Recent trends in several of the world’s advanced labour markets are prompting leading thinkers to reappraise the link between national economic growth and personal gain. These trends are most stark in the United States, where median earnings have now been stagnant for a generation. Between 1975 and 2009 US GDP more than doubled but the median American worker earned no more in 2009 than in 1975. Similar trends, though far less chronic and less acute, are now apparent in leading economies such as the UK, Germany and Canada. This phenomenon, however, is by no means universal. Other OECD economies, such as Australia, France, Sweden and Norway appear to have experienced better wage performance. These global developments set a worrying context for the UK. In absolute terms, UK earnings growth was strong from 1977 to 2003 but from 2003-08, despite GDP growth of 11 percent, wages in the bottom half flat-lined. After a sharp fall as the result of the downturn, wages are now set to recover only very slowly. Based on current government forecasts, we expect that average wages will be no higher in 2015 than they were in 2001.
Source: Resolution Foundation analysis, ONS ASHE and OBR projections; projections based on OBR figures for average earnings, as a proxy for medium wage growth.
Read more about these issues in the reports to the Commission on Living Standards