Where Has the British Paycheck Gone?

Posted on Oct 31, 2012

Kevin Cortopassi (CC BY-ND 2.0)

See the slideshow on which this article is based here. Watch a video report produced by the Resolution Foundation on the struggles of eight working families below.

A new report by the Resolution Foundation shows that growth in disposable income for British families has tumbled to a meager 0.6 percent in the last decade after growing at an average rate of 2.7 percent during the previous half-century.

The data shows that wages for Britain’s middle-income families got stuck around 2001—well before the 2008 financial meltdown. In the next decade, income is expected to decline outright to less than it was at the start of this one.

To explain the trend, researchers point to a $980 loss in male paychecks between 2002 and 2008. Income for working females pushed family income in the opposite direction, rising by $480, and a $930 tax credit bolstered take-home pay even more.

The drop in male income placed more of the burden of supporting the family on women. But typical married mothers keep little of what they make, as the report shows that much of their incomes are eaten up by taxes and child care. And moving from part- to full-time work will harm the family, as universal credit, the U.K.’s new welfare reform, will reward families receiving benefits at the expense of the second earners, most of whom are women.

With the government expected to give no more tax credits, relief can come only through increased incomes.

Critics suggest the wage squeeze can be addressed by setting sector-specific minimum wages that take into account different industries’ abilities to bear employee costs.

The proportion of low-paid workers in different sectors of the economy breaks down as follows: wholesale and retail, 29 percent; hotels and restaurants, 17 percent; administration, 11 percent; education, 11 percent; health, 6 percent; manufacturing, 6 percent; and other, 15 percent.

—Posted by Alexander Reed Kelly.

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