a post by Nye Cominetti for the Resolution Foundation blog
A tight labour market is finally delivering decent pay growth. In the three months to July 2019, average weekly regular pay (i.e. excluding bonuses) grew by 1.9 per cent on the previous year (slightly down on the previous month). Given that average real pay grew by 2.1 per cent in the eight years prior to the crisis, we can safely say now that we more or less back to ‘normal’ on pay growth. And with employment (and unemployment) little changed in recent months – at record highs and close to record lows respectively – it looks like the labour market has settled into a healthy holding pattern.
But we should not take this for granted – it has taken ten years to get the economy delivering on both jobs and pay. And there remains an underlying fragility. We only have to look back to 2015 to see that a recovery can turn sour quickly. Then it was the Brexit vote, with the ensuing fall in the value of the pound and the jump in inflation choking off real pay growth. Today, stronger real pay growth is underpinned by stable inflation at normal levels, so we can be more confident that recent growth rates will be sustained. But this assumes, of course, that we do not suffer an economic shock. Our newly healthy labour market would surely not survive the economic disruption that would accompany a no-deal Brexit.
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Showing posts with label pay. Show all posts
Showing posts with label pay. Show all posts
Thursday, 12 September 2019
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
Monday, 14 August 2017
Private schooling and labour market outcomes
an article by Francis Green and Golo Henseke (University College London, UK) and Anna Vignoles (University of Cambridge, UK) published in British Educational Research Journal Volume 43 Number 1 (February 2017)
Abstract
Though a relative small part of the school sector, private schools have an important role in British society, and there are policy concerns about their negative effect on social mobility. Other studies show that individuals who have attended a private school go on to have higher levels of educational achievement, are more likely to secure a high-status occupation and also have higher wages.
In this article we contribute new evidence on the magnitude of the wage premium, and address a puzzle found in previous studies: how to explain the direct pay premium whereby privately educated male workers have higher wages even than their similarly educated peers. It is commonly conjectured that the broader curriculum that private schools are able to deliver, coupled with the peer pressures of a partially segregated section of society, help to inculcate cultural capital, including some key ‘non-cognitive’ attributes.
We focus here on leadership, organisational participation and an acceptance of hard work. We find that privately educated workers are in jobs that require significantly greater leadership skills, offer greater organisational participation and require greater work intensity. These associations are partially mediated by educational achievement.
Collectively these factors contribute little, however, to explaining the direct pay premium. Rather, a more promising account arises from the finding that inclusion of a variable for industry reduces the private school premium to an insignificant amount, which is consistent with selective sorting of privately educated workers into high-paying industries.
Full text (PDF)
Abstract
Though a relative small part of the school sector, private schools have an important role in British society, and there are policy concerns about their negative effect on social mobility. Other studies show that individuals who have attended a private school go on to have higher levels of educational achievement, are more likely to secure a high-status occupation and also have higher wages.
In this article we contribute new evidence on the magnitude of the wage premium, and address a puzzle found in previous studies: how to explain the direct pay premium whereby privately educated male workers have higher wages even than their similarly educated peers. It is commonly conjectured that the broader curriculum that private schools are able to deliver, coupled with the peer pressures of a partially segregated section of society, help to inculcate cultural capital, including some key ‘non-cognitive’ attributes.
We focus here on leadership, organisational participation and an acceptance of hard work. We find that privately educated workers are in jobs that require significantly greater leadership skills, offer greater organisational participation and require greater work intensity. These associations are partially mediated by educational achievement.
Collectively these factors contribute little, however, to explaining the direct pay premium. Rather, a more promising account arises from the finding that inclusion of a variable for industry reduces the private school premium to an insignificant amount, which is consistent with selective sorting of privately educated workers into high-paying industries.
