a post by Adam Corlett for the Resolution Foundation blog
The strengths and weaknesses of economic forecasting are under scrutiny, perhaps like never before. How might GDP perform under different Brexit policies compared to a world with no Brexit? Is unemployment now likely to rise or fall? What will public borrowing in 2022 be? Whatever your politics, such modelling and forecasting is indispensable – so long as its limitations are appreciated. But whose job is it to forecast inequality?
We have just released our own projections for household disposable incomes. These are not based on new modelling of economic fundamentals but, rather, combine the latest official forecasts from the Office for Budget Responsibility (OBR) with the default tax and benefit system that will exist unless policy changes. Crucially, this allows us to explore not just aggregate figures like average income but how different groups might fare and the outlook for income inequality. It is a projection not just for growth but for the distribution of growth.
For example, while in our projection average household incomes (after housing costs) rise by a fairly weak 3 per cent between 2016-17 and 2020-21 after accounting for inflation, this hides an increase of 4 per cent for the richest third of the population and growth of zero for the poorest third. As shown below, we therefore project an increase in inequality after 2016-17 – maybe even to record highs on some measures.
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Showing posts with label incomes. Show all posts
Showing posts with label incomes. Show all posts
Wednesday, 7 March 2018
Saturday, 3 March 2018
How to solve the UK’s wealth inequality problem
an article by Torsten Bell published in the New Statesman
A family on the average wage would have to bank every single penny for 43 years to reach the wealthiest 10 per cent.
This year, average wages are set to be flat. British households, meanwhile, are in the middle of a projected four-year income stagnation. And our productivity has barely risen since the 2008 financial crisis.
Pay, incomes, productivity – that all are flatlining is the defining feature of our economics and our politics today. There’s a reason calling a general election in 2017, as wages fell, was a risky choice by Theresa May.
But one economic number that we rarely discuss has been increasing for some time: wealth. The value of land, it was recently reported, has increased by 412 per cent since 1995; UK households have £12.8tn of wealth. Crucially, our wealth is growing much faster than our income. Between 1955 and the 1980s, wealth was steady at two and a half times national income. Today, it’s closer to seven.
Continue reading
A family on the average wage would have to bank every single penny for 43 years to reach the wealthiest 10 per cent.
This year, average wages are set to be flat. British households, meanwhile, are in the middle of a projected four-year income stagnation. And our productivity has barely risen since the 2008 financial crisis.
Pay, incomes, productivity – that all are flatlining is the defining feature of our economics and our politics today. There’s a reason calling a general election in 2017, as wages fell, was a risky choice by Theresa May.
But one economic number that we rarely discuss has been increasing for some time: wealth. The value of land, it was recently reported, has increased by 412 per cent since 1995; UK households have £12.8tn of wealth. Crucially, our wealth is growing much faster than our income. Between 1955 and the 1980s, wealth was steady at two and a half times national income. Today, it’s closer to seven.
Continue reading
Thursday, 9 November 2017
The national living wage has caused the biggest fall in low pay in 40 years – but how is this improving people’s living standards?
a post by George Bangham for the Resolution Foundation blog
Employment is at a 40-year high, while pay is stagnating. That, in brief, sums up the last few years of changes in Britain’s labour market.
But the good news on employment has failed drastically to translate into a pay rise. A new squeeze on Britain’s median pay began in February 2017 – as Figure 2 shows – ending 27 consecutive months of real pay growth. This was due mainly to the late-2016 rise in inflation, attributable mainly to the weaker post-referendum pound, which pushed real pay down year-on-year despite nominal pay growth consistently topping 2% since early 2015. Newly-released October 2017 data from the Annual Survey of Hours and Earnings confirms that the new pay squeeze turns up in HMRC data too. Most observers don’t expect inflation to persist at its current level throughout 2018, as the effects of currency devaluation ‘pass through’, so today’s pay squeeze should change course in 2018. But with nominal wage rises still far below pre-crisis levels there are few signs that Britain can expect broad-based wage growth in the near future.
Continue reading there are several interesting graphs which make the problem very clear.
Employment is at a 40-year high, while pay is stagnating. That, in brief, sums up the last few years of changes in Britain’s labour market.
But the good news on employment has failed drastically to translate into a pay rise. A new squeeze on Britain’s median pay began in February 2017 – as Figure 2 shows – ending 27 consecutive months of real pay growth. This was due mainly to the late-2016 rise in inflation, attributable mainly to the weaker post-referendum pound, which pushed real pay down year-on-year despite nominal pay growth consistently topping 2% since early 2015. Newly-released October 2017 data from the Annual Survey of Hours and Earnings confirms that the new pay squeeze turns up in HMRC data too. Most observers don’t expect inflation to persist at its current level throughout 2018, as the effects of currency devaluation ‘pass through’, so today’s pay squeeze should change course in 2018. But with nominal wage rises still far below pre-crisis levels there are few signs that Britain can expect broad-based wage growth in the near future.
Continue reading there are several interesting graphs which make the problem very clear.
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