Middle-class problems: are we either stuck in low paid jobs or earning less in the middle?
14th Jan 2014
Ahead of a widely-trailed speech later this week, Mr Miliband set out his plans to "rebuild our middle class" in an article for the Telegraph. We've taken a look at some of his main claims:
- Are there fewer jobs now for those in the middle?
- Are we either stuck in lower paid jobs or earning less in the middle? (this factcheck)
- Are graduates stuck in non-graduate roles?
- We've previously looked whether the average family takes 22 years to save for a house deposit.
"Three quarters of those who started out in low-paid work a decade ago have been unable to move into permanently well-paid work — while middle-class incomes have been harder hit than any other group during the recession, with wages declining by 10 per cent."
The source of the first part of this claim - that three quarters of those on low incomes 10 years ago have struggled to move up the pay scale - is another report from the Resolution Foundation called "Starting Out or Getting Stuck?" published at the tail end of last year.
Using data from the New Earnings Survey Panel Dataset, published by the ONS, the Resolution Foundation calculated that of everyone in work but on low pay in 2002 ('low pay' here means earning less that two thirds of the median hourly wage of the day), 27% had only ever held low income jobs in the following decade.
A further 46% had moved onto higher incomes at some point in their career by 2012, but were not considered to have "escaped" low pay because they had not been earning incomes above the threshold for each of the previous three years (2010, 2011 and 2012). Combining these two groups gives a total of 73% who had been "unable to move into permanently well-paid work", just shy of three quarters of the cohort.
However this research doesn't show, as Ed Miliband puts it, that "under David Cameron, life is getting tougher still." In fact, the researchers point out that:
"Encouragingly, it shows that the proportion of employees escaping low pay has been gradually increasing over time... Since the early 1990s the proportion of low paid employees who manage to progress on to higher wages has increased, while the proportion remaining stuck on low wages has fallen, indicating there has been some improvement in earnings mobility."
The second part of this claim - that middle-class incomes have fallen faster than any other group in the recession - is more difficult to pin down.
"There was a real terms decrease in disposable income between 2009/10 and 2010/11, with the largest fall being for the middle fifth of households."
However while this was the case for the year that saw the UK emerge from recession (which ended in Q3 2009), it isn't the case if you look at the overall changes in income since the beginning of the economic downturn.
Over this timeframe the ONS paints a different picture, saying that "the largest fall in incomes over this period has been for the richest fifth of households."
Similarly, it's difficult to know exactly where the claim that middle class wages have fallen by 10% comes from. A study into middle incomes by the ONS published last year concluded that real wages among the middle fifth had fallen by 8.8% since the start of the economic downturn (2007/08). However it also found that changes to tax and benefit rules meant that disposable income had declined at less than half the rate, dropping by 3.8% in real terms.
We've been in touch with Labour to ask for more details, and will update with any information we receive.