The Great Stagnation in the UK

by Russ Roberts on October 5, 2011

in Standard of Living

Words should mean something. They often do. But not always. This report out of the UK purports to show stagnating living standards there. But the numbers tell a very different story:

Many people in middle and low income jobs have barely seen any improvement in their incomes over the past 30 years, a report from the TUC says.

FYI: the TUC is the Trades Union Congress. According to their website: “The TUC is the voice of Britain at work. With 58 affiliated unions representing 6.2 million working people from all walks of life, we campaign for a fair deal at work and for social justice at home and abroad.”

Low income workers have seen their pay rise by 27% in real terms over the past 30 years but rises for the top 10% of earners have been four times higher.

Hmm. One percent a year, corrected for inflation isn’t exactly “barely any improvement.” And that may understate the gains if British inflation measures are overstated as they are here in the US.

Its report found a “sharp divide” in earnings growth between professions.

While medical practitioners saw a 153% rise since the late 1970s, bakers’ wages fell by 1%.

Wages grew by over 100% for judges, barristers and solicitors, while they fell by 5% for forklift truck drivers and 3% for packers and bottlers in the same period.

Yes, some occupations are in high demand and some in low demand.

Its report, called “The Livelihood Crisis” by Stewart Lansley, says there has been a steady growth in “bad jobs”, offering poor wages and job security.

It says there are almost twice as many people now earning a third less than the median compared with 1977.

Hmm. That’s a bit confusing and hard to believe. The population is larger. Did Lansley correct for that? I’ll check out the report. Meanwhile, here is some seemingly horrible news:

It added that a significant proportion of workers have received little if any financial benefit from the doubling in size of the British economy in the last 30 years.

TUC general secretary Brendan Barber said: “People often cite the recession as the source of this income squeeze but a livelihood crisis has been brewing in Britain for decades.

“The financial crash has exposed decades of limp wage growth offset by soaring household debt.”

Mr Barber says the nation’s entire economy needs to be radically transformed.

“The financial crisis should have led to a fundamental economic rethink but instead our discredited model of market capitalism has somehow emerged unscathed.

“Far from making the changes that we need, the coalition is instead introducing more punitive measures against those on low and middle incomes.

“Unless we radically transform our economy – from recasting the role of the state to prioritising a fairer distribution of new wealth and jobs – we will simply be storing up more problems for the future.”

And the bottom line? It’s in the data at the end of the article. Check it out:

Rise in real earnings % 1978-2008 (male full-time)

Medical practitioners 153
Judges, barristers, solicitors 114
Secondary school teachers 67
Quantity surveyors 65
Accountants 60
Welfare/social workers 60
Median (mid-point of sample) 57
Electrical and electronic engineers 55
Bricklayers 37
Architects; town planners 36
Mechanical engineers 34
Skilled motor mechanics 34
Carpenters and joiners 30
Plasterers 30
Toolmakers/toolfitters 21
Heavy goods vehicle drivers 19
Bus and coach drivers 11
Sheet metal workers 8
Bakers -1
Packers, bottlers, fillers, canners -3
Fork lift truck drivers -5

So the median (worker? occupation?) grew a measly 57 percent in real terms over 30 years. That’s 2% per year. That’s a crisis? That requires radically transforming society? They’re even crazier across the pond than we are here.


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