Are you better off?
Every year the information published by government departments increases in scope and becomes more detailed, especially on economic and social questions—the wages or salaries the workers get, the prices they pay, their hours of work and paid holidays, the size of profits and amounts of taxation, etc. There are, however, still wide gaps in the information and much of it, in the form in which it reaches newspaper readers, is oversimplified or misinterpreted to the point of distortion: this, in addition to the unavoidable margin of error in the figures themselves.
Two of the best-known sources of information are the wage-rate index and the retail price index, which show from month to month the average percentage change of the weekly wage rates of over 13 million manual workers and shop assistants, and the average percentage changes of prices of the articles and services (including rents) bought by the great majority of households in the country. Being averages they do not necessarily fit the particular experience of individuals and groups. In the year 1962, in which there was an average increase of 4.4 per cent. in weekly wage rates, some workers had more than that and others none at all; and in a month when the average of all prices moved hardly at all some workers may have had to pay big increases of rent. There were, too, big differences between wages and rents in different parts of the country.
These two indexes can be used, with some adjustments, to show approximately what has happened to wage-rates and prices over long periods, for example, since 1938. In that twenty-five years, while average prices have trebled, average wage rates have increased just over 3½ times. If a pre-war wage of £3 a week followed the average pattern it would now be £10 12s. 6d., but it would buy only what £3 10s. 6d. would have bought in 1938. In the meantime, owing to more than proportionate increases of deductions from pay (national insurance and income tax), the average increase of the purchasing power of take-home pay is not the 18 per cent. the two indexes would show but something less, probably about 10 per cent.
Wage rates and prices have not always moved together; in the period 1947-1951 prices moved by 5 per cent. more than average wage rates, with wage rates moving ahead again since 1951.
Prices since 1938 have all moved upwards, but separate groups have moved by varying amounts and at different periods. By 1952 food prices were already double the pre-war level and clothing nearly two and a half times, while rents had moved only 12 per cent. Since then food prices have moved to three times the pre-war level and clothing at two and two-thirds times, but rents and other housing costs are catching up. Since 1956 they have gone up by over a half. They are now double the pre-war level and still going ahead, nearly ten per cent, since January, 1962.
If the wage-rate index has moved to 3½ times what it was in 1938, why have average weekly earnings of men in manufacturing and some other industries jumped to 4⅔ times the 1938 figure (from 69s. to £16 3s. Id.) and total wages to nearly five times? The explanation is that the wage rate index is based on minimum rates only and takes no account of payments above minimum rates, or of overtime pay (or of short time or unemployment) and the estimates of total wages include the effect of there being millions more workers at work than there were in 1938, mainly because of the decline of unemployment and the fact that far more married women are now at work.
Overtime pay has increased because agreed weekly hours of work have been reduced, but the hours actually worked have fallen little. Since 1938 there have been two general movements towards shorter hours, the first two years after the end of the war and the second in 1960-61. The first brought pre-war hours of 47 or 48 down to a more or less general 44, and the second to 42 (key points were the reduction of hours in the engineering trades from 47 to 44 in January, 1947, and to 42 in March, 1960). At present most industrial workers have a 42 hour week, with a few industries above 42 and a few below.
Weekly hours of clerical workers are often fewer than those of industrial workers: in the civil service for example clerical workers work 37 hours in London and 39 in the Provinces (expressed as attendances of 42 and 44 hours, including lunch intervals).
The reduction of hours has not been all gain: apart from increased intensity of work, many workers live farther away from their job and spend more time travelling, but it has had a big effect on earnings through the increase of overtime pay. In manufacturing and some other industries average hours worked in 1938 were 47.7 a week, they are now only about i of an hour less at 46.9. So men’s average earnings of £16 3s. 1d. include about 5 hours overtime; without the overtime the figure would be down to about £13 10s. Women, boys and girls in the same group of industries are of course much worse paid and do little overtime, and their average earnings are: women (age 18 and over) £8 3s. 9d.; youths and boys (under 21) £7 4s. 9d., and girls £5 5s. 2d.
These figures cover about 9 million manual workers, but outside that group there are other industries with much lower rates, at least for men. In agriculture the average is £11 9s. 11d. for 50.7 hours a week, which also includes several hours at overtime rate. Workers who do not work overtime and are on basic rates will be getting less, for example men employed outside London as cleaners in government departments, with pay under £9 10s. and shop assistants under £9.
