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Abstract:

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CEP Election Analysis
Real Wages and Living Standards
Stephen Machin
March 2015
Paper No' CEPEA024:
Full Paper (pdf)

Tags: wage inequality; real wage growth; unemployment; usa; uk; great recession; #electioneconomics; living standards; unemployment

Real wages and living standards have taken a hard hit in the UK in the recent past. Real wages of the typical (median) UK worker have fallen by almost 10% since 2008 and median family incomes have significantly fallen for working age households. This recent experience is weaker than in the majority of other OECD countries. Whilst the employment performance of the economy has been better than in previous downturns, some groups have been hit harder by the downturn: young workers in particular have suffered the ‘double whammy’ of greater falls in real wages and bigger rises in unemployment. No party has a coherent policy on what can be done substantively to improve the real wage position of the typical (median) worker. However, given they have fared so badly in recent years, policy should be geared up to focus on improving the labour market position of the young.