COVID pandemic hollowed out middle class, increased poverty and eroded living standards across the globe, says Pew Research

Our mission to make business better is fueled by readers like you. To enjoy unlimited access to our journalism, subscribe today.

The COVID-19 pandemic has eroded living standards around the globe, shrinking the global middle class and swelling the number of people in poverty amid a historic collapse in economic activity.

Analysis from Pew Research Center found that the global economic recession brought on by the pandemic shrank the worldwide middle class by 54 million, and increased the number of people in poverty by 131 million.

The middle-class falloff was most evident in South Asia, East Asia, and the Pacific, where the expansion seen over previous years came to a virtual halt. But it could have been worse: “The erosion in the middle class might have been deeper if not for the fact that China—which is home to more than one-third of the global middle class—evaded an economic contraction, even though growth there was slower than anticipated,” the Pew study said.

Before COVID-19, in 2020, Pew counted some 1.38 billion people as part of the global middle class. Now that figure is estimated at 1.32 billion.

The rise in poverty levels, meanwhile, erased gains seen over recent years, and was most evident in South Asia and sub-Saharan Africa.

Read: The U.S. will spend billions in stimulus to tackle child poverty—still puny by global standards

The ranks of the global poor rose to 803 million in 2020, Pew estimates, surpassing the 672 million expected previously as the livelihoods of many on the margins of poverty were further eroded.

“The global poverty rate, which had been in steady decline this century, is likely to have increased to 10.4%, nearly reverting to the rate in 2017, instead of sinking to a new low of 8.7%, as previously expected,” Pew said.

Pew defines income levels as follows: The poor live on $2 or less daily; people with low income earn $2.01 to $10 daily; middle income live on $10.01 to $20 daily, while upper-middle income live on $20.01 to $50 daily. Those in the high income bracket, meanwhile, earn more than $50 daily.

Pew acknowledged that its earnings definition of the global middle class straddles the definition of poverty in the U.S.—as an income of $10 to $20 per day equals a yearly income of $14,600 to $29,200 for a family of four.

The number of people living on more than $50 a day, the global high-income tier, is estimated to have dropped by 62 million in 2020, erasing about half of the gain since 2011, with most of the change coming from advanced economies.

Meanwhile, the upper-middle income population—those earning between $20 and $50 a day—fell by 36 million, Pew said.

The changes reflect the World Bank’s economic forecast for 2020, which was downgraded from 2.5% growth to 4.3% contraction as widespread lockdowns dampened activity across the globe.