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 economics of outrage: Why you haven't seen the end of Katie Hopkins

Her distasteful tweet may have cost her a job at LBC, but this isn't the last we've seen of Britain's biggest troll. 

Another atrocity, other surge of grief and fear, and there like clockwork was the UK’s biggest troll. Hours after the explosion at the Manchester Arena that killed 22 mostly young and female concert goers, Katie Hopkins weighed in with a very on-brand tweet calling for a “final solution” to the complex issue of terrorism.

She quickly deleted it, replacing the offending phrase with the words “true solution”, but did not tone down the essentially fascist message. Few thought it had been an innocent mistake on the part of someone unaware of the historical connotations of those two words.  And no matter how many urged their fellow web users not to give Hopkins the attention she craved, it still sparked angry tweets, condemnatory news articles and even reports to the police.

Hopkins has lost her presenting job at LBC radio, but she is yet to lose her column at Mail Online, and it’s quite likely she won’t.

Mail Online and its print counterpart The Daily Mail have regularly shown they are prepared to go down the deliberately divisive path Hopkins was signposting. But even if the site's managing editor Martin Clarke was secretly a liberal sandal-wearer, there are also very good economic reasons for Mail Online to stick with her. The extreme and outrageous is great at gaining attention, and attention is what makes money for Mail Online.

It is ironic that Hopkins’s career was initially helped by TV’s attempts to provide balance. Producers could rely on her to provide a counterweight to even the most committed and rational bleeding-heart liberal.

As Patrick Smith, a former media specialist who is currently a senior reporter at BuzzFeed News points out: “It’s very difficult for producers who are legally bound to be balanced, they will sometimes literally have lawyers in the room.”

“That in a way is why some people who are skirting very close or beyond the bounds of taste and decency get on air.”

But while TV may have made Hopkins, it is online where her extreme views perform best.  As digital publishers have learned, the best way to get the shares, clicks and page views that make them money is to provoke an emotional response. And there are few things as good at provoking an emotional response as extreme and outrageous political views.

And in many ways it doesn’t matter whether that response is negative or positive. Those who complain about what Hopkins says are also the ones who draw attention to it – many will read what she writes in order to know exactly why they should hate her.

Of course using outrageous views as a sales tactic is not confined to the web – The Daily Mail prints columns by Sarah Vine for a reason - but the risks of pushing the boundaries of taste and decency are greater in a linear, analogue world. Cancelling a newspaper subscription or changing radio station is a simpler and often longer-lasting act than pledging to never click on a tempting link on Twitter or Facebook. LBC may have had far more to lose from sticking with Hopkins than Mail Online does, and much less to gain. Someone prepared to say what Hopkins says will not be out of work for long. 

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