From the TUC

Class matters more than age

20 Apr 2011, by in Equality, Pensions & Investment

Across the political spectrum people want to put the baby-boomers on trial for crimes against the young.

They have mopped up pensions, housing and jobs leaving those behind them facing a bleak future, the argument goes. Perhaps the most prominent advocate has been David Willetts in his pre-election book The Pinch: How the Baby Boomers Took Their Children’s Future – And Why They Should Give it Back.  Francis Beckett has a much more nuanced argument from the left, and speaking up for youth are Shiv Malik and Ed Howker.

Understandable arguments about society nearly always rest on generalisations. We talk about and measure the experience of women or of ethnic groups and undoubtedly gain a lot from such insights into the nature of inequality. But there are also dangers that such generalisations lead us to pass over differences within groups, ignore the “tyranny of the average” and muddle up correlation and causality.

I’m particularlysuspicious of age generalisations. Unlike some other divisions – few of us change gender for example – being in an age group is necessarily transitory. It is no great revelation to discover that older workers have more assets than younger workers – they have simply had more time to build them up.

And there is always a danger of nostalgia when dealing with the past. Young people can legitimately claim that the government is making it much tougher to go to college (ironically a move spearheaded by David “the Pinch” Willets). Yet while my generation did not pay fees, there were far fewer university places. I undoubtedly did well, but those of my age group that did not get to college may not have done so.

One common argument in this debate is that older people have grabbed all the pensions. At one level  there is an obvious truth here. The older the worker the more likely they are to be ina good pension.

But to generalise from this would be a big mistake as new ONS figures today show (and if you can bear the excitement there’s an online podcast/presentation here.) This is how they summarise their snapshot of 50 to 64 year olds:

The estimated saving of households headed by 50 to 64 year olds in Great Britain in 2006/08 was £2.2 trillion (million million). Pension saving accounted for nearly three-quarters of this total (73 per cent).

Saving is unequally distributed between households: in 2006/08, the top 10 per cent of households had savings of £1.0 trillion (45 per cent), while the bottom 50 per cent had savings of £122 billion, accounting for 6 per cent of the total. (our emphasis and the 45 per cent is our calculation).
People taking part in the Wealth and Assets Survey – the main source of information for the new chapter of Pension Trends – were divided into ‘spenders’ and ‘savers’ based on their responses to statements about spending, saving and credit use. The results for ‘savers’ showed that 41 per cent had not saved from income in the last twelve months or ever.

This indicates that some people cannot save even though they wish to do so. A key constraint on saving is income. For households in the 50 to 64 age group, median savings increased from £74,600 for households with earned income of less than £10,000 to £797,000 for those with £70,000 and over.

The experiences within this one agre group are so diverse that I think it is a mistake to generalise about them.

My alternative account of change is almost certainly an over-generalisation too, but I think it makes more sense. This is what I would argue:

Since the 1980s we have become a much more unequal society both in terms of wealth and income. This reversed the social-democratic moment in UK history from the second-world war onwards where society tended to become more equal (if rather unevenly). The main beneficiaries of this are now reaching retirement – but they make up a pretty small proportion of their age group, the majority of whom have also been losers in this growing inequality.”

In other words it’s much more about class than age.

4 Responses to Class matters more than age

  1. Prawo Pracy w UK
    Apr 20th 2011, 6:33 pm

    Im not really sure I followed the thread of your article, I got the impression that it was going to be more focussed on how the older citizens are using up the pension fund.

    However, I agree with the conclusion that wealthier people save more. Lower income families are constantly bombarded with images of a better life and they spend to try and attain a higher lifestyle. How many times do you see the phrase “buy now pay later”. I have the impression that the rich educate their children on how to better handle money.


  2. Tom Walker
    Apr 21st 2011, 3:33 am

    I read the following today in an article in the Yorkshire Post:

    A TUC spokesperson took a more optimistic view of the survey, and said: “Considering how hard young people have been hit by the recession, it’s encouraging that most have still rejected the ‘lump of labour’ myth that older workers are somehow keeping young people out of work.

    “The best way to get more young and older people into work is to get our economy growing again so that more jobs are created.”

    I am curious about why a “TUC spokesperson” would be citing the “lump of labour myth” when the alleged fallacy originated as a slander dreamed up by anti-union propagandists? The prototype for the fallacy claim appeared 1834 in Edward Carleton Tufnell’s violently anti-union pamphlet, Character, Object and Effects of Trades’ Unions. Referring to the motives for union support for the Ten Hours movement, Tufnell wrote:

    The Union calculated, that had the Ten-hour Bill passed, and all the present factories worked one-sixth less time, one-sixth more mills would have been built to supply the deficient production. The effect of this, as they fancied, would have been to cause a fresh demand for workmen; and hence, those out of employ would have been prevented from draining the pockets of those now in work, which would render their wages really as well as nominally high. Here we have the secret source of nine-tenths of the clamour for the Ten-hour Factory Bill, and we assert, with the most unlimited confidence in the accuracy of our statement, that the advocacy of that Bill amongst the workmen, was neither more nor less than a trick to raise wages — a trick, too, of the clumsiest description; since it is quite plain, that no legislative enactment, whether of ten or any other number of hours could possibly save it from signal failure.

    Any doubts about what Mr. Tufnell’s attitude towards unions was can be cleared up by noting the concluding sentence of his pamphlet: “Were we asked to give a definition of a Trades’ Union, we should say that it was a Society whose constitution is the worst of democracies — whose power is based on outrage — whose practice is tyranny — and whose end is self destruction.”