Full text (PDF)
Friday, 9 June 2017
Ambition at work and career satisfaction: The mediating role of taking charge behavior and the moderating role of pay
an article by Sabrine El Baroudi (Canadian University Dubai, United Arab Emirates), Chen Fleisher, (Utrecht University, The Netherlands) and Svetlana N. Khapova and Paul Jansen (VU University Amsterdam, The Netherlands)
Julia Richardson, (Curtin Business School, Perth, Australia) published in Career Development International Volume 22 Issue 1 (2017)
Abstract
Purpose
The purpose of this paper is to examine the moderating role of pay in the relationship between employee ambition and taking charge behavior, and its subsequent effects on employee career satisfaction.
Design/methodology/approach
A two-wave quantitative investigation was conducted among alumni of a large public university in the Netherlands.
Findings
The results show that taking charge behavior mediates the positive relationship between employee ambition and career satisfaction. They also show that pay positively moderates this mediation, such that the relationship between employee ambition and taking charge behavior is stronger when ambitious employees receive an increase in pay, leading to increased career satisfaction. Conversely, a decrease in pay does not moderate ambitious employees’ taking charge behavior and the impact on their career satisfaction.
Research limitations/implications
The study draws on self-report data collected in one country: the Netherlands.
Practical implications
The study highlights the importance of pay for higher job involvement, demonstrating its impact on taking charge behavior among employees with higher levels of ambition.
Originality/value
This is the first empirical study to examine the impact of pay on employees’ taking charge behavior and the subsequent implications for career satisfaction.
Abstract
Purpose
The purpose of this paper is to examine the moderating role of pay in the relationship between employee ambition and taking charge behavior, and its subsequent effects on employee career satisfaction.
Design/methodology/approach
A two-wave quantitative investigation was conducted among alumni of a large public university in the Netherlands.
Findings
The results show that taking charge behavior mediates the positive relationship between employee ambition and career satisfaction. They also show that pay positively moderates this mediation, such that the relationship between employee ambition and taking charge behavior is stronger when ambitious employees receive an increase in pay, leading to increased career satisfaction. Conversely, a decrease in pay does not moderate ambitious employees’ taking charge behavior and the impact on their career satisfaction.
Research limitations/implications
The study draws on self-report data collected in one country: the Netherlands.
Practical implications
The study highlights the importance of pay for higher job involvement, demonstrating its impact on taking charge behavior among employees with higher levels of ambition.
Originality/value
This is the first empirical study to examine the impact of pay on employees’ taking charge behavior and the subsequent implications for career satisfaction.
Wednesday, 15 May 2013
Individual Choice and Risk: The Case of Higher Education
an article by Malcolm Brynin (University of Essex, UK) published in Sociology Volume 47 Number 2 (April 2013)
Abstract
The expansion of higher education raises the risk environment for school-leavers as more occupations become partially graduate with the result that occupational signals are fuzzy.
This makes the educational decision more difficult and more risky, especially with more of the cost of higher education being transferred to the individual.
After a discussion of the nature of risk, derived from Beck, and of the role of government policy and of economics in obscuring this, the analysis uses simple quantitative techniques, based on British Labour Force Survey data, to demonstrate the increased fuzziness of graduate work.
It is also shown that a rising proportion of graduates receive only average pay, thus raising the risks associated with educational investments even further.
Abstract
The expansion of higher education raises the risk environment for school-leavers as more occupations become partially graduate with the result that occupational signals are fuzzy.
This makes the educational decision more difficult and more risky, especially with more of the cost of higher education being transferred to the individual.
After a discussion of the nature of risk, derived from Beck, and of the role of government policy and of economics in obscuring this, the analysis uses simple quantitative techniques, based on British Labour Force Survey data, to demonstrate the increased fuzziness of graduate work.
It is also shown that a rising proportion of graduates receive only average pay, thus raising the risks associated with educational investments even further.
