Middle-class poverty is becoming more commonplace after disruptive economic flow-on effects from the COVID-19 global pandemic which lasted from January 2020 until May 2023. During this period more middle-income families and social groups began to slip into poverty in many countries across the Western world.  

Extended lockdowns and supply chain shortages killed small businesses within months. Many hospitality staff and others employed in public-facing service industries lost shifts and eventually their jobs because of small business failures and lockdowns. Many of these people were forced onto welfare for the first time in their lives. Some found themselves living near to or below the poverty line - particularly students, older more vulnerable workers, and those supporting families.

Middle-class poverty arose directly concerning rising inflation and rising unemployment caused by the pandemic. Even though the COVID-19 pandemic has been declared to be over by the World Health Organization - the economic conditions created by it persist - particularly continuing high inflation.

This article considers the rise of middle-class poverty in the West and what direction this socio-economic trend will take in the coming decades.

What is middle-class poverty?

Poverty as a general term refers to a condition where the basic needs of a family or individual such as food, shelter, clothing, and education cannot be met. When poverty becomes chronic it becomes impossible to escape from. This is particularly the case if there's no functional welfare system in place to help struggling people fulfill their basic needs.

Middle-class poverty is a more specific subset of the definition of poverty. It’s also known as relative poverty or hidden poverty. Middle-class poverty refers to a scenario where individuals or families who belong to the middle class, in terms of income and lifestyle, find themselves struggling to meet their basic needs and maintain a reasonable standard of living. 

In Australia this might look like a professional couple, both working full or part-time where at least one income earner is making six figures annually. Despite a significant income from both parties, this family still needs to visit community food banks to feed their families. Most likely because the bulk of one person’s income is simply servicing the mortgage or paying the rent.

To make matters worse, real estate values in Australia are out of control and have been for decades. This affects both renters and homeowners equally. But homeowners are being hit harder after 12 cash rate rises (during and post-pandemic from May 2022 to present) pushing up their mortgage repayments. 

In the following table compiled by Rate City, they based their data on a $500,000 owner-occupier homeowner paying both principal and interest with approximately 25 years remaining on their loans. This information was based upon the Reserve Bank of Australia’s existing owner-occupier variable rate from April 2022 of 2.86% - and they assume that the banks would pass on the cash rate increase in full. Which of course they did.

Table showing cash rate effects on mortgage repayment increases

Starting month	Estimated repayment	Difference	Increase from April by
April 2022	$2,335	Nil	Nil
May 2022	$2,400	$65	2%
June 2022	$2,532	$197	8%
July 2022	$2,667	$333	14%
August 2022	$2,807	$472	20%
September 2022	$2,949	$614	26%
October 2022	$3,022	$687	29%
November 2022	$3,095	$760	33%
December 2022	$3,169	$834	36%
February 2023	$3,243	$908	39%
March 2023	$3,318	$983	42%
May 2023	$3,393	$1,058	45%
June 2023	$3,469	$1,134	49%

So you can see from the data above that some homeowners have seen their mortgage repayments rise by as much as $1,000 per month from May 2022 to present. These rate rises are determined not only by interest rates rising but also the size of the mortgage. In Australia, the average mortgage can range from $400,000 to over a million dollars. 

Overpriced real estate driving middle-class poverty in Australia

For an average Australian family seeking to buy an ordinary home - the cost is now approximately $1 million in most capital cities. The Australian Bureau of Statistics cites the average cost of a home in the state of New South Wales to be $1,150,400 which is the highest in the nation. House prices in the Australian Capital Territory average $951,800 and in Victoria $898,300. The cheapest place to buy your own home in Australia is the Northern Territory at an average price of $502,100.

To give you an example of what middle-class poverty looks like in Australia, consider the following headline from Nine News - “Aussie families left with just $73 a week as the cost of living crisis grows”. This article reports that a full-time worker on the minimum wage of $23.23 per hour (or $882 per week) will only have $57 leftover after paying for rent, food, and weekly expenses. The figures were based on data from Anglicare Australia's Living Costs Index. They shed light on the financial situation of approximately 2.75 million Australians and their families.

