Real wages are still far below where they were before the recession.
According to the ONS statistics, the average worker is now bringing home about £15 less each week than they were before the financial crisis. This adds up to just under £800 across a year.
Before the recession, real pay climbed steadily at around 2% per year. Following the financial crisis, real pay took a tumble. It began to slightly recover in 2014, only to stagnate in late 2015 and then start drifting down again over the past year.
Not only has real pay never climbed back to the pre-recession level it was at in March 2008, but we’re currently quite a bit below. The chart below shows how far we’ve been from the March 2008 level in each month since then. The further we are from the line, the further we are from pre-recession pay.
But it’s not just 2008 levels we’re failing to hit. Real pay is lower now than it was throughout 2007, and most of the second half of 2006.
It’s going to be years until we’re back at 2008 levels. Even when we get there, this will only be a return to where we were in 2008. There’s been 10 years of lost wage growth since then.
Ten years is a long time, but time can often pass quickly. To help reiterate just how long it is since then, here’s a bunch of stuff that has, or could have, happened since March 2008.
You remember when Ricky Sbragia was appointed Sunderland manager? Me neither. But Ricky was the first of ten managers that Sunderland have hired since March 2008*.
It’s been a wild ride for them since then. They’ve had a relegation, a bit of controversy (Paolo Di Canio’s political views, David Moyes’s press conferences), plenty of sackings, and a Big Sam relegation escape.
It’s hard to tell at this point how many more will be sacked before real pay gets back to its 2008 level, but current manager Chris Coleman probably won’t be there when it does.
On June 20th, 1970, Dave and John Kunst, two brothers from Minnesota, set off on a walk around the world.
John died along the way, but Dave continued. Despite being shot in the chest in the same attack that killed his brother, Dave walked over 14,000 miles around the world. He returned home in October 1974.
If Dave had set off from the UK in March 2008, he could have done this trip twice and real wages still wouldn’t have recovered by the time he got back.
In 2008, my niece was tiny. A small baby who could barely hold her own head up and would only stop crying if you switched the hoover on.
Now she is about to start secondary school and demands that I buy her those weirdly-expensive kids magazines from supermarkets, and she’s really into about 8 different YouTubers that I don’t recognise, and the noise of a hoover no longer soothes any sadness she feels.
In March 2008, Instagram didn’t exist. It wasn’t even an idea yet, and it still wouldn’t exist for a couple of years.
In 2008, a 14-year-old waistcoat-wearing Liam Payne auditioned for X Factor. He scraped through the first three rounds of the show, only to be ditched just before the live show stage and told to return in two years.
Liam spent these next two years replacing all his waistcoats with white v-necks and came back in 2010.
Again, he found himself on the edge of being kicked out. It was at this point that Nicole Scherzinger had the idea to group five of the remaining male solo acts together into one boyband. Liam, alongside Harry Styles, Zayn Malik, Niall Horan and Louis Tomlinson, became One Direction.
They came third, but ended up becoming much bigger than Rebecca Ferguson and Matt Cardle, the two acts they finished behind. Following a number 1 debut single in 2011, they became one of the biggest musical acts in the world.
In March 2015, a few months after the release of the band’s peak album Four**, disaster struck. Zayn, unarguably the best member of One Direction, quit. The four remaining members continued for one more album, before announcing a hiatus and going their separate ways to mixed success.
Throughout all that, throughout the auditions and the hits and the subsequent solo careers and Liam’s recent lairy Instagram posts, average real pay has failed to return to the pre-recession peak it hit shortly before a 14-year-old Liam Payne first auditioned for The X Factor.
It’s nice to get lost in 2008-nostalgia, but this is a very tedious and flippant way to make a serious point. It’s ridiculous how long it’s been since real wages took a big hit. It’s been ten years, and a tiny nudge in real pay growth isn’t enough to suggest it’s going to get better on its own.
If we’re going to stop this decade-long real pay squeeze, the government needs to take some serious steps.
It can start by raising the minimum wage to £10 per hour as quickly as possible. As well as this, all public-sector workers need a fully funded proper pay rise after the years of pay cuts they’ve faced.
Collective bargaining rights for workers must also be strengthened, with new bodies set up to negotiate pay in sectors where low pay is endemic, such as hospitality, agricultural labour and care work.
We’d also like to see the government establish a National Investment Bank, with a remit to target communities where good quality and well-paid jobs are most needed.
*Not including caretaker managers
**Not controversial to say that this is the best One Direction album. That mid-point of Night Changes/No Control/Fireproof puts it above all the others.