The average earnings of weekly paid clerical workers in manufacturing, etc., industries are fairly close to those of the industrial workers, for men and boys an average of £16 2s. 4d. and for women £8 9s. 3d. For the monthly paid (including top administrative and technical grades) earnings are much higher; for male workers £25 9s. 4d. and for women and girls £11 5s. How much overtime is included is not known. These and the other earnings figures are before deduction of income tax, national insurance contributions, etc.
| Year | Wage Rate Index (Annual Average) | Retail Price Index (Annual Average) | Unemployment January of each year) | Unemployment as % of 1938 | |
| 1938 | 100 | 100 | 1,927,000 | 100 | |
| 1947 | 170 | 163 | 437,000 | 23 | |
| 1948 | 178 | 175 | 350,000 | 18 | |
| 1949 | 183 | 180 | 413,000 | 21 | |
| 1950 | 186 | 185 | 404,000 | 21 | |
| 1951 | 202 | 203 | 367,000 | 20 | |
| 1952 | 219 | 221 | 423,000 | 22 | |
| 1953 | 229 | 228 | 503,000 | 26 | |
| 1954 | 239 | 232 | 415,000 | 21 | |
| 1955 | 255 | 242 | 336,000 | 20 | |
| 1956 | 275 | 254 | 302,000 | 16 | |
| 1957 | 289 | 264 | 423,000 | 22 | |
| 1958 | 299 | 272 | 440,000 | 23 | |
| 1959 | 307 | 273 | 667,000 | 35 | |
| 1960 | 315 | 276 | 498,000 | 25 | |
| 1961 | 328 | 285 | 458,000 | 24 | |
| 1962 | 341 | 297 | 503,000 | 26 | |
| Jan 1963 | 348 | 298 | 861,000 | 45 | |
| Sept 1963 | 354 | 300 | 520,000 | 27 |
If disregard of the trebling of prices makes the increase of wages look vastly greater than in real terms, so also with the national income and the quantities of articles purchased.
On the crude figures the “gross national product” in 1962 was nearly five times what it was in 1938. In real terms, after allowing for price rises, it has gone up by about 60 per cent. But the increase of total “personal incomes”—the money employers, workers, shopkeepers, etc., have to spend—has increased far less than the ” gross national product.” The wear and tear of factories, plant, equipment, etc., takes a larger proportion as well as a larger amount of the total product as also does the annual expansion of these: likewise taxation and national insurance contributions. The effect of these and other factors is that consumers’ expenditure, adjusted for the rise of prices, has increased since 1938 by only 40 per cent., for a population which has grown by 12 per cent, from 47,494,000 to 53,301,000—such is the slender basis of the so-called affluent society, an increase per head of only 25 per cent, in 24 years.
Interesting changes have taken place in the relative amounts of the different items of income in the same period. Using the figures before deduction of tax and insurance contributions, total wages have risen from 38 per cent. of total personal income to 40 per cent., and salaries from 18 per cent, to 25 per cent. The proportion going to one-man businesses has dropped heavily, from 9.1 per cent, of the total to 5.2 per cent., and that going to rent, interest and dividends, from 22.3 per cent. to 10.9 per cent. of employers’ payments of national insurance and other contributors which are up from 2.5 per cent, to 5.3 per cent. and national insurance benefits from 5.4 per cent. to 8.3 per cent.
The salaries and the payments of rent, dividends and interest are of special interest. It is not that the gross profits of companies have failed to keep up with the general increase (they are in fact nearly six times what they were in 1938), but a larger proportion is taken in taxation and a larger proportion goes into expansion; it is the payments out to shareholders, etc., that have fallen relatively. They are, however, steadily rising again, their proportion of total personal income having nearly doubled since 1951.
One thing that had been happening is that more and more of the rich who before the war were satisfied to live in leisure on their investments now prefer to have jobs, as well as property incomes. In this way they get the advantage of lower taxation, together with the perquisites which go with directors’ and other tap jobs, the expense accounts, company cars, etc. Unfortunately, beyond the fact that the “salaries” figures include directors’ fees, no information is available to show to what extent the relative decline of dividends, etc., and the increase of salaries are two sides of the same coin. In addition the salaries group will have been increased by transfer from the group covering one-man businesses, partnerships, etc., as many of these have been absorbed by big firms.
1938 and 1962 (Before Deduction of Tax and Insurance, etc. Contributions)
| 1938 | 1962 | |
| % | % | |
| Wages | 37.8 | 39.9 |
| Salaries | 17.9 | 24.9 |
| Pay of Army, etc. | 1.3 | 1.7 |
| Employers’ payments of NI contributions | 2.5 | 5.3 |
| NI Benefits, etc | 5.4 | 8.3 |
| Professional workers working on own account | 2.3 | 1.6 |
| Farmers | 1.4 | 2.2 |
| Other one-man businesses and partnerships | 9.1 | 5.2 |
| Rent, dividends, interest | 22.3 | 10.9 |
H.