The “squeezed middle”: the key data

The wage squeeze, the rise in wage inequality and the coalition’s benefit cuts.

He may not have mentioned them by name, but Ed Miliband's speech today on the "cost-of-living crisis" was his most explicit pitch yet for the "squeezed middle". The speech was given to the Resolution Foundation (whose chief executive, Gavin Kelly, wrote a recent NS cover story on the "great squeeze") to mark the launch of its new Commission on Living Standards.

Here are three graphs that illustrate Miliband's key points.

1. The Wage Squeeze

In his speech, Miliband noted: "Over the last few decades less of what our economy produces has been paid out in wages – and more in profits. The gains in productivity we have seen have not been reflected in earnings." And here's the graph to back him up.

The chart below, taken from the TUC report Unfair to Middling, shows how wages fell from a postwar high of 64.5 per cent of GDP in 1975 to just 51.7 per cent in 1996. They then recovered slightly to reach 55.2 per cent in 2001 before falling back to 53.2 per cent in 2008.

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2. Rising Wage Inequality

But, as Miliband pointed out, this is only part of the story. The past three decades have also seen a dramatic increase in earnings inequality, as middle- and low-income earners have borne the brunt of the wage squeeze.

The graph below (also from the TUC report) shows that while earnings for the 90th percentile have doubled over the past 30 years, real median earnings have risen by 56 per cent only and real earnings for the 10th percentile have risen by just 27 per cent.

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3. The coalition's benefit cuts will make the situation worse

Combined with rising prices, falling wages and higher taxes, the government's planned benefit cuts will result in the biggest squeeze on living standards since the 1920s. As the graph below shows, the losses that families will suffer as a result far outstrip those from the abolition of the 10p tax band.

The removal of the 10p tax rate cost the average family £232, but the cut in support for childcare means half a million mothers on low to middle incomes will lose almost £500 a year on average, with the hardest-hit losing a remarkable £1,300. The plan to reduce the starting threshold for the 40p tax rate from £43,875 to £42,475 not only means that the marginal tax rate for those affected will double, but also that they will fall victim to George Osborne's raid on child benefit.

The plan to abolish the benefit for all higher-rate taxpayers means a loss of £1,055 a year for one-child families, £1,750 for those with two children and almost £2,500 for those with three children.

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The coalition's decision to raise the income-tax threshold by £1,000 to £7,475 will benefit low-to-middle-income earners by roughly £170. But, as Kelly has pointed out, this is not enough "to offset the rise in VAT, let alone the far larger tax credit cuts". A study by Grant Thornton suggests that the VAT increase will cost each household £517 a year on average.

George Eaton is political editor of the New Statesman.

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The Telegraph’s bizarre list of 100 reasons to be happy about Brexit

“Old-fashioned light bulbs”, “crooked cucumbers”, and “new vocabulary”.

As the economy teeters on the verge of oblivion, and the Prime Minister grapples with steering the UK around a black hole of political turmoil, the Telegraph is making the best of a bad situation.

The paper has posted a video labelled “100 reasons to embrace Brexit”. Obviously the precise number is “zero”, but that didn’t stop it filling the blanks with some rather bizarre reasons, floating before the viewer to an inevitable Jerusalem soundtrack:

Cheap tennis balls

At last. Tennis balls are no longer reserved for the gilded eurocrat elite.

Keep paper licences

I can’t trust it unless I can get it wet so it disintegrates, or I can throw it in the bin by mistake, or lose it when I’m clearing out my filing cabinet. It’s only authentic that way.

New hangover cures

What?

Stronger vacuums

An end to the miserable years of desperately trying to hoover up dust by inhaling close to the carpet.

Old-fashioned light bulbs

I like my electricals filled with mercury and coated in lead paint, ideally.

No more EU elections

Because the democratic aspect of the European Union was something we never obsessed over in the run-up to the referendum.

End working time directive

At last, I don’t even have to go to the trouble of opting out of over-working! I will automatically be exploited!

Drop green targets

Most people don’t have time to worry about the future of our planet. Some don’t even know where their next tennis ball will come from.

No more wind farms

Renewable energy sources, infrastructure and investment – what a bore.

Blue passports

I like my personal identification how I like my rinse.

UK passport lane

Oh good, an unadulterated queue of British tourists. Just mind the vomit, beer spillage and flakes of sunburnt skin while you wait.

No fridge red tape

Free the fridge!

Pounds and ounces

Units of measurement are definitely top of voters’ priorities. Way above the economy, health service, and even a smidgen higher than equality of tennis ball access.

Straight bananas

Wait, what kind of bananas do Brexiteers want? Didn’t they want to protect bendy ones? Either way, this is as persistent a myth as the slapstick banana skin trope.

Crooked cucumbers

I don’t understand.

Small kiwi fruits

Fair enough. They were getting a bit above their station, weren’t they.

No EU flags in UK

They are a disgusting colour and design. An eyesore everywhere you look…in the uh zero places that fly them here.

Kent champagne

To celebrate Ukip cleaning up the east coast, right?

No olive oil bans

Finally, we can put our reliable, Mediterranean weather and multiple olive groves to proper use.

No clinical trials red tape

What is there to regulate?

No Turkey EU worries

True, we don’t have to worry. Because there is NO WAY AND NEVER WAS.

No kettle restrictions

Free the kettle! All kitchen appliances’ lives matter!

Less EU X-factor

What is this?

Ditto with BGT

I really don’t get this.

New vocabulary

Mainly racist slurs, right?

Keep our UN seat

Until that in/out UN referendum, of course.

No EU human rights laws

Yeah, got a bit fed up with my human rights tbh.

Herbal remedy boost

At last, a chance to be treated with medicine that doesn’t work.

Others will follow [picture of dominos]

Hooray! The economic collapse of countries surrounding us upon whose trade and labour we rely, one by one!

Better English team

Ah, because we can replace them with more qualified players under an Australian-style points-based system, you mean?

High-powered hairdryers

An end to the miserable years of desperately trying to dry my hair by yawning on it.

She would’ve wanted it [picture of Margaret Thatcher]

Well, I’m convinced.

I'm a mole, innit.