About one in three Israeli workers is now earning less than before the country’s wars began, and the financial damage is no longer confined to the households that were already struggling. A survey from the Israel Democracy Institute (IDI, a non-partisan Jerusalem think tank), released this week, found 31 percent of salaried and self-employed workers reporting lower income than in the period before October 7, 2023, up from 27 percent in a January poll taken before the latest war with Iran began.
The four-point jump is the easy number to report. The harder one sits underneath it: losses that used to cluster among low-wage and self-employed Israelis have started reaching people who earn well above the average, and the researchers behind the survey are warning that the harmed group may simply stop recovering at all.
A Third of Israel’s Workforce Is Earning Less
The poll was conducted between April 23 and May 10 on a representative sample of 1,202 salaried and self-employed workers. It is the latest in a running series the institute has used to track household finances since the Hamas-led attack of October 7, 2023, and the wars that followed in Gaza, Lebanon and, most recently, against Iran.
The trend line is the worrying part. The earlier IDI reading, taken in the winter, put the share of workers reporting reduced income at 27 percent and was conducted roughly two months before fighting with Iran broke out on February 28. The new figure of 31 percent captures the first weeks after that conflict, and it points in the wrong direction across nearly every group the institute measures.
“The survey presents a troubling picture of a worsening economic impact across almost all population groups, reflected in rising shares of respondents reporting harm to their income and scope of employment,” said Daphna Aviram-Nitzan, the IDI economist who co-authored the report. Her institute has published the full survey of Israeli workers’ financial situation alongside the earlier readings, allowing the deterioration to be tracked quarter by quarter.
The North and the Self-Employed Took the Deepest Cut
Two groups carry most of the damage. Residents of the north, the region most exposed to missile and drone fire, reported the heaviest losses: 51 percent said their income had been harmed, 46 percent saw their scope of work or business activity shrink, and 38 percent said they had no liquid funds at all. The self-employed fared little better, with the average income hit running far ahead of what salaried staff absorbed.
The gap between the two kinds of work is the survey’s clearest structural finding. A salaried employee with reduced hours still tends to keep a paycheck; a self-employed Israeli whose customers stayed home during weeks of shutdown often had no revenue to fall back on.
| Group | Reported lower income | Average income drop | No liquid funds |
|---|---|---|---|
| Self-employed | About half | 47% | Elevated |
| Salaried employees | Roughly a quarter | 34% | Lower |
| Northern residents | 51% | Not specified | 38% |
Almost one in five salaried workers said their scope of employment, including working hours, had fallen by an average of 48 percent against the pre-October 2023 baseline. Among workers earning below the minimum wage before the Hamas war, 36 percent reported cut hours, more than double the 17 percent rate seen among those earning NIS 27,600 ($9,782), or twice the average wage.
The Damage Is Climbing the Income Ladder
Here is the shift that separates this survey from the ones before it. The economic pain is no longer a problem of the bottom of the labor market alone. Among high earners, 26 percent now report income losses, up from 15 percent before the war with Iran. That is a group with savings, protected jobs and, until recently, enough cushion to ride out a shutdown.
An eleven-point rise in losses among the well-paid does not threaten their solvency the way a lost month does for a minimum-wage earner. But it changes the political shape of the problem. When the people who fund the tax base and anchor consumer spending start reporting damage, the war stops being a story about vulnerable margins and becomes a story about the working middle.
It also undercuts the idea that Israel has two separate economies running in parallel, one booming and one bleeding. The booming half, built on technology and defense exports, is real. The survey suggests its workers are not as insulated from the home front as the headline growth figures imply.
“We call on decision-makers to act to create and strengthen economic support mechanisms for populations that have been more severely affected by the war,” Aviram-Nitzan said, singling out the self-employed, the Arab population, residents of the north, young people and low-income households. The list is long, and it is growing at the top.
Why the Recovery Stalled After February 28
The mechanics of the stall are not mysterious. For the first five days after Israel and the United States launched their joint campaign against Iran, almost the entire economy outside essential services was ordered shut under Home Front Command rules. The institute’s own explainer on the special home front situation set out how broad those powers run, from workplaces to schools to public gatherings.
Restrictions eased on March 5, but reopening a rule is not the same as restarting an economy. Schools in much of the country stayed closed under continuing missile fire, which kept parents at home and out of the workforce even after their employers were cleared to operate.
The sequence below shows how a short, sharp shock translated into weeks of lost income for households that had not yet recovered from the previous wars.
- February 28: Israel and the US open the campaign against Iran; non-essential business and education shut down.
- Early March: ballistic missile fire from Iran disrupts work across multiple regions during the heaviest days.
- March 5: Home Front Command eases workplace restrictions, but many businesses stay closed.
- Following weeks: schools remain shut in much of the country, keeping a share of parents out of paid work.
A Booming Tape, a Struggling Kitchen Table
The disconnect between the national accounts and the household survey is wide. Israel’s economy contracted at an annualized 3.3 percent in the first quarter of 2026, the Central Bureau of Statistics reported, reversing the 2.9 percent growth of the prior year, with consumer spending down 4.7 percent over the same three months. Yet the Tel Aviv market and the shekel held up, buoyed by defense orders and technology deals.
The early bill came fast. Business data firm CofaceBDI estimated revenue losses of about NIS 18 billion ($5.4 billion) in the first ten days of fighting with Iran, most of it in the private sector and concentrated among small businesses with thin equity. The Finance Ministry separately warned that the shutdown was costing roughly NIS 9.5 billion a week. The same forces that pushed up oil prices and rattled shipping in the region, traced in our coverage of how the Iran strikes split the global oil tape, fed straight into the cost of doing business at home.
- 3.3% annualized GDP contraction in Q1 2026, against 2.9% growth in 2025
- 4.7% drop in consumer spending in the first quarter
- NIS 18 billion in private-sector revenue lost in the first ten days of the Iran war
Forecasters expect a rebound. The Bank of Israel and outside houses such as Oxford Economics, in its read on the economic impact of the 2026 Iran conflict, see growth returning later in the year if the ceasefire holds. A V-shaped recovery in output, though, says nothing about whether a self-employed caterer in the north gets her customers back.
The Risk of a Recovery That Never Comes
That gap, between a national rebound and a household that never recovers, is what the survey’s authors are most worried about. They are not describing a deep recession. They are describing the possibility that a slice of the workforce simply gets stranded below where it started.
The figures raise concern that we may remain in a new static situation, in which the population harmed by the war is left behind and unable to recover.
Aviram-Nitzan made that warning in releasing the report, and the worry is grounded in the institute’s own time series. Across earlier surveys, the share of workers denied loans or credit by lenders rose steadily, from 28 percent in early 2024 to 38 percent by the start of 2026. A household cut off from credit during a downturn does not bounce when output does; it falls further behind. The institute is pressing the government to build targeted support before the gap sets, with particular attention to the groups it flagged: the self-employed, Arab workers, the north, the young and the low-paid.
Whether that window stays open depends partly on the fighting itself, and on whether the ceasefire that forecasters are counting on actually sticks. The state of those talks, including the mediation tracks we covered as Qatar and Egypt backed a US-Iran channel, will shape how long the home front stays disrupted. If the truce holds and aid reaches the harmed groups quickly, the 31 percent figure marks a peak. If the fighting resumes or support never arrives, the next survey will show whether the static situation Aviram-Nitzan fears has already arrived.
