The other poverty The middle class that took the pandemic

A section of the middle class became poor during the pandemic. Not only did he stop paying for his health and education, but he also struggles to make ends meet. And it is not that he has necessarily lost his job, although it has undoubtedly become precarious. They are self-employed, independent, small merchants, salaried workers of SMEs or self-employed, informal or not, dedicated to crafts, personal services such as hairdressing, sports activities, gastronomy. These are about two million people whose ability to generate income has been diminished or slowed down by the successive quarantines in an inflationary Argentina. They are Argentines who do not know if they reached poverty to stay or have a chance to return to the life they led.

The phenomenon is not exclusive to this country. Tour the region. According to the World Bank, in Latin America 4.7 million people fell into a situation of vulnerability. In Argentina, the poverty rate was around 35.6% at the end of 2019, reached 42% at the end of last year and would have reached 43.5% in the first half of this year. More than 800,000 families became part of that group that is between the middle class and poverty. They get to gather something more than the equivalent of a basic food basket calculated for a typical family (which according to INDEC, in May was $64,445 per month). But it's not enough for them.

“The central difference between these new poor segments, lower middle classes, with respect to the structural poor, is that the latter depend much more on informal self-employment activities or are very low-paid wage earners. And they are more linked to public services and social programs. The social segments of the impoverished middle class, on the other hand, are far from being beneficiaries of the social protection systems”, explains Agustín Salvia, sociologist, research director of the Argentine Social Debt Observatory of the Argentine Catholic University (UCA).

There are other differences between the structural poor, those who have been poor for decades and even generations, and the newcomers, those who still feel middle class. Basically, the latter are not resigned to losing or reducing their investment in education, health, housing and leisure. “They are reluctant to abandon certain symbolic assets or symbolic cultural capitals that define them socially,” Salvia emphasizes.

Mara separated in April 2020, a few months before the pandemic began. She and she changed jobs after working twenty years in a publishing house. Today he is working three jobs independently. With them, he more or less maintains his previous income. But it is in black, which generates a special uneasiness. You pay the expenses when the notice of payment arrives and you are not paying the municipal taxes. She is a tenant, and now she is renegotiating the contract. She is afraid because the rents went up a lot after the rent law. The prepaid fee also increased, because he has fewer contributions, so he changed the plan but it is also difficult for him to pay it. Mara has a 3-year-old daughter who stopped going to kindergarten, partly because of the fee and partly because of the pandemic. And with great difficulty, she sporadically hires a nanny to help her while she works. He stopped buying things that are not essential.

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Maybe Mara hasn't fallen into poverty yet. But she has begun to go through the experience of living on the edge. And she is haunted, like so many, by the most feared ghost of the Argentine middle class: the crisis of 2001.

“The new poor in pandemic Argentina are those families whose household income generators were informal workers. Fundamentally, to small merchants who did not have a high income but enough to not be poor. These are people who were on the edge and when the confinement came, they had to close their business, surely informal, and go home. The only sustenance became the IFE (Emergency Family Income) that they were given occasionally, since unlike registered workers they could not access the ATP (Emergency Assistance to Work and Production) on a monthly basis. According to data from INDEC, there are almost half a million people who were unregistered wage earners and who worked in small businesses, who have not returned yet," says Jorge Colina, chief economist at the Institute for Argentine Social Development (Idesa).

Silvana works as a personal and administrative assistant, she is single and has a 5-year-old son who she supports alone, since she has joint custody and does not charge any family fee. With the new rental law, just like her Mara, she had to move: she had increased the monthly value of her apartment by 100%. Now history repeats itself, since in two months he knows that his rent will skyrocket by 43%. And he's looking for a place to move again. In addition, they cut his salary in half and froze it until who knows when. He does not receive any allowance from the State; He admits that nothing would hurt him, but it turns out that being a monotributista and not being in the lowest category, there is no chance that he will receive anything. Fight to remain middle class.

