Britain and the US are poor societies with some very rich people – When it comes to average household incomes, the UK may soon need to ask migrant labourers to take a pay cut
Britain and the US are poor societies with some very rich people – When it comes to average household incomes, the UK may soon need to ask migrant labourers to take a pay cut
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Where would you rather live? A society where the rich are extraordinarily rich and the poor are very poor, or one where the rich are merely very well off but even those on the lowest incomes also enjoy a decent standard of living?
For all but the most ardent free-market libertarians, the answer would be the latter. Research has consistently shown that while most people express a desire for some distance between top and bottom, they would rather live in considerably more equal societies than they do at present. Many would even opt for the more egalitarian society if the overall pie was smaller than in a less equal one.
On this basis, it follows that one good way to evaluate which countries are better places to live than others is to ask: is life good for everyone there, or is it only good for rich people?
To find the answer, we can look at how people at different points on the income distribution compare to their peers elsewhere. If you’re a proud Brit or American, you may want to look away now.
Starting at the top of the ladder, Britons enjoy very high living standards by virtually any benchmark. Last year the top-earning 3 per cent of UK households each took home about £84,000 after tax, equivalent to $125,000 after adjusting for price differences between countries. This puts Britain’s highest earners narrowly behind the wealthiest Germans and Norwegians and comfortably among the global elite.
So what happens when we move down the rungs? For Norway, it’s a consistently rosy picture. The top 10 per cent rank second for living standards among the top deciles in all countries; the median Norwegian household ranks second among all national averages, and all the way down at the other end, Norway’s poorest 5 per cent are the most prosperous bottom 5 per cent in the world. Norway is a good place to live, whether you are rich or poor.
Britain is a different story. While the top earners rank fifth, the average household ranks 12th and the poorest 5 per cent rank 15th. Far from simply losing touch with their western European peers, last year the lowest-earning bracket of British households had a standard of living that was 20 per cent weaker than their counterparts in Slovenia.
*Image*
[In Norway, people right across the income distribution have high living standards. In the UK and US, the rich fare well but the poorest rank low vs other countries](https://archive.ph/IlYtF)
It’s a similar story in the middle. In 2007, the average UK household was 8 per cent worse off than its peers in north-western Europe, but the deficit has since ballooned to a record 20 per cent. On present trends, the average Slovenian household will be better off than its British counterpart by 2024, and the average Polish family will move ahead before the end of the decade. A country in desperate need of migrant labour may soon have to ask new arrivals to take a pay cut.
Across the Atlantic it’s the same story, only more so. The rich in the US are exceptionally rich — the top 10 per cent have the highest top-decile disposable incomes in the world, 50 per cent above their British counterparts. But the bottom decile struggle by with a standard of living that is worse than the poorest in 14 European countries including Slovenia.
To be clear, the US data show that both broad-based growth and the equal distribution of its proceeds matter for wellbeing. Five years of healthy pre-pandemic growth in US living standards across the distribution lifted all boats, a trend that was conspicuously absent in the UK.
But redistributing the gains more evenly would have a far more transformative impact on quality of life for millions. The growth spurt boosted incomes of the bottom decile of US households by roughly an extra 10 per cent. But transpose Norway’s inequality gradient on to the US, and the poorest decile of Americans would be a further 40 per cent better off while the top decile would remain richer than the top of almost every other country on the planet.
Our leaders are of course right to target economic growth, but to wave away concerns about the distribution of a decent standard of living — which is what income inequality essentially measures — is to be disinterested in the lives of millions. Until those gradients are made less steep, the UK and US will remain poor societies with pockets of rich people.
*john.burn-murdoch@ft.com*
*@jburnmurdoch*
I think any household in the UK that nets less than 45k a year (and doesn’t own their own property) is likely struggling to some degree.
Which is rather crazy when you think about it.
2x fulltime incomes not providing a comfortable standard of life is seriously concerning and suggests a broken system.
That’s the result of 12 years of Labour rule. This would never happen under a Conservative government!
We need to work together to kick Jeremy Corbyn out of Westminster, bring in a Conservative government, and start leveling up the country for all the people!
And don’t forget there would have been chaos under Ed Miliband .
