America's middle class workers face long-term wage squeeze

If what happens in current years in the USA gives us an idea of what to expect in the years to come in the UK, then it may be worth paying attention to the following article from Sunday's Observer.

In America's empty growth leaves its workers behind (Heather Stewart) it is argued that "average pay in the US has actually declined in real terms over the last five years while a booming stock market has handed windfall gains to the lucky few."

The article reports on a survey that found:

1) 50 per cent of households said they were just managing to keep up their living standards
2) 17 per cent said they were falling behind.

This is just the stuff that Barbara Ehrenreich wrote about early this year. The main strategy she recommended is to join a union.

In the UK many middle class workers work for the public sector, the public sector is still highly unionised and pay deals tend to be just above inflation. Private sector workers tend to get pay deals based on comparisons with the public sector and to avoid unionisation. The least paid workers are covered by national minimum wage regulations and pay for the lowest paid has increased wages above inflation since their introduction at the end of the 1990s (there are also welfare benefits for parents). We are likely face similar problems in the UK if the public sector comes under attack from the government and business groups lobbies hard against a rise in NMW.

See how you fair in the Salary Survey 2006 brought to you by Computer World.

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