The largest financial outlay in Australia is usually rent or mortgage repayments. Average house rent in Australia ranges from $530 in Tasmania up to $700 in Sydney - per week shown in the graph below:

Median house rents - June 2023 - (Source: Domain) 

City	Median House Rent	Annual change
Sydney	$700	+12.9%
Melbourne	$520	+13.0%
Brisbane	$580	+11.5%
Adelaide	$540	+12.5%
Perth	$580	+16.0%
Hobart	$530	-1.9%
Darwin	$650	+8.3%
Canberra	$675	-2.2%
All capital cities	$580	+11.5%

The data in the above table was sourced from Domain. Even performing an average across capital cities produces a figure of $580 per week to rent a house.

To make matters worse, Australia is in the midst of a severe housing crisis with major shortages of places to live in all capital cities and many regional areas. So potential tenants are being forced to bid well above the advertised rental prices just to secure a home. This is despite there being prohibitions on rent bidding in some states. 

There are now numerous stories of educated professionals earning over six figures with strong employment histories struggling to secure an appropriate rental property in Australian cities. 

Inflation, monetary policy, and the cash rate

The Reserve Bank of Australia has raised interest rates 12 times since the beginning of the pandemic. This is done by manipulating monetary policy via the cash rate.

The cash rate is the interest rate set by the Reserve Bank of Australia on overnight loans between commercial banks. In Australia, this is generally the Big Four Banks - the Commonwealth Bank, Westpac, National Australia Bank (NAB) and the Australia and New Zealand Banking Group (ANZ). It’s also applied to all commercial banks operating in Australia. When the Reserve Bank increases the cash rate - this causes the banks to then pass on that interest rate to its customers - who are both mortgage holders or lenders. 

As the cost of holding a mortgage rises, this can indirectly affect the supply and price of housing in Australia. To complicate matters further, there is a housing shortage in Australia which is discussed separately in this article. 

Returning to the cash rate and to provide some historical context, consider the following. In Australia, the cash rate has varied from a high of 17% in the 1990s to lows of 0.25% in April 2020. It’s now at 4.10%. 

This cash rate translates to how mortgage home loan interest rates are set by the Big Four banks in Australia. So, for example, Westpac charges between 7% to 8% for variable home loans for new mortgages in August 2023. Borrowers have to shop around to find the most competitive rates to keep their living costs low. 

However many families are forced to either refinance their homes, get second jobs as well as drastically cut their spending just to keep a roof over their heads. There will also be bank foreclosures on mortgages where families are unable to meet their repayments - which was seen in the United States extensively in the 2008 subprime mortgage crisis. However the unregulated nature of the US subprime markets meant that the effects in the markets were far more catastrophic than is likely in Australia.

Notwithstanding the above, look at the graph of the Cash Rate below from the Reserve Bank which shows just how drastically this arm of monetary policy has been used to affect interest rates.

Source website: https://www.rba.gov.au/statistics/cash-rate/ 

The Australian Economic Review reported that: “Post-COVID-19, inflation surged in Australia due to overseas factors such as the war in Ukraine, and domestic factors such as COVID-related backlogs in the construction sector. To constrain inflation, the Reserve Bank shifted to a phase of aggressive monetary policy tightening in 2022. There are, however, cost of living ramifications associated with tighter monetary policy. Looking forward, there is significant uncertainty about the rate at which inflation will normalize, and the spending response of consumers to higher interest rates.” [source: https://onlinelibrary.wiley.com/doi/full/10.1111/1467-8462.12498] 

In Australia, interest rate decisions are taken by the Reserve Bank of Australia's Board. The official interest rate is the cash rate. The cash rate is the rate charged on overnight loans between financial intermediaries and is determined in the money market as a result of the interaction of demand for and supply of overnight funds.

