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Who are the middle class?

The biggest concentration of the middle class is in Luzon, especially in Metro Manila (which has a
fourth of them), and neighboring CALABARZON and Central Luzon

Jose Ramon Albert, Raymond Gaspar, and MJ Raymundo

Published 11:00 AM, July 08, 2015
Updated 11:00 AM, July 08, 2015

Two weeks ago, we wrote an article that espoused a definition of the middle (income)
class anchored on official poverty line thresholds. Those who are middle class have per
capita incomes between four to ten times that of the poverty line.
This means that a household of five persons would be considered middle class if its total monthly
family income in 2012 ranged from about four times the government’s official poverty line, i.e., about
30 thousand (31,580) peso to ten times the poverty line, i.e. nearly 80 thousand (78,895) pesos. We
mentioned that in 2012, there were about an estimated 3.6 million households.

This article caught the attention of Albay Governor Joey Salceda, who carefully examines statistics.
Governor Salceda wanted more information on the number of households for these income classes,
as the article only described this information for the two extremes: the rich, the poor, as well as the
middle class.

While we answered Governor Salceda’s question on his Facebook post, we opted to give this
clarification to the larger netizen audience, as well as extra descriptions of the middle class.

Income classes revisited

In our last article, we categorized the entire income distribution into seven classes: the poor, the
lower income class (but not poor), the lower middle class, the middle class, the upper middle class,
the upper income class (but not rich), and the rich.

Those in the lower income class (but not poor) are of a considerable size. The lower middle class,
middle class and upper class have a combined strength of 45.8 percent of total households, and
two thirds (65.6 percent) of total household income.

In contrast, the poor and the lower income class makes up more than half of households (52.7
percent, or 11.3 million households), and have a quarter share (23.1 percent) of total household
income in the country. At the other end of the spectrum, households in the upper income (but not
rich) and the rich classes comprise only 1.5 percent of total households, and yet they have a share
of 11.4 percent of total household income.
Table 1. Income Classes in the Income Distribution, Income Thresholds and Sizes of
Income Classes in 2012

Income Class Definition Range of Monthly Size of Class (i.e.

Family Incomes (for a Number of Households
Family Size of 5
members)

Poor Per capita income less Less than PHP 7,890 per 4.2 million
than official poverty month
threshold

Low income (but not Per capita incomes Between PHP 7,890 to 7.1 million
poor) between the poverty line PHP 15,780 per month
and twice the poverty line

Lower middle income Per capita incomes Between PHP 15,780 to 5.8 million
between twice the poverty PHP 31,560 per month
line and four times the
poverty line

Middle class Per capita incomes Between PHP 31,560 to 3.6 million
between four times the PHP 78,900 per month
poverty line and ten times
the poverty line

Upper middle income Per capita incomes Between PHP78,900 to 470 thousand
between ten times the PHP 118,350 per month
poverty line and fifteen
times the poverty line

Upper income (but not Per capita incomes Between PHP 118,350 to 170 thousand
rich) between fifteen times the PHP 157,800
poverty line and twenty
times the poverty line

Rich Per capita incomes at least At least PHP 157,800 150 thousand
equal to twenty times the
poverty line

Note: Author’s calculations on data sourced from 2012 Family Income and Expenditure Survey
(FIES), Philippine Statistics Authority

Where do the middle class reside?

The biggest concentration of the middle class is in Luzon, especially in Metro Manila (which has a
fourth of them), and neighboring CALABARZON and Central Luzon (see Table 2). In total, these three
regions have more than half of the middle class.
The rich also reside in the same regions, while in contrast, the biggest concentration of the poor are
in Central Visayas, Bicol, Western Visayas and Mindanao.

Low income classes that are non-poor, but clearly more vulnerable to becoming poor than other
non-poor classes are predominant in Calabarzon, Central Luzon and Metro Manila.

Table 2. Income Distribution by Income Group and by Region, 2012

Region/Group Poor Low Lower Middle Upper High Rich

income middle income middle income
(but income income (but
not not
poor) rich)