Wednesday, 31 October 2012
Drowning the poor in excessive wages: the problems of the minimum wage law
Robert Schuldt, Davis Woodall and Walter E. Block (Loyola University New Orleans, Louisiana, USA) published in Humanomics Volume 28 Issue 4 (2012)
Abstract
Purpose
The purpose of this paper is to demonstrate that the minimum wage law is deleterious to the unskilled, to the young and to members of minority groups.
Design/methodology/approach
The main method used in this paper is the logical application of basic supply and demand economic analysis.
Findings
The authors found that when a minimum wage of any given level is imposed, those with productivities below that level are at great risk of unemployment. For example, with a minimum wage of $10 per hour, those who can only produce at the rate of $1-$7, $8, or $9 per hour are likely to become unemployed. Similarly, if the level is raised to, say, $100, then even people with productivity levels of $8 or $90 per hour will lose their jobs.
Research limitations/implications
More effort should be made to ascertain who it is that gains from this law, if it is not the poor and unskilled. Attention should be focused on labour unions in this regard.
Practical implications
The practical implication of this research is that the minimum wage should be repealed.
Social implications
Present public attitudes, however, overwhelmingly support this legislative enactment. But this is based on economic illiteracy. The public needs to be educated in basic economics.
Originality/value
This paper, if its implications are implemented, will have great value for all those who wish the unemployment rate to be radically reduced.
JEL classification: J64
Hazel’s comment:
Please remember that the author is writing about the USA but many students of economics believe that the same effect can be seen in the UK.
Abstract
Purpose
The purpose of this paper is to demonstrate that the minimum wage law is deleterious to the unskilled, to the young and to members of minority groups.
Design/methodology/approach
The main method used in this paper is the logical application of basic supply and demand economic analysis.
Findings
The authors found that when a minimum wage of any given level is imposed, those with productivities below that level are at great risk of unemployment. For example, with a minimum wage of $10 per hour, those who can only produce at the rate of $1-$7, $8, or $9 per hour are likely to become unemployed. Similarly, if the level is raised to, say, $100, then even people with productivity levels of $8 or $90 per hour will lose their jobs.
Research limitations/implications
More effort should be made to ascertain who it is that gains from this law, if it is not the poor and unskilled. Attention should be focused on labour unions in this regard.
Practical implications
The practical implication of this research is that the minimum wage should be repealed.
Social implications
Present public attitudes, however, overwhelmingly support this legislative enactment. But this is based on economic illiteracy. The public needs to be educated in basic economics.
Originality/value
This paper, if its implications are implemented, will have great value for all those who wish the unemployment rate to be radically reduced.
JEL classification: J64
Hazel’s comment:
Please remember that the author is writing about the USA but many students of economics believe that the same effect can be seen in the UK.
Thursday, 27 September 2012
Are public sector employees overcompensated?
an article (CEPCP377) by Alexander Danzer and Peter Dolton published in CentrePiece - The Magazine for Economic Performance (Autumn 2012)
The UK’s coalition government has suggested that both pay and pensions in the public sector are too high relative to the private sector. Alexander Danzer and Peter Dolton use the concept of ‘total reward’ to evaluate this claim, comparing the lifetime compensation available to highly educated men working in the two sectors.
Full article (PDF 4pp delightfully illustrated with hares and tortoises)
This article summarises Total Reward and Pensions in the UK in the Public and Private Sectors by Alexander Danzer and Peter Dolton, Labour Economics 19(4): 584-594, August 2012 [about which I blogged in August here]
The UK’s coalition government has suggested that both pay and pensions in the public sector are too high relative to the private sector. Alexander Danzer and Peter Dolton use the concept of ‘total reward’ to evaluate this claim, comparing the lifetime compensation available to highly educated men working in the two sectors.
Full article (PDF 4pp delightfully illustrated with hares and tortoises)
This article summarises Total Reward and Pensions in the UK in the Public and Private Sectors by Alexander Danzer and Peter Dolton, Labour Economics 19(4): 584-594, August 2012 [about which I blogged in August here]
Monday, 24 September 2012
Mind the Gap: the size and costs of pay differentials between the public and private sectors in the UK
a research paper by Matthew Oakley published in the Policy Exchange (September 2012)
Abstract
This paper considers how public and private wages differ in local areas. It extends the UK literature in two key ways.
