Hi Earnie. Thanks. I thought that I was missing simething. Odd way to show a graphic though.

What’s not clear to me is exactly what this wage inequality statistic is actually telling us, or what we should read into it.

Wage inequality is telling us just that the gap between the highest and lowest earners has widened. Not all that surprising in boom times but less surprising in times of bust.

Low levels of wage inequality are usually a sign of some of the countries with the best overall (for the total population) living standards. Think Scandinavia normally.

EL you might like to re- read my link. The average income of the lowest 20% of the population has INCREASED by 6.9% since 2007/8 whereas that of the top 20% has DECREASED by 6.8%. So your 0.1% difference (with the accompanying FFS) may well need some adjustment!?!

Fair point, I wasn’t paying attention and tbh I was thinking it sounded completely at odds with the “squeezed middle” narrative so it didn’t make a whole lot of sense.

But it was the 1% I was talking about, not the 20%, which as I have previously suggested can always expect to suffer disproportionately more during a severe economic downturn.

However the relatively short period since the banker’s credit crunch does not define what has happened with regards to wages for the last 30 years. There has been growing income inequality during that period so your comment :

Not to mention where the best trends in wages are to be found….and under a Tory Goverment – irony 3 of the day!

is clearly false.

Unless of course you happen to be one of the 1%, in which case it is absolutely true.

A nice video which has been posted before about income inequality in the US :

[video]https://www.youtube.com/watch?v=QPKKQnijnsM[/video]

Low levels of wage inequality are usually a sign of some of the countries with the best overall (for the total population) living standards.

Also more stable economies. Inequality creates instability.

Hmmm

Also more stable economies. Inequality creates instability.

Not sure whether I agree with this. The US has some of the highest levels of wage inequality (although China is probably the leader in this now) and as western economies go it’s pretty stable.

Although I’d agree that for some countries wage inequality is a major source of instability but I tend to think of such not 1st world.

worth reading as it correctly identifies that not only are these global trends but also that they are far more complex than some may like to argue! Then try the OECD report on global inequality and why it transcends political and economic structures.

so like wage inequality is inherent in the capitalist system…who knew.

as far as I am aware the so called communist nations real problems with wage inequality happened when they had liberal market reforms or basically they have capitalism { china and cuba for example]. The cause it is not complex as it is what capitalism does as a few people have the majority/disproportionate amount of the resources.
We could debate whether this is good or bad but lets not pretend we cannot work out why it occurs

ernie_lynch – Member
Fair point, I wasn’t paying attention

Phew, so we can drop the nasty stuff and focus on facts!

But it was the 1% I was talking about, not the 20%

Equally fair point and I would genuinely like to see the updated 1% numbers ie including 2011/12. I am not sure that they are availiabl though hence I restricted my comments to the available, independent stats from the ONS. Why? Because I was shocked by them (see below*). The issue of income inequality is clearly a serious one and no one is disputing its rise and the challenges this brings (although most academic studies suggest that the factors driving these trends are more complex that JY is suggesting!). As I said before, Labour are sensible to use this as their policy platform, one because rightly or wrongly they have lost the earlier economic debate and two, and more importantly, the benefits of any recovery (?) have yet to filter through in wages and living standards. So so far so good for Labour…..

But now the interesting bit….

so your comment….Not to mention where the best trends in wages are to be found….and under a Tory Goverment – irony 3 of the day!…is clearly false.

Is not a fair point. * This is where the ONS stuff is interesting IMO. If you are going to base your political strategy on ideas such as the Coalition or the Tories favour the rich and depress the poor, that tax changes benefit the rich and not the poor then you need to be confident that the independent body responsible for producing the supporting evidence is doing so.

Which comes back to the surprise/ shock comment. The ONS date covering the first part of the Coalition terms in office does not support the Labour narrative and as I said on early threads that poses a risk to the new Labour strategy. If pointing that simple, objective fact out makes me a swivvle eyed RW loon in your eyes, then so be it!!! I can live with that 😉

As an non-aligned observer (!) I am interested that those other RW loonies (?!?) at the IFS are predicting that the current ST trends of reduced income inequality under the coalition may only be temporary. In which case the political battle will be an intriguing one to watch – especially for a neutral!!!

Not sure whether I agree with this. The US has some of the highest levels of wage inequality (although China is probably the leader in this now) and as western economies go it’s pretty stable.

It was income inequality, particularly in the US, which is at the very root of the present crises. Poor people make very bad consumers, capitalism needs consumers ….. lots of consumers with plenty of spare cash.

So as wages have been driven down and income inequality has widen in the last 30 years, it comes as no surprise that also in the last 30 years credit has become more and more easily available, specially to poor people.

This did stave off under consumption which is the consequence of low wages, for a while, but the end result of giving easy credit to poor people was always going to be fairly obvious.

Low levels of wage inequality are usually a sign of some of the countries with the best overall (for the total population) living standards

This much is clear, but is this correlation or causation? And is it necessarily always the case? And how is it actually measured? If you have low inequality, and everyone’s benefitting from a strong economy; then this attracts the super-rich people, inequality goes up, but no-one’s actually lost out have they?

Or is it a problem of perception? When you have lots of rich people driving around in their Audi R8s, you might feel a bit crap about your Fiesta. However compared to those struggling to eat, you’re doing just fine.

It was income inequality, particularly in the US, which is at the very root of the present crises. Poor people make very bad consumers, capitalism needs consumers ….. lots of consumers with plenty of spare cash.

So as wages have been driven down and income inequality has widen in the last 30 years, it comes as no surprise that also in the last 30 years credit has become more and more easily available, specially to poor people.

This did stave off under consumption which is the consequence of low wages, for a while, but the end result of giving easy credit to poor people was always going to be fairly obvious.

Pretty much.

so like wage inequality is inherent in the capitalist system…who knew.

Also this.

So we have a system that promotes low wages (“good for business”) but offers credit to poor people to boost consumption and requires the government to effectively subsidise businesses to be able to pay said low wages, in order to sell stuff to people who can’t afford the stuff they sell because they’re on wages that don’t cover the cost of living (including raising kids)….so the poor people need to be offered credit in order to be able to consume to the required level to keep the system going.

Madness?

Totally in agreement with ernie_lynch about the living wage, I am a big supporter of it. It would allow more people to be able to afford to live and raise families without having to rely on tax credits, top up benefits etc because a lot of businesses will pay only the legal minimum they can get away with, “flexible” part time working and zero hours contracts are on the increase so it’s easier for employers to hire and fire at will.

If they properly went after the serious tax dodgers as well, that would reduce the need to pick on the poor. Fewer people claiming in-work benefits (thanks to better, living wages, and a Scandinavian-style subsidised childcare system allowing parents to return to work without crippling costs) would allow more money to be invested helping the long term unemployed, and in job creation, so that the unemployed and the yoof have a future to look forward to, and having babies in order to secure a council flat and a benefit income is less of an attractive choice for young women who come out of education thinking they have few other prospects.

Not a criticism of anyone in work and claiming in work benefits by the way – it’s the way the system works, and I would if I was on low wages. I am saying the system isn’t right. People should be better off working, and people being in work should lessen the burden on the state welfare bill.

But the CEOs and the shareholders will bleat and lobby the government if they dare suggest that their multi million pound profits should be reduced, so it’ll never happen.

^ What she said.