I - Ilocos 3.7 6.2 5.5 4.4 4.3 3.9 3.5

Region

II - Cagayan 3.1 4.5 3.4 2.8 3.1 2.3 2.1

Valley

III - Central 5.7 11.3 14.4 12.4 9.0 10.5 8.8

Luzon

IVA - 6.1 13.2 18.8 18.8 17.1 17.6 15.4

Calabarzon

IVB - 3.6 3.3 2.7 2.4 2.0 1.7 3.5

Mimaropa

V - Bicol 8.9 6.4 3.4 3.1 3.1 2.0 2.9

Region

VI - Western 8.7 8.1 6.3 6.9 7.4 6.7 7.2

Visayas

VII - Central 9.6 7.3 7.1 5.6 6.1 6.2 4.4

Visayas
 VIII - Eastern 8.0 4.2 2.6 2.5 2.8 4.0 3.4
Visayas

IX - Western 6.1 4.0 2.4 2.1 1.8 3.0 1.4

Mindanao

X - Northern 7.6 4.8 3.2 3.0 3.1 3.4 4.4

Mindanao

XI - Southern 6.4 5.6 4.5 3.6 3.0 4.4 1.8

Mindanao

XII - Central 8.7 4.7 2.9 2.9 2.3 3.0 0.9

Mindanao

National 1.8 8.7 18.4 25.6 31.5 27.1 36.6

Capital Region

Cordillera 1.6 1.6 1.8 2.1 2.2 1.6 2.3

Administrative
Region

Autonomous 6.4 3.1 1.0 0.2 0.1 0.4 0.0

Region in
Muslim
Mindanao

CARAGA 4.0 2.8 1.7 1.5 1.3 2.1 1.4

In addition, as is to be expected, being middle class is an urban phenomenon with about two third of
the middle class residing in urban areas (see Figure 1) while the poor and low income families are
more concentrated in rural areas. Similarly, high income and rich families they tend to be more
concentrated also in urban areas, just like the lower middle, middle, and upper middle income
classes.
Figure 1. Income Distribution by Income Group and by Urban/Rural Classification

Note: Authors’ calculations on data sourced from the 2012 FIES, Philippine Statistics Authority

Family sizes of the middle class

Compared to poor and low income groups, the middle class tends to have a smaller family size,
whether we consider data from 2012, or even earlier years (such as 2009 and 2006) when the Family
Income and Expenditure Survey was conducted (Figure 2).

On average, middle class household comprises four members, lower than an average family size of
six among poor households. While this does not mean that family size causes poverty, but it
suggests that those with low income may be further weakening their purchasing power with more
household members to support.
Figure 2. Average Family Size by Income Group, 2006, 2009 and 2012

Note: Authors’ calculations on data sourced from the 2006, 2009 and 2012 FIES, Philippine Statistics Authority

Sources of income

Household heads of the middle class tend to rely more on salaried jobs (Figure 3), and this may be
the reason why the middle class accounts for the largest share to total income tax payments as well
as to total taxes (Figure 4).
Figure 3. Major Source of Income by Income Group,
2012

Note: Authors’ calculations on data sourced from the 2012 FIES, Philippine Statistics Authority
Figure 4. Share to Total Income Tax and Total Tax by Income Group, 2012

Note: Authors’ calculations on data sourced from the 2012 FIES, Philippine Statistics Authority

Profile of OFW families

Overseas Filipino workers (OFW) have always been considered the new heroes of the country,
having contributed regularly to economic performance.

Figure 5 shows that a majority of OFWs (a third of them) belong to families in the middle class,
particularly the lower middle class, while the low income and middle class have a quarter each of
these OFWs.
Figure 5. Families of Overseas Filipino Workers (OFWs) by Income Group, 2006-2012

Note: Authors’ calculations on data sourced from the 2006, 2009 and 2012 FIES, Philippine Statistics Authority

Income inequalities are very prevalent in the country, i.e. there are gross disparities in incomes
among different income classes. What the profile of OFW families suggests is that the increasing
wealth of our taipans and our economic growth is being built by the toil and sweat of people at the
middle and lower income classes.

Isn’t it time for our billionaires to become more responsible and ensure shared prosperity, or at least
give back a bit of those profits to families of OFWs who have built these fortunes?

Isn’t it time for the taipans to invest in creating more and better quality jobs, than the current jobs
they offer up to five months?

Isn’t it time for government to use its persuasive power on our taipans to do so?

A research paper by Dabla-Norris et al. released by the International Monetary Fund shows that an
increase in the income share of the poor and the middle class is associated with higher economic
growth, ceteris paribus.
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In contrast, economic growth deteriorates when the income share of the rich increases. Isn’t it time
we seriously address income inequalities? Sister Stella L. once said “kung di ngayon, kailan pa?” –
Rappler.com

Dr. Jose Ramon "Toots" Albert is a professional statistician. He is a Senior Research Fellow of the
government’s think tank Philippine Institute for Development Studies(PIDS), and the president of the
country’s professional society of data producers, users and analysts, the Philippine Statistical
Association, Inc. for 2014-2015.

Raymond E. Gaspar is a Research Specialist at Philippine Institute for Development Studies (PIDS)
and is currently a Masters in Development Economics student at the UP School of Economics.

Martin Joseph M. Raymundo (not in photo) is a Research Analyst at the Philippine Institute for
Development Studies (PIDS).