Earning 84 Million Won Annually but Saying "I'm Lower Class"... Economic Status Decline and Self-Imposed Taxation

Top 20% Annual Income Earners: 2.9% Say "I Am Upper Class"
"Income Share Declines, Some Dissatisfaction Over Reduction"

Although they are high-income households in the top 20% earning an annual income of 84 million won, a survey found that they perceive themselves as 'middle class' or 'lower class.' This contrasts with the Ministry of Economy and Finance's earlier standard that separates the middle and upper classes at 78 million won per year (200% or less of the average wage of all workers).

According to the report "Who Are the Middle Class in Korea" by Hwang Su-gyeong, Senior Researcher at the Korea Development Institute (KDI), and Lee Chang-geun, Professor at KDI Graduate School of International Policy, a survey of about 3,000 people last year showed that only 2.9% considered themselves upper class.

Citizens are passing through the Gwanghwamun intersection in Seoul.
[Photo by Yonhap News]

In particular, among high-income households earning more than 7 million won per month, only 11.3% considered themselves upper class, while 76.4% identified as middle class, and 12.2% as lower class.

The researchers analyzed that the reason for the middle-class underestimation by actual upper-class households is due to a decrease in the income share of high-income households over the past decade and some income reduction, showing a form of 'self-imposed taxation.' This implies that the middle-class crisis theory stems not from an actual decrease in the middle class but from the 'dissatisfaction' caused by the economic status decline of high-income groups who consider themselves middle class.

In fact, the income share of the top 20% (quintile 5) decreased by 4.3 percentage points (from 44.3% to 40%) between 2011 and 2021, while the shares of quintiles 1 to 4 all increased.

Furthermore, when the researchers classified socioeconomic classes into five groups?upper class, psychological non-upper class, core middle class, vulnerable middle class, and lower class?they found that the so-called 'psychological non-upper class,' who are high-income but do not consider themselves upper class, had the highest rates of high education, high income, managerial and professional occupations, and home ownership.

The researchers warned, "It is necessary to be cautious about the possibility that the views of the psychological non-upper class may be exaggerated as social demands of the middle class."

Several academic experts stated, "Usually, the middle class is defined as a social group with moderate economic, social, and cultural levels and a self-awareness of being middle class, but it is not easy to clearly subdivide these criteria, and there are various classification methods." They added, "However, accurately understanding the middle class is essential to establish precise standards for government policies such as work incentives and child allowances." They further noted, "Moreover, if those who are actually upper class consider themselves middle class and raise their voices to influence policies favorably, resources that should be focused on the lower class may become insufficient, potentially disrupting social balance."

The Organisation for Economic Co-operation and Development (OECD) sets the middle-class standard as 75% to 200% of the median income. The person located exactly in the middle when all citizens are lined up by income is considered middle class. The median income per person is about 2.22 million won per month, so earning between 1.67 million and 4.45 million won qualifies as middle class.