Mark Wadsworth

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

Falling Real Wage Fun (3)

A certain commenter over at HPC insists that using National Insurance receipts to guesstimate a ten per cent fall in real wages during the period April 2008 to April 2011 is completely wrong, and that we should use Average Weekly Earnings (see Historical Time Series, Regular Pay tab) and the Consumer Price Index.

OK. There’s no figure for April 2011, so let’s use March instead.

March 2008, AWE £408, CPI 106.7
March 2009, AWE £417, CPI 109.8
March 2010, AWE £424, CPI 113.5
March 2011, AWE £433, CPI 118.1

We then adjust AWE for the CPI deflator to express AWE in terms of March 2011 prices:

March 2008, AWE £451
March 2009, AWE £448
March 2010, AWE £441
March 2011, AWE £433

That looks like a real fall of exactly four per cent, which we can further adjust for a 1.2% fall in total employment (from ONS Labour Market Statistical Bulletin) which gives us a total real fall of just over five per cent, which, intuitively, seems closer to the mark than a ten per cent fall.

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