Silvana's reality is an example of how middle-class life has deteriorated. Guillermo Oliveto, a specialist in consumption and society, affirms: “Last year what was appreciated was the deterioration towards the interior of the middle class, not so much a fall from the middle class to the lower class. In addition to having widened the gap between the upper middle class and the lower middle class: the former is now linked to what is the logic of the upper class, although with another purchasing power; and second, she sees herself as getting closer to becoming lower class. So far this year, although the data is not yet available, evidence is beginning to be detected that would express a downward social mobility of people who are losing anchorage in the middle class, among them young people who lived alone and today cannot pay the rent and return to live with their parents. Families that go to lower social work plans. People who stop using the car because they can't pay for the fuel or directly who sell it”.

Javier was a coffee grower at the Morón train station, although he lived in José C. Paz with his wife and three children. Movement restrictions caused work to drop and he had to find another way to earn a living. So it was that he began to make potato tortillas to sell in the neighborhood. While the business was growing, and to reduce expenses, he stopped paying the rent and moved in with his widowed mother. He also took the boys out of the private religious school he sent them to. And he took advantage of the help of the State, accepting the IFE. Luck was on his side: today he was able to rent his own house in Pilar again, continues selling tortillas and has just partly resumed his old trade, adding the coffee shop to his new street business.

If we look at the phenomenon with greater perspective, part of the deterioration of the middle class has been taking place for ten years, that is, since the Argentine economy has been stagnant and with a very high level of inflation, which has pulverized power purchasing salary. But the coronavirus health crisis has undoubtedly greatly aggravated the situation. To such an extent that many have had no alternative but to resign or lose much of what their parents and grandparents had won. However, perhaps for that very reason, the majority is not resigned to losing certain assets that they associate with their class membership. “They embrace technology as if it were a way of not losing inclusion. But these are technological devices that, when they break, cannot be replaced because their costs are out of reach,” says Oliveto.

The State today is not taking care of this middle sector of society that feels declassed. “The Government is very present in the care of the 42% of the population that is below the poverty line,” adds Oliveto, and explains: “There are few measures for lower-middle-class citizens. Perhaps some of the plans that stimulate consumption or programs such as those with careful prices, but honestly what these people feel is that they are without much containment. Keep in mind that while the upper lower class is not technically the middle class, symbolically it is. In Argentina, between 75 and 80% of the population see themselves as middle class, due to cultural tradition, parental origin, education. These people have middle-class aspirations, middle-class conflicts, middle-class values, they believe in work as their way to advance, and it is very painful for them to feel that they are losing that status. Perhaps work is not a sine qua non condition to avoid poverty, but unemployment is a condition to end up falling into poverty”.

The impact of the recession in the City

More porteños have fallen to the status of “vulnerable non-poor”

Where the middle class has fallen into poverty the most during the pandemic is in the cities. In 2019, when the Covid seemed like a very distant issue, in the city of Buenos Aires 50.7% of Buenos Aires were middle class. A year later, that figure had dropped to 49.1%. Today it represents 44.8%.

This without taking into account that even among those whose income belongs to a middle class considered “fragile” (up to $96,994 per month per typical family, according to City estimates), there are many who aspire to preserve assets from other times. In 2018, this sector represented 8.8% of the citizens of the Capital; today they are 9%.

However, according to data from the Buenos Aires City Statistics and Census Directorate, it is the next category in the income pyramid, that of the “vulnerable non-poor” (they receive between $63,289 and $75,595), the one that most It has grown in the last year and a half. In 2019, 9.5% were vulnerable; it currently represents 11.1% of the city's population.

“Unlike other crises, in this one everything is lost, not only economically. And that is what makes it unprecedented, unpredictable. The past is of little use. The recipes that can be found there are of doubtful effect”, says Guillermo Oliveto. And he adds: “You cannot understand this year without analyzing 2020. They are a continuum. Today the economic and emotional cost of a confinement that no one can help but recognize that it was very extensive is being paid ”.

When analyzing the data, it must be remembered that we ended 2020 with the second worst drop in Argentine GDP in history: 9.9%. In 2002, when it was the worst, the contraction was 10.9%.

Vice President Cristina Kirchner dismissed these indicators of the decline of the Buenos Aires middle class. To do so, she published 2012 World Bank statistics on Twitter a few days ago, according to which in the last decade, "in Argentina, the middle class increased from 9.3 million to 18.6 million."