Pfff, me taking a pay cut? Yeah, I don’t fucking think so mate
And the chancellor is trying to remove cap on bankers bonuses. Which btw is currently set to twice their salary. Imagine getting twice the amount of your salary on top of your salary as a bonus! And now imagine you are on a bankers salary!
>A country in desperate need of migrant labour may soon have to ask new arrivals to take a pay cut.
A subtle long game then, if we are unattractive to our EU neighbours then of course we have to look much further afield to find the labour to keep our wage rates low.
One of the surprising things about the article was:
“Last year the top-earning 3 per cent of UK households each took home about £84,000 after tax”.
I thought that figure would be higher.
Where does the Mirgrant labour taking a pay cut come from. The entire article talks about the issues for inequality of the rich earning more than the poor?
>Far from simply losing touch with their western European peers, last year the lowest-earning bracket of British households had a standard of living that was 20 per cent weaker than their counterparts in Slovenia.
I’ve noticed this myself. Working class people in Eastern Europe used to be a bit of a joke – images of babushkas taking their donkeys to sell potatoes etc. Old fashioned poverty.
But from my travels, I’ve noticed working class people in “poor” parts of Europe are significantly better off than their equivalents in the UK now.
They can afford a little car, a small house and a family, dining out and local leisure. Happy little lives. Which is more than can be said for our factory workers, nurses etc etc.
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I think we’re blinded by it because of the exchange rate (which is countered by a high cost of living here) and the juxtaposition with wealthy people in the UK (plenty of posh coffee shops and SUVs).
But the reality is that the joke is on us, the impoverished workers of Europe ain’t the Polish anymore…
The wealthy few are bleeding us all dry with their greed. It’s about time we all did something about it! They won’t be happy until we are all dead.
About Norway (since I’m Norwegian but live in the UK, and Norway was mentioned by OP): On the Norwegian equivalent of this sub, someone asked the other day how the rising cost of food and energy is affecting people on benefits. While some people said they were really struggling, the typical answer was “it’s harder than it was before, but I’m ok”.
This is the result of redistribution of wealth. Norway is fortunate to have a strong economy, but making sure people have enough to get by is a choice, not a given. I’m generally wary of making comparisons between the UK and Norway due to our different cultures and histories, but one thing that’s never sat right with me here is how people seem to just accept massive differences between rich and poor + a lack of social mobility as the natural order of things. It doesn’t have to be like this.
All through our history from the time of the norman conquest forward, this country has been run for a small cadre of elites. Our role is to service them and let them live a life of ease whilst we toil for that aim. We’ve been conditioned for this for centuries.
The UK standard of living was created by the welfare state concept.
In fact it also created much of the middle-class as it came to be, if we define middle-class by job-type/salary and quality of life.
In the USA standard of living derived from the immense industrial machine that is the USA. The fact that quality of life has declined so much is, just like in the UK, a political choice.
The similarities end there because the UK cannot continue as it is, unlike the USA which will just go on as long as the American public allow it.
Only Cameron can fix this.
Only May can fix this.
Only Johnson can fix this.
Only Truss can fix this.
i dont see how thats my problem, it seems like you problem for not being being a grafter and hardworking. – Liz probably while laughing with her billionaire execs.
That’s ok migrant workers either don’t want to or can’t get in anyway.
This has been the Tory plan since like forever.
Why can’t people see it?
I don’t Understand how the very suggestion that shareholder and large business owners take a pay cut. It’s always suggested that to give the workers a pay rise with inflation that the cost of the service or products will go up to pass the pay rise into consumers. Can they not just this once take the hit? Even labour under Starmer are suggesting they cannot be made to take the hit. If they won’t take the hit then threaten to re nationalise some of the rip off services. It’s criminal how the wealth is distributed sun this country, I feel like it’s now gone past the point of no return.
I have long said that I suspect a future where, if not employed in what is now a WFHable (new word) trade in some capacity, economic migration is inevitable, and likely cyclic, with some nomads constantly moving between geopolitical borders to chase a wage wherever major contracts are awarded. This is already true for many (eg: petrochem).
I just didn’t think I’d see my own Countrymen potentally be amongst the migrants … and certainly not so soon.
Thanks mainly go to the 23% voting right-wing for this, but particular thanks go to Privatisation for eviscerating our economy and infrastructures.
No thanks go to the now 31% who don’t vote, of course.
