Single shock could push middle class Filipino households into poverty—study

A recent finding emphasized that escaping poverty is not enough, as most middle-class households remain one setback away from falling back into it.

In its policy note, the Philippine Institute for Development Studies noted that in 2023, about 30% of households were at risk of falling into poverty, meaning a single shock—economic, health-related, or environmental—could push them into financial distress.

"Poverty reduction alone does not guarantee economic security. Many Filipinos who have exited poverty remain highly exposed to shocks and face a substantial risk of falling back into deprivation. Health emergencies, job losses, price spikes, and natural disasters frequently push households across the poverty line, revealing that welfare status in the Philippines is often fragile and reversible rather than stable," it noted.

It added that poverty in the Philippines "is transient rather than chronic, with many households clustering just above or below the poverty line and frequently crossing it over time."

This “churning” means that leaving poverty is often unstable, and focusing on who is currently poor ignores the many households that are still financially insecure.

What vulnerability looks like

To illustrate this, Deanne Cabalfin, one of the authors of the policy note, described a typical family of five living in Metro Manila.

"The family earns above the poverty threshold. They put food on the table and they manage their monthly bills, but they may have a little or no savings buffer. So if there is only a breadwinner, for example, and he loses a job, or if a family member is suddenly hospitalized, or now that 'yung prices are likely to increase considerably, and employment may be affected because of the US-Israel-Iran war. Some families like this have almost nothing to fall back on," she told PhilSTAR L!fe.

Jose Alfonzo Añes, a 26-year-old freelancer, said that although he is technically in the middle class, he often feels like he’s just surviving rather than living a balanced lifestyle.

"When you say middle class, parang may scale. When you say middle, balance lang. Balance yung lifestyle mo, balance yung income mo...but somehow, it feels like I'm always in survival mode," he said.

Añes described his financial situation as "stable but tight," able to cover daily needs but often at the expense of personal comfort.

"Either comfort over security, or security over comfort. So, yes, people might be able to afford the daily expenses, but paano naman yung extras? In terms of the vacation... kailangan pa ng months or years na planuhin sila," he said.

"From time to time, once a week, nakakakain naman ako sa labas. Pero ngayon, I cook at home, tapos, I do my own laundry. I need to be strategic, kasi kailangan e," he said, noting how the rising fuel prices have affected his budget. "At the same time, I manage my expenses din for the purpose of easing my financial anxiety. What if bukas mawalan ako?" 

His experience reflects a reality: many Filipinos face financial vulnerability. According to Cabalfin, younger workers often experience unstable career paths, whereas older workers face limited time to build retirement savings.

Cabalfin noted that some take on intergenerational responsibilities early in life, further straining their finances. A sudden health emergency can make recovery even more difficult.

Unlike those below the poverty line who access programs such as 4Ps (Pantawid Pamilyang Pilipino Program), many in the middle class fall outside support systems. This is described as the "missing middle problem," where individuals earn too much for assistance but lack the stability that comes with formal employment.

"Some in the middle class and those in informal or semi-formal employment frequently fall between these two systems. They earn too much to qualify for poverty-targeted transfers, but they do not have the stable formal employment that provides full access to SSS, GSIS, PhilHealth, and PAGIBIG benefits," she added.

Sociology professor Niño Leviste emphasized that, although we often conflate them, poverty and vulnerability are "really different situations or different conditions." He noted that many government programs focus primarily on immediate relief rather than addressing the conditions that lead to instability.

"These programs shouldn't just address poverty in the short term, but should also be sensitive to the conditions that cause impoverishment in the first place," he stressed.