President Obama’s ‘middle-class tsar’ today is taking part in a major summit with British economists on the squeezed middle classes.
Jared Bernstein, who ran the White House Taskforce on how to reverse the decline of the American middle-class, will speak at the meeting with British and American economists called by independent think tank the Resolution Foundation.
The event comes as the Resolution Foundation reveals two possible scenarios for future wage growth for ordinary workers in Britain. Using current government assumptions to 2015, but looking beyond to scenarios for 2020, the Foundation says the figures pose “a stark choice for the UK” between:
– a return to better times, with wages resuming the growth seen in the UK in the 1980s and 1990s
– a US style ‘Nightmare on Main Street’, in which wages return to the stagnation seen in the UK from 2002 to 2008.
It says: “Even under the better scenario, median wages would only reach their pre-recession levels by the end of the decade. But the nightmare scenario would mean the UK following America’s ‘great stagnation’, with British median wages no higher in 2020 than they were in 2001. For a generation, the wages of ordinary working Americans have barely risen, despite strong GDP growth. In the 2000s median income for working age US households fell by more than $6,000, a 10% real terms loss.”
Jared Bernstein will be joined at the event by economists including Martin Wolf, Anatole Kaletsky and Jonathan Portes, to debate how the UK can avoid the American fate. The event is part of a series for the Commission on Living Standards, set up by the Resolution Foundation to examine the long term trends in living standards of households on low to middle incomes, due to report next summer.
Bernstein says: “For many US middle class families, the great recession was a problem on top of a problem. Their income was going nowhere in the 2000s expansion, even before taking a huge hit in the recession. The question for US policy makers is what must be done to address our long-term middle-class squeeze. The question for UK policy makers is what can be done to avoid it.”