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Economy / Jobs

These charts show how wage growth has been terrible in most British cities for years now

The latest instalment of our weekly series, in which we use the Centre for Cities’ data tools to crunch some of the numbers on Britain’s cities. 

You know, it’s been a while since I wrote anything about how Britain is basically an economic basket case and nobody’s talking about it, so let’s take a look at wages. Specifically, let’s talk about how average weekly wages paid in Britain’s cities have changed since the Conservatives entered government in 2010.

The short version is, it’s not good.

The longer version is, it’s really, really not good.

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The graph below shows changes in real wages – that is, inflation adjusted – paid for jobs based in those cities between 2010 and 2016. (To be clear, these are the wages of jobs, not residents, located in each city; if you live in Southend but work in London, your salary is included in the latter average.)

In good times, one would expect average wages to increase by about 2 per cent a year. (Sometimes it’s more, sometimes it’s less, and anyway it depends to an extent on which data you’re looking at; but 2 per cent a year is not a crazy wish fulfilment figure.) Play that forward, and over a period of six years, you’d be looking for an increase of about 10 per cent.

Now obviously these are not normal times, but keep that figure in mind as you look at this:

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Literally no significant British city has seen average wages rise by more than 10 per cent. Only one got close, Belfast, where they rose by just shy of 9.7 per cent.

In fact, of the 63 cities included in the dataset just 15 – less than a quarter – saw wages rise at all. Over six years.

The average British city saw a falls of 3.9 per cent over the six years between 2010 and 2016. And while no city saw a wage increase of 10 per cent or more, three did see falls of that magnitude: Aldershot, Derby and Slough. If you can spot the connection between those three cities, you’re a better man than me.

Actually, there’s no obvious pattern with these cities at all. It isn’t geography, as cities where wages are both falling and increasing can seemingly be found in all parts of the country:

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Nor, for all the talk of agglomeration effects, does it seem to be size:

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Here’s the same graph with London taken out of it, to stop it mucking up the scale:

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It’s definitely not productivity:

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Mind you, even if there’s no obvious correlation between current productivity and wage growth in individual cities, the fact that productivity has stalled nation-wide is likely a big part of the explanation here:

Trying to find explanations for why some cities have seen wages struggle slightly less than others may be to miss the point: the real story here is that, considered over the last six years, wages in most British cities have performed badly.

In some ways, 2010 is a slightly arbitrary year to start the clock. Okay, we had a change of government; but the financial crisis was still feeding through the wider economy, which didn’t really bottom out until later. Start from 2012, and things look quite considerably better:

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Then again, if we go back to 2004, when the dataset begins, they look worse again:

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The point is that, for a significant period now – for basically my entire career, and I’m getting on a bit – the historic assumption that wages and living standards would rise over time hasn’t really held true. No wonder everyone’s in a bad mood all the time.

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and also has a Facebook page now for some reason.

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