First it uses the Special License version of the Annual Population Survey to allow wage differentials to be identified using quantile regression estimation at a Local Authority level with the most up to date data available. This approach demonstrates a complex picture of mismatches between the wages one might expect individuals to receive based on their characteristics and types of job, and the public sector wages they receive: pay differentials vary dramatically both across and within regions and across the pay distribution.
Secondly, this paper puts forward tentative estimates of the overall value of the pay differentials in order to inform discussion over how much it would cost or save, should differentials be reduced, ceteris paribus, over time. These results are also split by region. Total costs are found to be sensitive to whether or not other factors, such as pension entitlements, are accounted for.
Full text (PDF 66pp)
JEL classifications: J3, J7
Abstract
This paper considers how public and private wages differ in local areas. It extends the UK literature in two key ways.
First it uses the Special License version of the Annual Population Survey to allow wage differentials to be identified using quantile regression estimation at a Local Authority level with the most up to date data available. This approach demonstrates a complex picture of mismatches between the wages one might expect individuals to receive based on their characteristics and types of job, and the public sector wages they receive: pay differentials vary dramatically both across and within regions and across the pay distribution.
Secondly, this paper puts forward tentative estimates of the overall value of the pay differentials in order to inform discussion over how much it would cost or save, should differentials be reduced, ceteris paribus, over time. These results are also split by region. Total costs are found to be sensitive to whether or not other factors, such as pension entitlements, are accounted for.
Full text (PDF 66pp)
JEL classifications: J3, J7
Wednesday, 15 August 2012
Gender earning gaps around the world: a study of 64 countries
an article by Hugo Ñopo and Nancy Daza (Economic Studies Unit, National Planning Department, Bogotá, Colombia) and Johanna Ramos (Office of Evaluation and Oversight, Inter-American Development Bank, USA) published in International Journal of Manpower Volume 33 Issue 5 (2012)
Abstract
Purpose
The purpose of this paper is to analyze gender disparities in labour earnings for a comprehensive set of 64 countries.
Design/methodology/approach
Using the methodological approach proposed by Ñopo, socio-demographic characteristics are used to match males and females such that gender earnings disparities are computed only among individuals with the same observable characteristics.
Findings
Disparities are partially attributed to gender differences in observable socio-demographic and job characteristics. After matching males and females with the same characteristics, the authors found that the earnings gap falls within a range between 8 per cent and 48 per cent of average females’ earnings, being more pronounced in South Asia and Sub-Saharan Africa. The unexplained earnings gaps are more pronounced among part-time workers and those with low education levels.
Originality/value
This paper presents a comprehensive view of gender earnings gaps in the world, simultaneously exploring many of the issues highlighted in the related literature. It adds value by exploring gender gaps in a comparative perspective, applying the same methods for several different countries.
Abstract
Purpose
The purpose of this paper is to analyze gender disparities in labour earnings for a comprehensive set of 64 countries.
Design/methodology/approach
Using the methodological approach proposed by Ñopo, socio-demographic characteristics are used to match males and females such that gender earnings disparities are computed only among individuals with the same observable characteristics.
Findings
Disparities are partially attributed to gender differences in observable socio-demographic and job characteristics. After matching males and females with the same characteristics, the authors found that the earnings gap falls within a range between 8 per cent and 48 per cent of average females’ earnings, being more pronounced in South Asia and Sub-Saharan Africa. The unexplained earnings gaps are more pronounced among part-time workers and those with low education levels.
Originality/value
This paper presents a comprehensive view of gender earnings gaps in the world, simultaneously exploring many of the issues highlighted in the related literature. It adds value by exploring gender gaps in a comparative perspective, applying the same methods for several different countries.
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