Can we track UK real living standards?

Does figure 2 in here help?

http://webarchive.nationalarchives.gov.uk/20160105160709/http://www.ons.gov.uk/ons/rel/social-trends-rd/social-trends/social-trends-41/social-trends-41—income-and-wealth.pdf

The IFS here offer a link to a spreadsheet giving incomes since 1961 for all different levels of income, with inflation rates:
http://www.ifs.org.uk/tools_and_resources/incomes_in_uk
Thanks for asking me. I note that when you want economic facts, you ask a Marxist.

Wow, thanks Tim.

This is in the context of my discussion with family about Brexit, which inevitably leads into discussions about ‘neo-liberalism’, globalisation, free-trade etc. Because their (justifiable, in my opinion) gripe is that the working-class who voted out were sold a bum deal because there is no chance that any of the possible plans is going to “bring their jobs back to the UK”, nor “throw out the foreigners”.

The contention that free trade makes us ‘all richer on average’ is no good to the people on the tail end of that average if they have things worse than they did before.

So I guess my definition of ‘working class’ is effectively a bit fuzzy. It’s about getting a better idea of how (absolutely) bad the losers have got it.

Where does that leave the unemployed? I guess difficult to know: are they unemployed because their job disappeared (to technology, a foreigner, or abroad)? Or also because they don’t want to retrain, can’t retrain, or there aren’t any jobs to retrain for anyway? But that’s getting into even more fuzzy waters.

I am not sure why this is desirable for the UK.

It isn’t. It’s just seen, by the politicians, as desirable for a number of readily identifiable sections of the voting classes.

NIMBYs being the most guilty, imnsho, rather than home owners (my relatively expensive for the area house being an asset of relatively meaningless value – excepting re-mortgaging – until I sell it. Which is not planned to be for another 30-odd years.)

So, fundamentally a planning problem. Build more houses, of the sort people want to live in, in the areas where there is a housing shortage. Price falls or, at least, stabilisation will follow.

The problem is that everyone wants more houses, just somewhere else.

I’m perfectly happy with the additional housing being built by me. I’d be happier if there was any indication that there might be more infrastructure on its way but I’ll wait for the market drag to take effect.

(It helps that I’ve no longer got kids at the local schools. I might be being a bit more vociferous about the incompetence of the planners if I did.)

A basic graph with the 25th and 50th percentiles here from the IFS stats, converted to annual income (because most people think that way?)

There is no single index that will track living standards for the working class. The change from a multi-worker household to a single-worker household in the Victorian era and the early twentieth century to a two-worker household in the late twentieth century is not captured by any economic or financial index nor is the step-change in 1948 when medical care became free of charge, nor is the improved quality of housing when council housing in the 1950s replaced Victorian houses that had declined into slums.
One can look at tables for median income (average income is distorted by the vast incomes of those at the top) and then adjust them for tax (direct at that level of income and indirect on a working-class shopping basket) and tax credits. This has three major weaknesses – on the one hand, the increase in white-collar jobs and the number of pensioners means that the median income has moved from just above the centre of the working class to within its upper quartile and on the other it ignores the growth in dual-income households, but most importantly it ignores the smaller family size so instead of one income supporting husband, wife and two or three kids, two incomes support a smaller household.
I am quite aware of the data available from ONS, iFS etc and it does tell us something *but* any table that starts in 1961 just *after* the fastest rise in working-class living standards in the twentieth century is grossly lacking in useful information.

“Living standards” is a subjective term. Kids today simply don’t believe that you didn’t have hot running water or indoor toilets growing up. You might find the answers you want in quality of life surveys.

This survey by the EU covers 2003-2011:
http://www.eurofound.europa.eu/sites/default/files/ef_publication/field_ef_document/ef1364en.pdf

Points of interest:
– On both Happiness and Satisfaction, the UK is above the EU27 average; roughly the same level as Spain.
– The UK scores poorly on the question “Several times a month, I have come home from work too tired to do some of the household jobs which need to be done.”
– Despite all evidence to the contrary, Brits claim to be fairly satisfied with both their homes and their healthcare system. This suggests that the survey may not be terribly robust.

