Middle Class 1992-2010: Who are we talking about?

Real Estate Protest in Tel Aviv 25.7.2011

People who talk about the middle class are often referring to very different people. This report clarifies the term, examining Israel’s middle stratum at three points in time: 1992, 2002, and 2010. The report looks at the middle stratum in Israel from the point of view of income distribution , home ownership, ethnicity, occupation, education, and place of residence, among others.

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During the two decades covered by the report, the size of the middle stratum shrunk, from 30.8 percent to 27.8 percent of households, and its share of income declined by 14 percent. During the same period, the upper stratum and especially the lower stratum increased in size. Another development was the increase in the gaps between the median incomes of households in the three strata.

In 2010, 28.5 percent of Jewish households belonged to the middle stratum, compared to 23.4 percent of Arab households. While among Jews the shrinking of the middle stratum was accompanied by an enlargement of the upper stratum, among Arabs it was accompanied by an enlargement of the lower stratum.

During the period examined, the most outstanding change was the increase of the share of households headed by second-generation Mizrahi Jews and new immigrants from the former Soviet Union (1990s and later) in the upper stratum (albeit in the lower part thereof): in 2010, 45.3 percent of households headed by Mizrahi Jews and 27.2 percent of households headed by new immigrants from the former Soviet Union were to be found in the upper stratum.

The majority of households in the middle stratum have two wage earners, but there is a big difference between the upper and lower parts of the stratum: in 40.5 percent of households in the lower part there is only one bread winner, compared with 28.5 percent in the upper part. In 2010, in contrast to 1992, two breadwinners were needed to be considered part of the middle class.

In 2010, the most common vocations of household heads in the middle stratum were skilled workers in manufacturing and construction and sales and service personnel. These two categories accounted for approximately half of household heads in the lower-middle stratum and 40 percent of household heads in the upper- middle stratum. An additional third worked in the free and technical professions or as clerical workers. In contrast, academic and administrative professions are characteristic of the top stratum, contributing to a clear dividing line between the top stratum and the two lower ones.

The biggest employer of household heads in the middle stratum is the public services, just as it was twenty years ago. In contrast, their representation in the hi-tech and financial services sectors of the economy is low.

When it comes to higher education, the middle stratum resembles the lower stratum more than the top one. In fact, the percentage of college graduates is the most outstanding line of demarcation between the middle and upper strata. Approximately one-fourth of household heads in the middle stratum are college graduates, in comparison with half in the top stratum.

In the middle stratum as well as the lower one, the largest group is that with household heads holding high school or vocational degrees, a situation that has not changed over the years. During the same period, the data indicate that the rewards for education were higher for men than for women.

If we look for localities that typify the middle stratum, we find that the Jewish development towns fit the mold: the percentage of households in them belonging to the middle stratum is higher than that in Arab localities, on the one hand, and higher than in the localities constituting the Forum of 15 most affluent localities, on the other. The percentage of middle-stratum households in the development towns increased between 2002 and 2010; in contrast, the percentage of middle-stratum households in Arab localities decreased, at the same time that the percentage of lower-stratum households increased.