    The next significant episode in the evolution of the fallacy claim occurred in response to the victorious 1871 Engineers’ strike in Newcastle for a nine-hour day. The London correspondent for the New York Times (“F.H.J.”) stated what has become the canonical explanatory summary of the fallacy claim: “their theory is that the amount of work to be done is a fixed quantity…” Once again, it is instructive to look at the whole context of the claim to get a clear picture of its political intention:

    The real question which lies at the bottom of the dispute is the object of the men in seeking a reduction of hours. Do they want the rest and leisure for its own sake, or for the sake of ulterior designs. Mr. Barnett assures the employers that the men, refreshed and invigorated by the repose of shorter hours, will work harder during the time they are employed. The plea that the value of a man’s labor is not to be measured by the time he spends on it is plausible, and to a certain extent true. It is quite possible that a man might to do more and better work in nine hours than in ten hours, and the same argument might apply to eight hours as compared with nine, or seven as compared with eight. Everything depends on the spirit in which a man labors. Mr. Mundella says he believes the men are sincere in their declaration that they do not wish to check the rate of production; and it is possible that this may be the case. But I find it very difficult to take this view. The League is only an offshoot of the Unions, and the great object of the Unions is to surround production with all manner of restraints and restrictions, so that it shall not be accomplished too fast or by a small number of workmen. Their theory is that the amount of work to be done is a fixed quantity, and that in the interest of the operatives, it is necessary to spread it thin in order to make it go far… I think … there can be little doubt that the nine hours movement is only another of the Socialist expedients of the Unionists.

    Of course, just because an idea was the brainchild of reactionaries, doesn’t mean it is necessarily wrong, does it? In the case of the fallacy claim it has been shown to be itself a fallacy by reputable economists. In 1912, A.C. Pigou pointed out, with regard to the “fixed Work-Fund fallacy” (another name for the lump of labour), that “the reasoning process, which seeks to rebut a conclusion merely by disproving the cogency of a particular argument used in its support, itself involves a fallacy to which logicians have given a name — the fallacy ignoratio elenchi.” Maurice Dobb went further in 1928 in explaining the very narrow reasoning behind the fallacy claim:

    It is sometimes said that while the employer is interested in securing a low wage-cost, the worker is interested in securing a high level of earnings, and that, since by increased efficiency both things can be simultaneously attained, employer and worker should have a like interest in the speeding up of work and in all methods which promote this result. In the past a similar, but more general, argument has been advanced to the effect that anything which hinders an increase of output is damaging to worker and employer alike and trade unionists in the nineteenth century were severely castigated by economists for adhering, it was alleged, to a vicious “Work Fund” fallacy, which held that there was a limited amount of work to go round and that workers could benefit themselves by restricting the amount of work they did. But the argument as it stands is incorrect. It is not aggregate earnings which are the measure of the benefit obtained by the worker, but his earnings in relation to the work he does — to his output of physical energy or his bodily wear and tear. Just as an employer is interested in his receipts compared with his outgoings, so the worker is presumably interested in what he gets compared with what he gives.

    One would hope that at a time when the likes of The Economist magazine are invoking the phony fallacy claim in support of attacks on pensions by raising the entitlement age to 70, that “TUC spokespeople” would challenge and refute the reactionary rhetoric, rather than smugly and complacently parroting it.

  3. Bryn Davies
    Apr 21st 2011, 8:57 am

    I really have not had time to write anything at length about the egregious nonsense being presented by Willetts et al. But you just need to think for a moment about the OBR endorsed assumption that, despite the recent recession, our GDP will continue to grow, with the result that each succeeding generation will have a higher total income than the one before. So if there’s a problem it’s not a lack of fairness between generations; it’s a lack of fairness within each generation.

  4. Liz Smith
    Apr 21st 2011, 12:15 pm

    As a baby boomer myself I am totally fed up with the stream of moans about how we have had charmed lives and left a lousy legacy for today’s young people . Yes ,we were the first beneficiaries of the welfare state thanks to a Labour Government; yes , state pension age was 60 for women [although many didn’t qualify because they had been discouraged from paying the ‘stamp’ or had to leave the labour market to care for children ] and men at 65 ; yes mortgages were in reach of more younger people until the credit crunch [but baby boomer women will recall when they had to get husbands or fathers to authorise it!] and that a small percentage of predominantly middle class people who went to university got a grant .
    But let’s take a closer look at the baby boomer experience .
    Women baby boomers had precious few maternity rights compared with today.The reality for most women was giving up work [often being sacked] or making precarious childcare arrangements that worried them to death .
    Until the late 60’s it was impossible to get either proper family planning advice or a safe and legal abortion and to be an unmarried mother was shameful and wrecked many lives.Many women were made to give up their children for adoption.
    It wasn’t a bowl of cherries for all men either .Gay men had the terrible choice of denying their sexuality or risking prison until the late 60’s.
    Most working class kids were branded failures when they failed the 11+.
    Disabled peole were shut away -assumed to be an embarrassment or a burden .
    For those who arrived from the Carribean and the Indian sub-continent in that period it wasn’t just the climate that was cold and unwelcoming.
    Fortunately like generations before them many of the baby boomers didn’t take it lying down .Trade unionists ,feminists ,disabled groups ,anti-racists ,lesbian and gay organisations and many others challenged the status quo and won some important victories that have improved the lives of those that followed .
    Equality legislation ,phasing out of selective education ,and a more open and tolerant society .
    Of course successive governments can and do put elements of the clock back and there are many injustices still to be put right .No doubt many of the baby boomers who both benefited from their foreparents campaigns and contributed to the better aspects of life today, are outraged about the lack of jobs for young people and the impacts of the cuts on the poor and vulnerable .
    But don’t shine a light on us just because a few better off people born in the 40’s and 50’s had more opportunity than most working class people had then and still have now!
    Choices have to be made by all governments . There is no acceptable rationale for making the wrong ones . Every generation has a duty to do their best by future ones .
    Blame the bankers not the baby boomers!