FAIR PAY
Ordinary workers missing out on gains from growth
The share of national income going to the bottom half of earners in Britain has fallen dramatically over the last 30 years, according to a new report by the Resolution Foundation. These ordinary workers have seen their share of GDP drop by a quarter, at the same time as the share going to the top 1% of earners increased by half.
In the Resolution Foundation's second report to the Commission on Living Standards, Matthew Whittaker and Lee Savage explore who is receiving the fruits of growth and who is “Missing Out”.
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Key findings
The report reveals that in the last 30 years of each £100 of GDP:
Once bonuses are included the findings are even more stark with the top 1% of earners taking home nearly £5 of each £100 of GDP, while the bottom half of earners receive only £10 of each £100.
In part, less of overall GDP is reaching the pockets of workers, with more paid as profits and social security contributions. But the largest factor explaining the declining fortunes of the bottom half of earners is the growing gap between the best and worst paid. Inequality has increased in all sectors - from finance to retail - resulting in a wage squeeze for ordinary workers.
A final word
“The declining fortune of low to middle earners is in stark contrast to those at the top and if you take into account bonuses the picture looks even worse. This is not just about the finance sector racing away - wage inequality across all sectors of the economy seems to be the driving factor, including in retail which is the largest employer of those on low to middle incomes.” - Matthew Whittaker, co-author of the report.
“If these worrying trends continue in the decade ahead it casts doubt on whether those on low-to-middle earnings will see their living standards rise in line with economic growth. Shared prosperity requires that the gains from growth are widely spread rather than ever more narrowly concentrated.” - Gavin Kelly, chief executive of the Resolution Foundation.
Want to know more?
Title: Missing Out: Why ordinary workers are experiencing growth without gain, by Matthew Whittaker and Lee Savage, Resolution Foundation, July 2011.
Availability: You can download the 41-page report in PDF format at www.resolutionfoundation.org/publications.
The Resolution Foundation is an independent research and policy organisation. It says: “Our goal is to improve outcomes for low and modest earners - in particular the 11.1 million low-to-middle earners (LMEs) who make up the ‘squeezed middle’, living on below median income but broadly independent of state support.” For more information visit www.resolutionfoundation.org.
“The Commission on Living Standards is an independent and wide-ranging investigation into the pressures facing people on low-to-middle incomes. Its work is focused on the long-term economic trends that are changing the nature of life on low-to-middle income in modern Britain, from jobs and pay to the cost of living and family working patterns. The Commission brings together a wide range of leading thinkers to examine these trends, ranging from private and public sector employers to economists, experts in public opinion and representatives of parent networks.”