If you’re not rich, you’re not Middle Class, says the FT
Well actually that’s not exactly how they put it in their feature on pay disparity this morning, but it might as well have been. What they actually said was “Middle-class workers richer than they think”. But it does depend what you mean by ‘middle class’ – what they mean is people who start their careers on more than most people earn, and keep getting richer, which is a strange use of the term “middle”. But it is a reflection of just how unequal our society has become since the 1970s (inequality rose fastest in the 80s, less fast in the 90s, and the last decade has seen ambiguous data but no reverse in the trend). Given that brief historical summary, it is surprising that the FT concludes that it is difficult to say why inequality has grown in this way, and why it has grown more in the US, UK and New Zealand than in countries like France and Germany. Er, it’s because growing inequality was the policy of UK governments in the 80s and 90s (as well as in different times in the US and New Zealand) and constraining that growth in inequality has been government policy in France and Germany, isn’t it?
All this has been explored in greater depth and with greater erudition in TUC Touchstone pamphlets like Life in the Middle, but it’s all worth revisiting – what we need is Government policies aimed at restoring equality in earnings, and non-Governmental tools like stronger trade unions and more collective bargaining to back them up.
The figures that the FT quote indicate that the richest people at work (let alone the idle rich who don’t work at all) are so rich that the mean average wage of £487 a week is nearly 25% more than the most that the poorer half of the population earn (half the population earn below the median wage of £393 a week). What the FT reported was that middle class people – remember, that’s people who start their careers earning more than most other people earn and actually get richer as they get older, I can’t emphasise this enough – actually earn far more than most (the poor, or working class), and only appear poor because they don’t earn the staggering sums of the super-rich – such as the top 0.1% of the population whose earnings are above £7,000 a week!
What has led to this increasing inequality is politics, and it can be changed if people want it to. Although this is of course complex territory, and different causes (which all interact with each other) have indeterminate impact on the outcome. But, fundamentally, inequality derives from policies like non-progressive taxation (eg abandoning higher rates of income tax as people earn more, or increasing the use of generalised consumption taxes like VAT) and the restriction of unions’ ability to negotiate better wages for the majority of workers (a mechanism which counterbalances the tendency of market economies to reward elites or the most skilled workers).
My colleague Nigel Stanley blogged months ago about the abuse of the term “middle class” in British journalism. It usually means professionals, and has all sorts of cultural implications, whereas in the US it means “ordinary workers”. Fairly clearly, it often means “us”, as opposed to “them” – them being people significantly poorer or richer than “us”.
Postscript: there’s a sad piece of evidence in the article about how confusing some people find statistics. It says “separate work by IFS, using 2004/05 tax data, calculated recently that there were 4.7 million adults in the richest 10% of the population.” That is because there are 47 million adults in Britain, and wherever there are 47 million adults, regardless of what tax data tells us, 4.7 million of them are going to be in the richest 10% of the population. It’s, like, an iron law, or something. Doh!