Four in 10 middle-income earners saw income fall in 2024, highest rate since COVID-19

About four in 10 individuals in the third income quintile saw their wages and business income fall in 2024 compared with the previous year — the highest income decline rate since the COVID-19 shock of 2020.

According to the Ministry of Statistics' 2024 Income Mobility Statistics released Sunday, 38.9 percent of individuals who were in the third quintile by wages and business income in 2023 saw their income decrease the following year. That was the highest figure since 2020, when the rate stood at 41.2 percent, and marked a 3.7 percentage-point increase from the previous year's 35.2 percent.

The income decline rate had fallen for three consecutive years — from 38.6 percent in 2021 to 35.8 percent in 2022 and 35.2 percent in 2023 — before rising again in 2024. The share of third-quintile earners whose income dropped by 50 percent or more also rose 0.5 percentage points to 12.8 percent, meaning roughly one in three of those who saw their income fall experienced a drop of at least half.

Meanwhile, the share of earners whose income increased fell 5.7 percentage points to 57.3 percent, from 63.0 percent the previous year — the lowest level since 2021. The proportion whose income rose by 50 percent or more dropped 2.3 percentage points to 9.7 percent, the lowest since the statistics were first compiled in 2018.

Among all five quintiles, the third saw the sharpest rise in its income decline rate. The second quintile's rate rose 2.5 percentage points, from 38.0 percent to 40.5 percent; the fourth quintile's climbed 3.3 percentage points, from 33.2 percent to 36.5 percent; and the fifth quintile's edged up 1.0 percentage point, from 34.1 percent to 35.1 percent. Only the first quintile saw a slight decrease, falling 0.2 percentage points from 29.3 percent to 29.1 percent.

Some observers note that the benefits of economic recovery may be concentrating among high-income earners. A Ministry of Statistics official said performance bonuses and gains from sectors such as semiconductors and some other manufacturing industries "tend to be concentrated in the fourth and fifth quintiles, which are largely made up of workers in their 30s and 40s," adding that "there may be limits to how directly the warmth of strong exports reaches middle-income groups such as the third quintile."

The Bank of Korea reached a similar conclusion in a report published in July titled "Why Is This Terms-of-Trade Improvement Different?", finding that wage gains and capital returns driven by the recent semiconductor boom are concentrating among high-income, high-asset households — groups with relatively low marginal propensities to consume and weaker wealth effects.