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The middle hasn't been squeezed as much as you think

The middle 20 per cent of working age households in 2011-12 had on average the same real-terms income as four years before.

Today we publish Riders on the Storm our new report on middle income households. But you know their story, right? The operative verb is to squeeze, or to be squeezed. Yet the data we've used - a panel survey conducted by researchers from the University of Essex for the past 20 years - shows something different.

The middle 20 per cent of working age households in 2011-12 (the latest survey data available) had on average the same income in real terms as four years ago. In other words, even in the teeth of the greatest recession in a century, their income wasn't squeezed, though it did stop increasing. It gets better, literally. Start at the other end in 2007-08 and two fifths of the middle income households moved up into the 40 per cent of the distribution that was above them. Around the same number stayed where they were in the middle 20 per cent. The rest moved down.

But how can this be? It's been proved definitively that real incomes are falling. The reason is that most work on these issues compares snapshots taken at different times except they are snapshots without the same people in them. We, too, found that the middle in 2011 had lower incomes than the middle in 2007. But those two snapshots of the middle don't contain the same people. As I said in the paragraph before, only around two fifths of the middle stayed in the middle over those four years.

To compare the two different snapshots is like looking at family photos and saying "Wow, auntie has really changed", except in the time between when the two photos were taken your uncle has divorced and remarried. This is why we chose to look at what happens if you keep the same people in the snapshot.

There are other problems with the typical approaches in this area too. Take this series of incomes: 3, 3, 5, 7, 20. Some of the work done by others focuses on the median income. The median in this series is 5. Imagine that we leave this series alone for four years and then come back to it. The person on 7 has retired, to be replaced by a much younger person earning 4. The new series is: 3, 3, 4, 5, 20. Suddenly the median has dropped from 5 to 4 even though no one got poorer. And, by the way, the median falls even if the person earning 5 before has popped up to 6, 7 or even 19.
Obviously it's still significant that the median is lower. But it's lower in my example because of a demographic change not because the middle was squeezed.

Right, enough of the thought experiment. Back to our findings. Track the same people and you find that their incomes haven't been squeezed. Yet they are stagnant. Despite being four years' older and despite, as our data also shows, slightly more of them being in work. So we're not getting carried away. The other reason not to put out the bunting is that the bottom 20 per cent, in particular, had a really bad time. Their level of employment had fallen. As many as a quarter were behind on their rent or mortgage.

Squeezed middle? Perhaps not. Smacked bottom? Yes, certainly.

Emran Mian is director of the Social Market Foundation

Emran Mian is director of the Social Market Foundation

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Watch: The evidence Nigel Farage said money sent to the EU should go to the NHS

After the EU referendum result, Nigel Farage said it was a "mistake" for Leave to suggest funds could go to the NHS. But what's this?

Remember Friday? (I know: it's not necessarily a pleasant thing to do, but bear with me.) On Friday, hours after the result of the EU referendum was announced, Nigel Farage appeared on Good Morning Britain and said that the Leave campaign advertising which linked the extra "£350m a week" Brexit would allegedly gift us with the NHS was a "mistake".

Sure, it was on posters, and emblazoned on a bus, and he didn't speak up to disabuse anyone of the notion. But let's give Farage the benefit of the doubt and pretend he does sorely regret the fact that, through no fault of his own, members of the electorate may have been led to believe that that money would be put into healthcare. It must be tough, when you ought to be high on your victory, to have to answer for other people's mistakes

Ah. Hold that thought.

It looks like the Independent has unearthed a video of Nigel Farage on television before the vote, and  strange thing  he tells Hilary Benn that the money currently being sent to Europe should be spent on, er, "schools, hospitals and the NHS".

Well, this mole isn't sure what to say. Maybe Farage doesn't remember this specific moment? Maybe when he said "schools, hospitals and the NHS" he actually meant something different, like "negotiating our exit from the EU", or "paying to access the common market despite no longer being a member"? Or maybe when he said that money should be spent on these things, he didn't mean it necessarily would be, and it would have been entirely unreasonable for the voting public to make such an absurd leap?

All I can suggest is that you watch and decide for yourself, dear reader.

I'm a mole, innit.