1 thought on “The UK’s great wage stagnation: beware aggregates and averages”

  1. Posted 01/12/2016 at 14:26 | Permalink

    Very interesting, as the author points out, this is likely to be used as a justification for yet more intervention in wage-setting.
    2 points to raise: Firstly, I think that in any discussion of wages, we need to add in a discussion of costs of living, which as the IEA’s own work has frequently pointed out, are driven up by government interventions (including the NLW/min wage itself) – particularly in terms of housing, childcare, transportation, energy and taxes. It does seem to me that even substantial increases in wages is rapidly outdone by rising costs imposed through government-imposed supply constraints – most evidently in housing. This needs repeating ad nauseam.
    Secondly, to what extent do these figures incorporate benefits? As we know, any discussion of wages is futile without also assessing the benefit system. And surely many ‘JAMs’ (who I assume obtain substantial portions of their incomes from this system?) are unable to become ‘managing quite comfortably’ (acronym please?) because of the impact of marginal tax rates, combined with point 1?

Leave a Reply

Your e-mail address will not be published.