To the left, please get your shit wired ASAP, and FFS by 2024.
21% Labour, and ~24% split amongst others (Greens *et al*).
Together you are 45%.
Apart you are just a (yawn) toothless opposition party plus also-rans, bickering about comparative responses.
You are being part of the problem towards removing the Tories. The time for a solution really is **now**.
Parties of The Workers, ultimately, you all are.
Time for a pact, and a clear, winning, manifesto that DELIVERS on promises to reverse the course we are patently on otherwise, politically, economically and socially.
Learn fusion.
Quickly!
It’s a rigged economic system pure and simple. It’s designed to squeeze the middle class and the poor especially, and enrich the ultra wealthy.
Ironically the Tories are in love with redistribution. It’s just it’s based on taking from us and giving to the rich – a reverse Robin Hood if you will.
This is persuasive because it comes from hard data analysis from the FT – not exactly a bastion of anti-capitalist thinking.
Trickle down economics has just not worked for the US and UK.
The result of 12 years of Tory government. Fuck knows how bad it’ll get if they win the next election.
As someone once said.
America is a third world country with a gucci belt. And Britian is it’s cousin wearing an Armani one.
I actually did take a pay cut to emigrate from the US to the UK.
Why is Slovenia being held up as the “poor society” here?
>[The economy of Slovenia is a developed economy, and the country enjoys a high level of prosperity and stability as well as above-average GDP per capita by purchasing power parity at 83% of the EU28 average in 2015.](https://en.wikipedia.org/wiki/Economy_of_Slovenia)
And yet, we keep on voting in people who make it worse. It’s not even like they are pretending that much anymore. Weird behaviour.
Genuinely just a layman here but….
With these statistics those on the bottom rungs of society eg the working class are better off emigrating to countries like Norway?
And if they do and they are actually going to be having 40% better quality of life there?
If yes to both, does that not mean really we are better off doing exactly what all the migrant workers where hoping to do by moving to Britain?
No wonder we have national heroes like Robin Hood
It’s crucial to engage with the other side effectively on this, because the vast majority of the electorate are not “winning” in this economy and there’s no fiscal or economic benefit to the current distribution of resources and power.
Even viewed through a mean, bean-counting lens, millions of households on the financial margins means lower tax receipts, greater national vulnerability to economic shocks, and worsening social and living conditions for anyone who interacts with the public realm or the wider population.
As a purely practical matter, this needs to be addressed it the long-term trajectory of the nation is to be corrected. Finding a way to reconcile that with the fears and biases of a wider range of voters – pensioners, middling earners, etc. – is crucial. Unfortunately, that’ll require both tact and empathy for people we don’t agree with, and neither has been a strong suit of representatives with half-decent values for a long time in British politics. Or, indeed, among left-leaning voters at large.
>Britain and the US are poor societies with some very rich people
>the UK may soon need to ask migrant labourers to take a pay cut
>While the top earners rank fifth, the average household ranks 12th and the poorest 5 per cent rank 15th
>A country in desperate need of migrant labour may soon have to ask new arrivals to take a pay cut.
I don’t follow. How does cutting wages solve this problem?
When I visited the UK for the first time in the late 1970’s, when I was in my teens, I thought ‘this would be a nice country to live in, but only if you’re wealthy enough to not have to deal with the poverty’.
I’ve never had a reason to change that opinion. If anything, the economic inequality in the UK has become much worse since then. I’m surprised Britons on the whole don’t seem to notice it. They keep telling themselves they live in one of the richest countries in the world, but do not care or even question who actually owns those riches.
Title should be Britain and US are designed to be poor countries…..
I believe the UK is a “victim” (of it’s own making) of globalisation. As production and manufacturing has shifted out of the country to cheaper parts of the world, our trade deficit has grown.
Shifting to a service based economy rather than advanced manufacturing or technological has lead to the country hemorrhaging wealth, and it’s not going to change any time soon.
Ultimately, the more our currency is devalued through inflation, the worse off we are.
It’s almost laughable to compare our situation to Norway. They have a small population and have had several decades of trade surplus (mainly driven by fossil fuels). There’s money pouring into the country so higher salaries and government spending are much more viable.
Our wealth is being redistributed, but it’s going to places like China and Vietnam.