Did rising prosperity end for most people in 2003?

John Rentoul

Did median real wages stop rising in 2003? I have been puzzled by this claim since the Resolution Foundation made it last October, and I am puzzled by it now that Duncan Weldon, an economist at the TUC, takes issue with me for suggesting that people generally continued to become better off until the bank crisis of 2008.

I admit I chose this graph to illustrate my assertion partly to provoke.

hholdexp1 Did rising prosperity end for most people in 2003?

I know it shows mean chained volume expenditure rather than median real weekly earnings for male employees, which the Resolution Foundation prefers (see below, from page 15). But that is my point: by choosing your statistics you can give a different impression of the same society.

My graph gives what I think is a better picture of people’s standard of living: they were able to buy more stuff every year until 2008. Hence my headline is number 959 in my series of Questions To Which The Answer Is No.

The Resolution Foundation numbers refer to the wages of male employees, thus excluding females, the self-employed and income from benefits. I am more interested in total incomes and how much people could buy with it, which went up until 2008 and then went down and is now bumping along levelly.

Weldon tries to say this wasn’t so by complaining that I have used a mean rather than median, and to point out that the incomes of FTSE 100 chief execs has gone up.

I hesitate to go back into the debate about the inequality of incomes, but most incomes have become slightly more equally distributed over the past 20 years, while the above-average increases of the top 1 per cent means that overall inequality has been roughly stable. So there is no big difference between the direction of growth of mean and median disposable incomes.

Finally, it is worth making the point, as the Institute for Fiscal Studies does today and the Centre for Economic Performance at the LSE did earlier this month, that the downward flexibility of earnings since 2008 has been good news and the main reason why unemployment has not risen nearly as much as would have been expected in previous recessions.

I really cannot understand why the TUC, the Resolution Foundation and (sometimes) the Labour leadership should want to use statistics selectively to suggest that people on middle incomes had a hard time during the golden Blair years 2003 to 2007.

resolution Did rising prosperity end for most people in 2003?

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  • reformist lickspittle

    Yes, because a site for the UK parliament will be using the figure for the whole of the UK (NI included) This is not how it has been normally done in recent years (at least since 1979) though.

  • Pacificweather

    The 3 main parties don’t field candidates in NI so GB figures for them are UK figures.

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