From the TUC

Wage Growth 2003-2008: A reply to John Rentoul

12 Jun 2013, by Guest in Economics

The last few years have several big, landmark events in my life – getting married, buying a house, having my first child. This morning I experienced another whilst on my way to the IFS’s excellent presentation on their important findings on wages and productivity, when I became the subject of one of John Rentoul’s “Questions to Which the Answer is No” blog posts.

Yesterday I took issue with Rentoul’s claim that the current pressure on living standards is simply a result of the recession, pointing that the problem existed well before the crash. He has responded disputing this.

He again offers a chart on mean expenditure and questions the relevance the Resolution Foundation figures I cited. He also writes that:

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.

Hence he lists,”Did rising prosperity end for most people in 2003?” as a queston to which the answer is no (QTWTAIN).*

I’m afraid I still disagree and at risk of getting into a “chart war”, I would simply point to the below chart from the IFS presentation this morning.

Real hourly wages

Rentoul ends by noting that:

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.

To which I’m tempted to ask, why is Mr Blair’s biographer is so keen to tell us that was fine until 2007?

*On a technicality I’m not sure I’m really worthy of a QTWTAIN, as I never actually asked the question…

3 Responses to Wage Growth 2003-2008: A reply to John Rentoul

  1. dsquared
    Jun 12th 2013, 12:33 pm

    The difference, of course, between an expenditure measure (as used by Rentoul) and an earnings measure (as used by you) is the increase in debt.

  2. Paul Cotterill
    Jun 12th 2013, 3:03 pm

    Easy enough to read between the lines of Rentoul’s criticism of the TUC etc for their supposed blaming of the 2003-2007 Blair govt is a rather naïve assumption that a government cam improve or harm workers’ conditions at will. It’s as though he’s unfamiliar with the broader concept of capital-labour relations, over which a govt may have some influence if it chooses, but generally only some, in a mixed, international economy. Labour in the 2000s chose not to bother, preferring instead some make-up measures like tax credits and the minimum wage, which may have been beneficial in the short term to the bottom percentiles, but which reinforced capital-labour power inequalities for the longer term.

  3. Roger Sealey
    Jun 13th 2013, 10:19 am

    If we use the Gini coefficient, which is used to show the degree of income inequality between different groups of households in the population.
    The all you need to look at the DWP publication Households Below Average Income 2010/11 – See Table 2.2ts, which gives the Gini coefficient before housing costs this peaked at 36% between 07/08 and 09/10.