Pew Research Center on the rise of middle-class poverty 2020

A study by the Pew Research Center in 2020 concluded that the rise of middle-class poverty following the pandemic was highest in developing countries across Asia. In this essay, however, we consider the factors creating the rise of middle-class poverty in the West and ways that people are adjusting their lifestyles to manage the rising cost of living pressures around the world.

How is the cost-of-living crisis affecting Australians?

Current data shows that poverty is now affecting over 3.3 million Australians - out of a total population of 25.7 million. That’s almost 8 percent of Australians living in poverty. That data includes more than 700,000 children. The data also shows that 40 percent of renters anticipate struggling to pay their rent in the next quarter. 

These financial stresses are also reflected in Suicide Prevention data from March 2023 which shows 46% of Australians are experiencing significant financial hardships impacting their mental health. In addition, Australians are reporting financial stress in just meeting existing grocery, energy bills, and fuel costs which have risen substantially over the past year. More than half of Australians surveyed report feeling anxious about their ability to meet essential expenses in the next three months. 

How many billionaires were created during the pandemic globally?

According to Forbes during the pandemic, nearly 500 People Became Billionaires During The Pandemic Year

Covid-19 hasn’t stopped the increase in billionaires, who multiplied at an astounding rate over the past year. A record 493 people joined Forbes’ World’s Billionaires list this year—meaning the world on average gained a new billionaire every 17 hours since Forbes last took a snapshot of billionaire wealth on March 18, 2020. The previous record for most new billionaires in a year was 290 in 2015.

No country put more names on the Forbes list this year than China, which gained 205 new billionaires. Notable Chinese newcomers include its richest newcomer, 45-year-old Chen Zhiping (worth $15.9 billion), who is chairman and CEO of vaping device-maker Smoore International, and Kate Wang ($5 billion), CEO of Chinese vaping company RLX Technology. At 39, she is one of the world’s youngest self-made female billionaires.

Other new healthcare billionaires on the Covid frontlines include Prathap Reddy ($1.5 billion), an Indian billionaire doctor whose hospital chain has seen a doubling of its stock price amid a shift to focusing on treating and diagnosing Covid-19; Uğur Şahin ($4 billion), the Turkish-born physician who cofounded German firm BioNTech, which developed a vaccine in partnership with Pfizer; Stéphane Bancel ($4.3 billion), the French CEO of U.S.-based firm Moderna, which had its Covid-19 vaccine approved in the U.S. in December—plus two of the company’s co-founders and one of its early investors.

THE UNITED STATES BILLIONAIRES LIST 2023

• Elon Musk: $146.5 billion.
• Warren Buffett: $107.6 billion.
• Jeff Bezos: $107.3 billion.
• Bill Gates: $103.3 billion.
• Larry Ellison: $102.4 billion.
• Steve Ballmer: $78.5 billion.
• Larry Page: $77.3 billion.
• Michael Bloomberg: $76.8 billion.

The average net worth of these 493 newcomers: is $2 billion. Their average age: is 54 (vs. 63 for the overall list of 2,755 billionaires). A full 84% of them are self-made billionaires, who founded their companies rather than inherited them (vs. 72% for the overall list).

According to a new report by global anti-poverty charity Oxfam, the 47 billionaires in Australia doubled their collective wealth during the pandemic to a combined $255 billion.

Is there a big gap between rich and poor in Australia?

According to the European Economic Agency's measures, Australia ranks 18th among 42 mostly wealthy OECD countries in terms of household income inequality. The report's authors warn that a disconnect between economic and wage growth drives income and wealth inequality.

Of course, the destruction and impoverishment of the middle class across the West is part of the global agenda pushed by the New World Order and promoted in The Great Reset. Stakeholder capitalism requires the destruction of the middle class so that the world is divided into two groups: the elites (who run the world) and the rest of us who will become essentially a slave class serving the needs of the latter.