The Resolution Foundation’s “Missing Out” report reveals that the share of GDP paid as wages to the bottom half of earners has fallen 25% in the last 30 years.
Matthew Whittaker is a senior economist at the Resolution Foundation
The Resolution Foundation today publishes the latest report to the Commission on Living Standards. The report, Missing Out, (pdf) reveals that the share of GDP paid as wages to the bottom half of earners has fallen by a quarter over the last 30 years.
In 1977, workers in the bottom half of the earnings distribution received £16 of every £100 of value generated in the economy; by 2010, their share had fallen to just £12. By contrast, the share of GDP flowing to the top 10% of earners increased from £12 per £100 of GDP to £14.
As Figure 2 below shows, when bonuses are factored in, these figures are even starker.
If the full extent of bonus payments are included in the calculations the share of GDP going to the top 10% of earners increases from £14 per £100 to £16, while the share of the bottom half reduces from £12 to just £10.
So what explains these trends? The report shows that the growth of the financial sector only tells part of the story. Wage inequality between those at the top and those in the middle has grown across all sectors.
As Figure 15 below shows, the ratio of earnings of the top and middle grew in all sectors between 1999 and 2008.Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.