Squeezed middle – US lessons for Britain

Workers in the US have not benefited from earnings growth for an entire generation – the average American worker earned no more in 2009 than in 1975 – and now something similar appears to be happening to the 'squeezed middle' in Britain. A new book, to be published shortly, brings together a wide range of expert contributions on the lessons the UK can learn from the American experience.

 

 

Core themes

  • The 'sharp edge' of the flexible labour market
    The failures of the flexible labour market model are now hitting low-paid workers hardest. 'Lousy' jobs offering low pay, little security and no health or pension benefits are a feature of an increasingly polarised US labour market. The UK needs to defend, and if possible extend, existing employment protections. In the longer term the efficacy and fairness of the flexible labour model need to be challenged, and profound questions asked about whether the model's shortcomings now outweigh its benefits for most workers.
  • The importance of boosting pay levels and redistribution
    The limited nature of redistributive programmes in the US explains the even sharper increase in inequality it has experienced. US tax policies disproportionately favour the rich, while the minimum wage was worth less in real terms in 2010 than in 1955. The UK should fight to maintain its own national minimum wage at a decent level, and consider other ways to boost workers' bargaining position. Important lessons might be learned from 'living wage' campaigns on both sides of the Atlantic.
  • The need to address new pressures in family life
    In both countries women's earnings have become an increasingly important factor in household living standards over the last 30 years. Living in a two-earner household, rather than paid work as such, is now the best route out of poverty. The UK has done better than the US in closing the gender pay gap, and supporting childcare provision and flexible working practices for parents. But these gains are now under threat from austerity measures, and the position may worsen further under the new universal credit system. Protecting family-friendly rights, and extending social policies that support families juggling paid work and caring duties, will be a vital part of sustaining and improving living standards for low- and middle-earners.

Source: Sophia Parker (ed.), The Squeezed Middle: The Pressure on Ordinary Workers in America and Britain, Policy Press (publication date: January 2013)
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