Mark Wadsworth

This is a spare 'blog in case my main 'blog at markwadsworth.blogspot.com isn't working

Falling Real Wage Fun

I can’t find actual official statistics for total wages paid out every month, so as the closest proxy, let’s use monthly National Insurance receipts from April 2008 to April 2011 as published by HM Revenue & Customs, subject to one adjustment*:Ho-hum, that’s as clear as mud, so I made two further adjustments:

1. I smoothed the monthly receipts, i.e. April receipts are on average 13.5% higher than in other months, so they were adjusted down by a factor of 100/113.5 and so on.

2. I downloaded the RPI figures from the ONS and rebased everything to April 2011 prices.

There, that’s a lot clearer, isn’t it?* I adjusted the original April 2011 figure because the effective main rate of NIC increased from 23.8% of wages to 25.8% (ignoring the very high earners, for whom it increased from 13.8% to 15.8%, and ignoring the increase in the thresholds), so I reduced the original figure of £10 billion by a factor of 23.8/25.8, so as not to overstate increase in headline wages. Employee’s NIC went up from 11% to 12% of headline wages, i.e. people’s net income went down from 89% of headline to 88%, so I reduced the figure by 88/89, seeing as we are only using NIC as a proxy for real wages.

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