Why isn't work paid better?

[malificent7]

People who work hardshould be able to afford a better life for themselves. So many work in stressful jobs and also have stressors outside of work too like poor housing, expensive food and childcare etc. Please explain to a simpleton why jobs aren't being paid in line with inflation...espwcially public services.

I can only assume Labour are talking about building more homes because they don't actually want to tackle the problem and know that to build our way of the housing crisis would take more than 5 years, assume they won't get a second term, and just want to pass the problem on to the next government.

There are over a million empty properties in the UK, and many, many more that are under occupied (lots more bedrooms than people).
If there was an actual shortage of houses then housing would, in general, be over-occupied.

But whether through building or improving the way our existing housing stock is used, actually tackling the housing crisis would inevitably mean prices falling. A small number of people would materially suffer from this (those who bought recently who might then end up in negative equity and need to sell). But many more would feel poorer even though they weren't actually materially worse off (this includes outright homeowners and mortgaged homeowners with enough equity that they could see their home value decline without ending up in negative equity). If you think your house is worth a million and then it's only worth half a million, you're going to be irrationally furious, even if you weren't planning on selling it. I suspect Labour is scared of losing those voters, so they are pretending to tackle the problem (by saying they want to build more homes) when in fact they don't actually want to fix it at all.

Actually wages across the economy have broadly gone up with inflation over the last 10-15 years (maybe slightly less for.some public sector). Bit of course in the decades prior they were rising 2-3% pa faster. The key difference is productivity growth has slowed to virtually zero (down in the public sector). No more output per worker = no growth in real incomes.

Oh and by the way house prices and wages have risen pretty much the same amount over the last 15-20 years.

@Beck30 this ONS data suggests that housing affordability has, in fact, worsened over the last 15-20 years:

https://www.ons.gov.uk/peoplepopulationandcommunity/housing/bulletins/housingaffordabilityinenglandandwales/2022

I was looking at the Nationwide house price index (vs earnings). The data you use is Q2 2023; house prices are pretty much flat since then whilst wages are up getting on for 10%.

The big deterioration in housing affordability was during 1996-2007

@Beck30 where are you getting wage growth of 10 per cent from? The latest ONS bulletin I can see has annualised wage growth at 5.2%. The Nationwide house price data has housing prices increasing by 4.8%, suggesting housing unaffordability was basically unchanged last year.

Even if housing was exactly as affordable now as in 2005, on a price:income basis, that ignores the fact that there's a lot more credit rationing going on today. People can't get self-cert mortgages, and are having to stump up bigger deposits as a proportion of property prices. Plus most mortgaged buyers in 2005 didn't have massive student debts, which mortgage lenders now penalise you for having when doing affordability calculations.

Taking all of that into account, housing that cost the same as a multiple of income today would be less accessible to a person on any given income than it was in 2005.

The house price data in your link went up to late 2022 - early 2023. I think house prices dipped in H2 2023 whilst wages were rising 5-6%. Then in 2024 both edged up.

Fair point about less accessible credit (although 100% mortgages in 2005 were maybe not a great idea).

Depends where in UK but I could not in London 13 years ago.

Salaries should not be included to calculate inflation.
It seems crazy that we're being discouraged to ask for higher salaries when prices for everything goes up, just to not fuel inflation.

I'm a carer. I'm expected (with two to three others) to not only look after up to 16 people, most of whom cannot move and are doubly incontinent, for 12 hours straight from bathing and dressing them in the morning to washing and putting them in PJ's at night, I have to feed them, hold drinks to their mouths regularly, change their clothes, dress their wounds, treat their ailments, apply creams, reposition them at least every 4 hours, (often with heavy equipment), more than once a shift, change their beds completely often with them still in (try that with an adult who can't move themself!), I have to tidy their rooms, organise their belongings, speak to families, social services and medical professionals almost on a daily basis, I have to be trained excessively (on my own time online with many mandatory sessions in work all through the year), I have to buy membership to the care governing body, and be fully trained and tested in human rights and all the associated care laws and guidance every single year. I have to attain qualifications on my own dime just to keep my job and most importantly, I have to spend time with the clients and eventually, hold their hands when they pass away. Then I have to wash and dress their bodies.

For £12 shitty quid an hour.

It's disgusting. Take into account that the insane number of hours of online training I have to complete in my own time every single year, I have to supply my own pens and my uniform is deducted from my wages, I don't even make minimum wage when averaged out between all the hours I actually do. But that's Care for you. Vitally important but paid a pittance.

I think for a lot of people their pay hasn't kept up with inflation.
Ive worked for a local council for 12 years, every year I've had either a below inflation pay increase or some years no pay increase at all. So in real terms my pay has gone down.
Add in high housing costs and the situation is even worse.

