Anorak | There’s Ignorance about economics and then there’s Zoe Williams in The Guardian

There’s Ignorance about economics and then there’s Zoe Williams in The Guardian

by | 1st, March 2012

TO be fair to Zoe Williams in The Guardian this morning she does say that she doesn’t know very much about economics. But then she comes out with this statement:

Real wages in this country have been falling since 1968.

That’s insane. The idea that real wages (that is, wages after inflation) are lower today than they were 44 years ago isn’t just not knowing very much about economics it’s going entirely fucking doolally.

It’s true that the labour share of income is lower than it was: the peak was in 1975. But that’s a measure of how much of the pie goes in wages to labour, not a measure of the absolute amount of money that is going in wages.

We’ve a way of showing that real wages have risen too. Go to this site. Sadly, I can’t link you to a page that has my calculation already in it but you can do your own as you wish. I put in £50 in 1971 (to avoid having to do two calculations because of decimalisation) and asked what was the value of that 1971 £50 in 2010 money (because the 2011 data isn’t there yet). The answer?

In 2010, the relative worth of £50.00 from 1971 is:


using the retail price index


using the GDP deflator


using the average earnings


using the per capita GDP


using the share of GDP

As you can see, average earnings have risen faster than inflation over the period. That is, real wages have grown, not fallen. In fact, with a bit of rounding, real wages (OK, average wages) have doubled in real terms over that 39 years.

Sorry, but no, a doubling of real wages is not the same thing as a fall in real wages.

Ms. Williams did tell us that she’s ignorant of matters economic but even so that’s a bit of a howler, isn’t it?


Posted: 1st, March 2012 | In: Money Comment | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink