Good News from the Statistical Trenches

LauraW10

http://www.bbc.co.uk/blogs/thereporters/stephanieflanders/

Steph Flanders Blog BBC

"For those who missed it, there was some good news from the statistical trenches in Saturday's FT from the Undercover Economist, Tim Harford.
We are used to thinking that nearly everyone suffers financially from a recession. But he asked an economist at Bristol University to check.
Using data from the regular survey of British households that began in 1991, Lindsey MacMillan found that at the end of the last recession in 1993, more than half of households were earning more than they did in 1991.
Amazingly, one in six had seen their income rise by more than 50%, despite meagre growth in the economy as a whole. And the results during the latter recovery were much the same.
"In other words," says Harford, "the variability in individual experience completely drowned out the distinction between growth and stagnation in the underlying economy."
We all know that some industries do better in recessions - after last week's flurry of new jobs announcements from KFC and others, the fast food industry comes to mind. The same goes for Poundland and discount supermarkets.
But this new finding goes a lot deeper than that. It reminds us that even in parts of the economy that are adversely affected by recession, most people will not suffer a big decline in income as a result of this recession.
The National Institute of Economic and Social Research expects British households' real disposable income to grow by 3.3% in 2009. That would be the fastest growth in years. In 2007, the peak of the boom, real incomes didn't grow at all.
It's a paradox we're getting used to. In a year of rising real living standards, households are going to save more because they are understandably fearful about the future. But back in 2007, when their income was flat, they saved less - 2.2% of their income compared to 4.2% in 2006.
But, as our undercover friend would remind me, those, too, are simply macroeconomic aggregates, far removed from the actual experience of real families and households.
People still get promoted in recessions. They still retire - not necessarily earlier than planned. And I can personally attest that they still have babies.
All of those changes can have a bigger impact on a given family's finances than the fact that the UK is in recession. That's not much consolation to households where one or both earners have recently been laid off. But it is true. "

PasturesNew

In the early 90s, there was no minimum wage. When minimum wage did come into effect a lot of low paid jobs had their salaries double overnight (they were on £2/hour or less, minimum wage was about £4). Maybe they're the 50% he's on about.

In about 1990 I was on £6.60/hour working through an agency doing secretarial temping work .... today if I walk down the road to a temp agency I'd get about the same rate offered.

baileysbattlebus

PasturesNew wrote: »

In the early 90s, there was no minimum wage. When minimum wage did come into effect a lot of low paid jobs had their salaries double overnight (they were on £2/hour or less, minimum wage was about £4). Maybe they're the 50% he's on about.

In about 1990 I was on £6.60/hour working through an agency doing secretarial temping work .... today if I walk down the road to a temp agency I'd get about the same rate offered.

I don't think minimum wage started until 1998 - the Tories would never have brought it in - they were dead set against it, they said it would ruin business and the country.

Infact there was a bill introduced by Chris Chope (Conservative) on 10th Feb to get rid of minimum wage - here is a snippet from it.

The second and much larger group who will be helped by my Bill are those who are currently out of work but would be willing to work for less than the minimum wage, which is £5.73 an hour or £11,918 a year based on a 40-hour week. Our Government make it illegal for an employer and an employee freely to negotiate the level of remuneration if it is less than £5.73 an hour for an adult, unless, of course, the work involved is unpaid voluntary work.
Before anybody accuses me of wanting to impose poverty wages, let me emphasise that I am talking about arrangements for freely consenting adults. The Government regard an income of £11,918 per year as much in excess of an employee’s personal needs. That is why a single person on that salary is required to pay no less than £1,887 in tax and national insurance, thereby effectively reducing their take-home pay to £4.82 an hour instead of the £5.73 that it is nominally.

Why should it be illegal for someone voluntarily to accept pay of £4.82 an hour? After all, that is all that is left in their pocket if they are paid the minimum wage of £5.73. Giving people the freedom to opt out of the minimum wage would help not only those who are out of work but those in the hard-pressed retail and hospitality sectors where businesses are going down like ninepins. How many such small businesses could be saved if those working in them had the freedom, in conjunction with their employers, to agree to reduce their wages?

So PN, in the not too distant future if the Tories have their way people will be back on £2 an hour and be grateful for the privilege.