Over the past two years, Brazil has undergone one of the most significant processes of social mobility in its modern history. According to a study by Fundação Getulio Vargas (FGV), based on data from the Continuous National Household Sample Survey (PNADC) covering the period from 1976 to 2024, 17.4 million Brazilians moved out of poverty and entered social classes A, B, and C. To put the scale of this shift into perspective, that number is equivalent to the entire population of Ecuador.
As I analyze the data, it becomes clear that Brazil is experiencing a structural change in income distribution at a pace not seen in decades. FGV estimates that the speed of social mobility between 2022 and 2024 was 74% faster than the expansion recorded between 2003 and 2014, another period marked by strong upward mobility. In just two years, the share of the population in classes A, B, and C increased by 8.44 percentage points, with between 13 and 14 percentage points linked to households receiving Bolsa Família and the Continuous Cash Benefit (BPC).
This transformation is not merely statistical. It reflects deeper economic dynamics, especially the recovery of the labor market and the expansion of formal employment. Marcelo Neri, director of FGV Social and author of the study, emphasizes that income from work was the primary engine behind the rise of the middle class. According to him, the protection rule embedded in Bolsa Família encourages formal employment contracts, which may be the clearest symbol of a new middle class emerging from the base of the income distribution.
Beyond that, Brazil’s strong economic growth over the past four years came as a surprise, even to economists. Few expected such performance, and forecasts largely missed the scale of the expansion. In my view, one of the main explanations lies in the massive expansion of income transfer programs, which began during the pandemic under former president Jair Bolsonaro and were later reinforced.
Much of this expansion took place after the Covid-19 pandemic and gained even more momentum as the presidential election approached. Four months before the vote, Jair Bolsonaro’s administration decided to raise Auxílio Brasil — the name given to Bolsa Família under his government — from R$400 to R$600. The move and the increase was widely seen as an attempt to distance the program from its historical association with the Workers’ Party (PT), led by the current president, Luiz Inácio Lula da Silva.
Thus, before the pandemic, Bolsa Família cost around R$30 billion per year. Today, the program alone amounts to roughly R$150 billion annually. Added to this is the Continuous Cash Benefit (BPC), which guarantees one minimum wage to elderly people living in poverty and to individuals with certain debilitating conditions, also exceeding R$150 billion per year. In practice, Brazil moved from a R$30 billion income transfer system to one approaching R$300 billion, a tenfold increase in social spending, not including unemployment insurance and wage bonuses.
When all transfer programs are combined, Brazil now distributes close to R$400 billion per year, effectively operating a welfare-state model. This approach contrasts sharply with the spending cap period between 2016 and 2020, when efforts to contain transfers coincided with weak economic growth averaging just 1.5% per year.
Income transfers played a decisive role in reigniting growth because low-income households spend virtually all of what they earn, injecting demand directly into the economy. This surge in consumption helped explain, for example, why Brazilian industrial output grew 3.5% in 2024.
The strategy helped put Brazil back on a growth trajectory, but it also increased public debt and borrowing needs. Today, the government faces the challenge of financing these programs amid high interest rates, which explains its push to raise funds in financial markets. The Ministry of Finance, led by Fernando Haddad, is fully aware of these constraints and has often clashed with other factions within the government that advocate for even more spending.
This tension now extends to monetary policy. The new Central Bank president, Gabriel Galípolo, faces difficult decisions, including potential interest rate hikes, placing him in a politically sensitive position given past criticism of the Central Bank’s independence and policy direction by members of PT.
In short, income transfers were crucial to Brazil’s recent growth, but the challenge ahead is calibrating social spending while managing debt, inflation, and interest rates in a more restrictive fiscal environment.
In Brazil, social classes A, B, and C are defined primarily by household income. Class C is generally associated with the middle class, composed of families that can meet basic needs while maintaining some level of consumption. Classes B and A include higher-income groups with greater financial stability. In 2024, Brazil reached its highest historical level of participation of middle- and upper-income classes since 1976. The combined share of classes A, B, and C reached 78.18% of the population, with class C alone accounting for 60.97%, while classes A and B together represented 17.21%.
At the same time, the study shows that lower-income groups reached their smallest proportions on record. Class D accounted for 15.05% of the population, while class E fell to 6.77%. For Wellington Dias, Brazil’s Minister of Development and Social Assistance, these numbers confirm the strength of social policies aligned with economic growth. He argues that integrated policies in education, healthcare, and socioeconomic inclusion, combined with GDP growth above 3% per year, have expanded opportunities for employment, entrepreneurship, and income generation. In his view, money reaching millions of low-income Brazilians through programs such as Bolsa Família has acted as a gateway to formal jobs or supported business initiatives, reinforcing a virtuous cycle of growth.
In practical terms, families with a monthly household income between R$4,000 and R$10,000 — a value equivalent to approximately US$1,850 — are typically classified as middle class in Brazil as of 2026. This income range allows households to cover essential expenses such as housing, food, and transportation, while also supporting basic private healthcare, education, and moderate leisure spending. Above this level, families are considered upper-middle class, while those below it tend to remain concentrated in lower-income categories.
Despite this progress, a concerning reality persists. Recent surveys indicate that most Brazilians would struggle to maintain their current standard of living for long if they lost their main source of income. This vulnerability is not limited to the poorest segments of society and affects a significant portion of the middle class as well. Many households operate with little or no financial reserves, revealing a structural weakness in family financial planning.
This picture suggests that even as millions of Brazilians move into the middle class, economic stability remains limited. Income gains are real, but they are not always accompanied by financial education or the ability to save, especially when you're forced to spend your entire salary. In a country where economic shocks are frequent, this combination makes long-term economic security a continuous challenge, even for those who have already climbed several steps of the social ladder.
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