‘Biggest drop in living standards’ refers to year-on-year change. The mean household disposable income in 2020 was double the income in 1977.
‘Biggest drop in living standards’ refers to year-on-year change. The mean household disposable income in 2020 was double the income in 1977.
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Wanted to post a clarification as some people seem to think income has been falling for a long time, when the opposite is true.
Source: ONS 2020, https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/householddisposableincomeandinequality/financialyear2020
You can’t have 13 years of Tory rule and be better off…
These stats do not mean what I assumed they would mean.
They are post tax income, not post expenses income – that is why in a country with an average income of about 30k, the median “disposable income” is about 30K – if it was income less expenses you would expect it to be much lower than the eaverage income.
If you go to the data, you can see this is just inflation adjusted income minus tax.
You could say it proxies for how much spare money people have after expenses, but it does not reflect changes in the things people need to pay for. For instance, far fewer people live in council housing than in 1977, and although changes to private rent might be normalised in, the fact that more people have to pay it at all is not.
Comparing how much spare money people have would be a much deeper project.
The other interesting thing this shows is the K shaped recovery –
[https://www.ons.gov.uk/resource?uri=/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/householddisposableincomeandinequality/financialyear2020/f990c4d9.png](https://www.ons.gov.uk/resource?uri=/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/householddisposableincomeandinequality/financialyear2020/f990c4d9.png)
This distribution shows that the median sits above the mode (the peak) – a big lump of people are earning at the bottom end (cat 3), and then the top end is kind of stretched. The other graph shows that incomes for both the poorest and the richer 50% have gone up, real incomes for the cat 3 big blob have gone down. This probably explains why a lot of people feel poorer.
I wonder who this cat 3 blob are – earning about 20k, not much of a pay rise in a few years – I think they are low grade office workers.
Finally – these are household income but since the 70s labour force participation (women in the workforce) is way up. Does this explain the doubling? i.e. an average household has 1.8x as many people actually earning money?