Earnings: A Long-run Perspective

This briefing considers changes in earnings in real terms, ie adjusted for inflation. This is a measure of the quantity of goods and services which the person on average earnings can buy with their earned income. The briefing mainly relies on a long-run dataset produced in 2018 by the Office for National Statistics (ONS), relating to Great Britain, which was created by linking together several series from different sources covering different periods. The ONS described the final dataset as not fully consistent through time, and therefore warned that comparisons over time should not be taken as exact.

Between 2009 and 2018 real earnings fell by an average of 1.4% per year for men and 1.1% per year for women. In contrast, between 1938 and 2009 real earnings rose by an average of 1.9% per year for men and 2.6% per year for women. Had the average growth rate between 1938 and 2009 been sustained, real earnings would have been 35% higher for men and 39% higher for women in 2018 than they actually were. An even longer-term series of average earnings, going back to 1800, suggests that the falls after 2009 are unusual but may not be unprecedented. Despite the stronger performance of women’s earnings over the period 1938 to 2018, they had still only reached 80% of men’s average earnings in 2018, having increased from approximately 50% in 1938.