I do support minimum wage rising, the vast majority of companies can afford this, obviously they will moan, businesses always do, they want to keep as much profit as they can for shareholders. People who work full time should really be able to support themselves without receiving top up benefits

Most shareholders are ordinary people via occupational pension schemes.

Occupational pension scheme as opposed to what are now pretty gold plated public sector pensions when compared to the payouts from private occupational schemes.

My pay would be much better if I didn’t have to pay any bloody tax!

Property should be a lot more affordable than it is too, and should enable people on one income to comfortable mortgage or rent. I’m sick and tired of the expense of everything and feeling I have no option but to work until a very old age, and full time too.

Until you suddenly had to start paying for private education, medical treatment, bodyguards and all the rest of the things your taxes go to.

You're absolutely right people who work hard should be able to live better lives, but unfortunately, wages haven't been keeping up with inflation for many, especially in public services. One reason is that governments and businesses often prioritize cutting costs over raising wages, especially in publicly funded sectors. Life certainly isn't fair.

Tesco didn't make £2.9b profit last year that was their projected profit for the coming year. Pre tax profits were reported as £2.3b. Their ,turnover of £62b. So pre tax is around 3 or 4% profit. After tax less than that. Hardly a massive reward for their risk. Their turnover in a bank account would make more in interest.

Tesco employ 311,531 people, national insurance on its own is increasing 1.2% to 15%, which is around £700 minimum increase in cost for each employee. Which equates to £218 million.

Then minimum wage increase, its more than £1 but for the sake of argument let's say it is that's another 300k.

But of course Tesco doesn't just employ minimum wage people, it will have a full range of employees so their bill is likely to be much higher.

These are not insignificant amounts. I can easily see closer to £1b eaten away from their already small % profits.

That is why they are speaking out, big employers with low profit margins are massively affected by the Ni change in particular.

It's been like this for the majority since the introduction of agriculture, many millennia ago.

Arent the vast majority of businesses in this country small, family owned companies? It's easy to point at huge employers with millions or billions in profit and say they should pay more but unless someone can come up with a sliding scale for size of business / cost of employing people, further rises in NI, NMW etc will drive small companies then wall and then there's no job.

An Economist on R4 yesterday was explaining the new rates cost MORE % wise for a NMW worker than they do someone on a large salary..I think it was 22% more vs 10% more. I live in NE. You can buy a small flat and service the bills here for around 22k salary. It's not impossible outside of the south east. Maybe a more regional approach is needed also.

Do you want to pay more tax, OP? Do you want to pay more for food, fuel, clothes, transport etc? Because if you pay higher wages, that's what will happen. It's basic economics.

I’m a teacher and I don’t think I’m underpaid for what I do when I’m at school (generally there 8 till 5 ish) I actually think my pay (middle of main scale) is good for those hours especially when you factor in the holidays.
If I didn’t have to work at home on top of this I’d think it was an excellent salary - If I was given a choice between having a pay rise and extra non-contact time so I didn’t have to work in the evening and weekends I’d take the extra non-contact time.

This.

14 years of a useless government who ignored the problems.

New government in for a mere 6 months and attempting to make tough choices eg no winter fuel allowance for all pensioners just the ones on the lowest income who qualify for pension credit and the outcry!

No one wants to pay for the services that the country wants eg education, the NHS, social care.

With social care people don't want to pay even when they have assets they want the state to pay.

Inheritance tax, farmers didn't pay anything even if they were buying a fun farm to avoid tax. The proposed change to not paying on the first 3 million for a couple then paying at a reduced rate compared to others, outcry. Again no one wants to pay.

There are more examples where services are wanted but no one wants to pay eg leaving elderly in hospital blocking beds because family don't want to use money/home to pay for care, they want to sit it out and not find a care home. It happens lots. Meanwhile no beds.

Salaries aren’t included in inflation, inflation is calculated by comparing the cost of a ‘basket’ of goods/ services. You put pay up and the cost of those goods/ services goes up, or there’s more money sloshing around which also pushes up inflation.

The April minimum wage increase and employer NI changes with push up costs, and therefore inflation again.

That’s still demand and supply. Buy to letters are still demanding property.

The factors are:

• not enough property to meet demand
• the market being distorted by housing benefit. Meaning people can buy houses and rent is paid by the government at a level those on minimum wage can’t afford, distorting the market.

People with more money who.purchased buy to let or second homes helped force up property prices. Gaining huge amounts of income from rentals. The tenants will never be able to buy. High rents will large amounts paid for on housing benefit also pushes up benefit payments ...

This is a common misconception but it's incorrect. Pension funds and insurance combined own about 4% of UK shares today. Most are owned by overseas investors, predominantly ultra high net worth individuals.