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Category: Lessons from abroad

Transatlantic lessons for middle Britain

Sophia Parker

This blog originally appeared on Bright Blue

Today sees the launch of 'The Squeezed Middle: the pressure on ordinary workers in America and Britain' - a collection of essays from America’s leading thinkers in the field of living standards to understand what lessons, if any, we might draw from the US experience.

You may well wonder what we can take from a country where the crisis in living standards is so great that it’s not an exaggeration to talk of America’s ‘lost generation’. Productivity has risen threefold since 1970 but barely a dollar from this buoyant economy has made its way into the average person’s pay packet. Even the recent return to moderate growth in the US has not eased the challenges most families are facing

Sophia Parker

This blog originally appeared on Public Finance

In the UK, low and middle income families face flatlining or falling living standards. But the so-called ‘squeezed middle’ is under even greater pressure in the US. What can we learn?

New analysis of the ‘squeezed middle’ in America and Britain, launched today by the Resolution Foundation, raises some important pointers for the future here in the UK.

You may well wonder what we can take from a country where the crisis in living standards is so great that it’s not an exaggeration to talk of America’s ‘lost generation’.

Productivity has risen threefold since 1970 but barely a dollar from this buoyant economy has made its way into the average person’s pay packet. Even the recent return to moderate growth in the US has not eased the challenges most families are facing.

HELP for America's struggling middle class?

Sophia Parker

Last month, Tom Harkin, one of the Democrat giants of the Senate and Chair of the Health, Education, Labor and Pensions (HELP) Committee, convened the first of several meetings to examine why the American Dream appears to be ever harder to reach, even for those who – in Clinton’s words – ‘work hard and play by the rules’. The full footage and transcripts can be read here.

I suspect Sen. Harkin had hoped for a more focused discussion than he got about how to address the crisis of America’s so-called middle class - the stagnating median wages, rising income inequality and declining standards of living that are attracting more and more mainstream attention in US politics.

Obama's trillion dollar question

Sophia Parker

It was only a month ago that America narrowly escaped a Federal government shutdown, caused by the intense difficulties of reaching a consensus on the 2011 budget. But if that skirmish seemed significant, it is nothing compared to the battle that is erupting between Democrats and Republicans over Obama’s 2012 budget proposals, and his accompanying plans for how to take $4 trillion out of the deficit over the next decade.

The King's Speech: Governor's "bigger picture" isn't big enough, as published on Left Foot Forward

James Plunkett

Bank of England Governor Mervyn King yesterday acknowledged that Britain’s households are now facing the toughest squeeze on living standards since the 1920s. His comments echo the findings of our report Squeezed Britain, which revealed in December that, on the basis of Office for Budget Responsibility (OBR) projections, the average low-to-middle income family will be £720 poorer in 2012 than they were in 2009.

That all comes before the government’s planned spending cuts. And with King now admitting that inflation could hit 5 per cent this year, that £700 is likely to rise, with faster price-growth doing even more to corrode the value of wages...

Australia's squeezed middle on a sticky wicket

Sue Regan

Sue Regan

Australians continue to lick their wounds over their Ashes’ loss. But looking beyond this recent sporting catastrophe, Australia is fairing well. The economy is strong, unemployment is around 5 % and the post GFC (Global Financial Crisis) is relatively tiny. Whilst economic prospects are currently far better than in the UK, Australia still provides a useful comparator. In political terms, the battle for the ‘squeezed middle’, however it is defined, is going on in earnest in this particular corner of the globe and has been for decades.

Whilst the term ‘squeezed middle’ is not used, there is persistent political interest in wooing working people who fight hard to get by. John Howard became prime minister in 1996 by winning over many traditional Labour voters, who became known as ‘Howard’s battlers’. It was the battlers’ realisation that whoever managed the economy best would help them the most, which shook left wing politics to the core of its union bedrock. In 2007, Kevin Rudd took back power for Labour vowing to ease the pressures on ‘working families’ and by promising to show more fiscal restraint than the incumbent Tories. The battlers have proved themselves to be true swinging voters, throwing their allegiance behind whoever they think can look after their ‘hip-pocket’ the best. As a consequence, the plight of low-to-middle earners has often been central to Australian political discourse...

Lessons from America

Sophia Parker

In the three months I’ve been working on low income households in the US, a wry smile and an emphatic “no” is the almost universal response I get to my question “does the US have any lessons for the UK?”

It is certainly true that American safety nets, where they exist at all, are more ragged than Britain’s. And antipathy towards ‘welfare’ is even more pronounced here than the ‘benefit scrounger’ tropes of the British media.

Will we catch the American bug? Donald Hirsch

Donald Hirsch

The American middle-class has been complaining since the 1970s about their stagnating incomes. The economic growth that the country has seen since then has gone mainly to the better off. Households at or below the middle of the income distribution have seen no significant rise in their living standards for a generation.

That certainly can't be said of the UK – yet. Here, living standards have improved considerably for most groups in recent years. However, in the past decade, we have started to look a little more like the US...

A lost decade, not a burst bubble, by Sophia Parker

Sophia Parker

From time to time we’ll be posting pieces from the USA and elsewhere to gain international insights on the plight of low-to-middle earners. Here Sophia Parker, a Research Associate of the Foundation, sets out the growing crisis facing low-and-middle income America and considers what it means for the Obama administration.

“The problem”, declares American academic Joan C. Williams, “is that Obama eats arugula.” For Williams, the President’s major problem is that his choice of food is a ‘class act’ – a kind of cultural symbol that associates him with a professional class and an urban elite who are disliked, resented and mistrusted by ‘ordinary folk’.

The culture gap is certainly part of Obama’s problem and it will make it harder for him to reach out to the hard working Americans whose support he will badly need in 2012. But if he has any hope of bridging this culture gap, he will need to make some serious progress in tackling the dramatic economic gap that has opened up between professionals and the ‘missing middle’ in recent years...