Figures just released show that since 1979 the poorest ten percent of the population got poorer. Not just relative to the rest of the population, but in absolute terms. The latest official government Households Below Average Incomes survey shows that the average fall in the real living standards of the bottom ten percent between 1979 and 1991 was a staggering 14 percent.
In concrete terms this means that in 1991 they could buy 14 percent less goods to satisfy their needs than they could in 1979.
These figures confirm previous studies and give the lie to those—not just Tories—who claim that under modern capitalism the poor no longer get poorer. One such earlier study, published last September, was the Fabian Society Working Group Paper Income and Wealth in the 1980s by Thomas Stark of the University of Ulster.
Unequal increase
The statistics analysed by Stark show that between 1979 and 1991 the average earnings of adult wage and salary earners went up by 34.6 percent after allowing for rising prices. It would, however, be wrong to conclude, as some have done, that therefore the whole working class became better off by this amount and could buy 35 percent more goods and services in 1991 than they could in 1979.
For a start, the increase wasn’t distributed evenly. The earnings of the top 10 percent of wage and salary earners went up 71.1 percent and only the top 30 percent got an increase equal to the average or more. So the great bulk of wage and salary earners—70 percent of them—got less than 34.6 percent, with the earnings of the bottom 10 percent only going up by 16.2 percent over a twelve-year period (Table 22).
Secondly, these earnings are gross earnings, before, that is, deduction of tax and NI contributions. And. third, these figures exclude that section of the working class that depends for its income on state payments rather than wages from an employer (about one in six of the population is on income support). When these are taken into account a rather different picture emerges.
A person’s standard of living depends on their total income from all sources: wages, cash benefits from the state, any occupational pension, interest on any savings. The government statisticians don’t provide figures for this for individuals but only on a family or household basis. These are obtained from the Family Expenditure Survey that is carried out each year and provide a much more reliable guide to working class living standards, even if they do also include the incomes of capitalists and the self- employed.
The relevant figures are those for income after tax and other deductions (called "disposable income”). These show that, after allowing for rising prices, the average annual disposable income of households increased between 1979 and 1989 by 19 percent (rather less than the trumpeted 35.4 percent above) (Table 7). Once again this is an average figure and, once again, it was the highest income groups that got the biggest increases.
This can be seen by looking at what happened to the shares of the various bands. That of the bottom two (the bottom 20 percent, a common definition of the poor) went down, from 6.5 percent in 1979 to 5.3 percent in 1989. Over the same period the share of the top 10 percent increased from 22.7 percent to 26.9 percent (in 1988 it reached 28.2 percent). The gap between them increased: in other words, the poor became poorer, relative to the rich. Such figures were the basis for the statements made increasingly from the mid-80s on that “the rich were getting richer and the poor, poorer".
After 1987, however, it is not just the shares of the bottom two bands that have fallen. Between 1987 and 1989 those in these bands became worse off in real terms: they became absolutely as well as relatively poorer. The real annual average income (i.e.. money income after allowing for inflation) of households in the 80- 90 percent band fell by 1.6 percent and that of those in the bottom band by 5.1 percent (Table 10).
Even these figures can be said not to give a true picture since they don’t take into account the differing size and composition of households. Clearly, a household with more members is worse off than a household with the same income but less members. The government’s statisticians have taken this criticism on board and since 1988 have been providing figures, including backdated ones, which take this into account. These show that, after housing costs have been paid, the real weekly income of the 80-90 percent band increased by a mere 2 percent (2p in the pound) over the whole of the period 1979 to 1989 while that of the bottom 10 percent fell by 6 percent ( Table 13).
With the current slump things have got worse. Not only has the fall in the real living standards of the poorest ten percent now reached 14 percent, but, according to the latest issue of Social Trends that came out in January, the average real “disposable income" of all households fell between 1990 and 1991. So. the government’s own statistics refute the self-satisfied view that capitalism provides continual and automatically rising living standards for all. It doesn’t and it can’t.
Adam Buick
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