Turning it up to eleven: Low earners in the recovery
Authors: Dr Neil Lee
27 May 2011
In a report out today, the Resolution Foundation have warned of stagnant real wages for the eleven million people at the bottom end of the labour market. With a wealth of data, it presents a convincing case: the growth of the last few years has bypassed many working people, who are increasengly squeezed by rising costs of living.
Underlying this is the changing structure of the labour market – something we’ll be reporting new evidence on in the summer (my colleague Paul Sissons is leading on this). We're investigating these issues as part of our research programme – The Bottom Ten Million - which focuses on those who earn under £15,000 a year. Our group is only ten million, but we agree that the problems of low earners need addressing.
Yet exactly how these problems can be addressed is less clear. There will be marked regional differences in the scale of the problem, with relative prices varying considerably by region. Life on £15,000 in north London is probably harder than it would be in Northumberland. And we need to know more about how much of this is temporary - what sort of people escape from low earning, and which groups cannot?
There are temptations to suggest that these groups are lucky to be in work at all, in a period of high unemployment. But the incentives to enter work are a key area of policy, and this is one element of it. If real wages continue to be squeezed by high inflation, employment may be less of an option for many. And life on low wages can be tough. So while unemployment is important, earning low wages needs to be a government focus as well.
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