Middle class salary crisis: 'You either become rich or fall behind' — expert sounds the alarm

India’s middle class is facing a harsh economic truth—salary growth over the past decade has been a mere 0.4% CAGR, according to insights now widely shared by economists and financial commentators. In the face of rising inflation, automation, and diminishing global opportunities, the figure has sparked concern about the future of India’s aspirational population.

Akshat Shrivastava, Founder and CEO of Wisdom Hatch, weighed in via social media post, warning that the problem runs deeper than flat paychecks. He pointed to a global job crunch and the increasing threat posed by AI, which is steadily replacing mid-level tech jobs, roles in which a significant portion of India’s workforce is currently employed.

Shrivastava wrote on X: "The salary growth for India's middle class in the last 10 years has been 0.4% CAGR. Let that sink-in 0.4%. People don't get the gravity of this:- 
1) There is a severe job crunch across the world. 
2) AI will replace a large % of the existing workforce, especially in tech. 
3) Indians are know for their tech prowess. So they are most susceptible to this change (low/mid end tech jobs) 
4) Every country will protect its own people first (including the US). 
5) In India: we are protecting freeloaders. And, a socialist mindset. 
6) Back to 0.4% CAGR salary growth: what does that indicate."  

He further added that the concern is restricting skilled migration might backfire — forcing top-tier talent to compete for average jobs, further compressing opportunities and income for the broader middle class. “Talented Indians who can’t leave will absorb domestic roles, squeezing out the average worker,” said Shrivastava said.

Shrivastava added that protectionist policies in Western nations like the United States are compounding the issue, as countries move to shield their own citizens from economic uncertainty. “Every country will protect its own people first,” he said.

Back home, Shrivastava criticised India’s economic priorities, saying the country is failing to build high-margin, innovative enterprises. “We’re subsidising freeloaders and supporting a socialist mindset,” he wrote. “Without profit growth, how can firms afford meaningful salary hikes?”

He warned that curbing skilled migration may backfire, as highly qualified individuals who cannot go abroad will compete locally for average jobs, further squeezing the middle class.

The silent crisis

Recently, Bengaluru-based entrepreneur Ashish Singhal brought attention to what he referred to as "the silent crisis that is often overlooked": the stagnation of middle-class salaries amidst rising costs and increasing income inequality.

Singhal emphasized that as expenses continue to rise while salaries remain stagnant, the middle-class is quietly bearing the economic burden without any significant support or attention. He highlighted statistics showing that over the past decade, the group earning under Rs 5L experienced a 4% compound annual growth rate (CAGR), while the Rs 5 lakh- Rs 1 crore income group saw only a 0.4% CAGR. Additionally, food prices have increased by nearly 80%, purchasing power has been nearly halved, and yet people are still spending more, largely funded by credit.

Singhal described this situation not as a sudden collapse, but as a gradual and well-disguised decline. Despite the economic challenges, individuals are still able to take annual vacations, purchase new phones, and meet their loan obligations.

Based on estimates, India's middle class accounted for 31% of the population in 2021, with projections indicating a growth to 38% by 2031 and nearly 60% by 2047. Despite this demographic shift, there is little evidence of corresponding improvements in economic stability or social mobility.

Rather than seeing an increase in real wage growth, individuals are facing stagnation, leading to an increase in EMIs and a rise in lifestyle inflation that is pushing families towards debt-financed consumption. The use of credit cards is on the rise, healthcare expenses are escalating, and the affordability of urban living is gradually diminishing.