You can also just follow the money. Are working-class Brits seeking a new life abroad? (The days when Brits moved to Spain to open bars seem long gone.) Are working class foreigners eager to come to the UK? What does that tell you?

John,

So you are essentially using the Marxist definition (or something very close to it) – for which nobody seems to have kept accurate stats.

@ SE
I think I am using an update of a definition that pre-dated Marx and it includes self-employed artisans so it wouldn’t dovetail neatly into Marxist ideology.
That’s not why I am using it – it’s the one that seemed to be universally accepted when I grew up.

> “One of the unspoken reasons for housing costs being so high is the move to women working and having their own careers.”

If this was the year 2000, you’d have a point. But both the percentage of women in the workforce, and their earnings, has been stagnant since about that year. Yet the cost of housing (whether renting or buying) has risen significantly.

@ Ben S
There are three main drivers to the current housing shortage.
#1 – by far the biggest – planning restrictions
#2 – net immigration – 3 million more people born abroad living in the UK in 2011 than in 2001
#3 – students living away from home as a result of Blair’s policies with relatively negligible building of specialist student accommodation for them to live in
The decline in average household size, a combination of divorce rate and increased longevity of widowed/widowered pensioners was a big factor in the latter third of the twentieth century, but it hasn’t decreased much more since 2000.
The rise in house prices is a simple way of matching demand to supply – prices go up until enough people cannot afford to buy a house/flat and demand is shrunk to the level of supply. One of Cameron’s few good ideas was to allow local communities to relax planning rules when a majority of locals agreed but, lacking a parliamentary majority, he was blocked by vested interests

The working classes can be easily defined as those who aren’t allowed to provide the character reference on a passport application.

Tim,

Put those claws back in. I say this is a fellow professional engineer.

New definitions of class are needed imv – based on income while you were aged between 21-65.
1) Upper Class – 2/3rd or more of your income was ‘unearned’ e.g. rents, dividends, capital gains, farm subsidies, interest on inheritances, that sort of thing
2) Working Class – 2/3rd or more of your income was earned from work, by hand, or brain
3) Benefiterati – 2/3rd or more of your income including Housing Costs was from welfare
Someone could fall in crossover classes if they satisfied the 1/3rd or more income requirement
e.g. 1) and 2) = middle class
2) and 3) = lower class
1) and 3) = should be in jail for fraud class

It’s a system that won’t catch on though.

@ Henry Marsh
So all pensioners would be Upper Class?

Hi john77, Good point – pension income is usually working income that has been deferred so would go in category 2. This scheme does need elaborating though – and if it is ever to gain acceptance a kinder word for benefiterati needs to be found, but I think it does need a category as describing those more than 2/3rd state dependent as working class is unfair on those who would have traditionally regarded themselves as working class.

Warren,

You’ll likely get little respect in this forum stating that the CPI doesn’t actually reflect consumer prices. If it helps my personal experience is that inflation has averaged ~7% over the last 20 years.

This month I am using the blueberry index. I created this when I realize blueberries are now ridiculously expensive and planted my own bushes. In 1996, during peak season, pints of blueberries sold for 10¢. The price in the store today, yes it is peak season, was $2.50.

I do need to note that not all of the increase is general inflation. Ethanol subsidies distort the market pushing farmland to be used for corn. Yucky cranberries have taken market share. I estimate around 20% of the increase is due to these types of factors.

Henry Marsh, your system could also distinguish between the modern working and middle classes by whether their work requires them to have a chitty, a qualification of some sort that they must have before they are allowed to do it.

distinguish between the modern working and middle classes by whether their work requires them to have a chitty, a qualification of some sort that they must have before they are allowed to do it.

Like Gas Fitters, Electricians etc?