Michael Taft: Negotiating Data and The Economy

at


From top: Wages have barely exceeded inflation over the last 10 years; Michael Taft

Tom Healy, Director of the Nevin Economic and Research Institute, put up the graph (below) on Twitter with the comment:

‘Average Weekly earnings flat in real terms since 2009. Yet, non-labour incomes rising significantly.’

Seamus Coffey, Chair of the Irish Fiscal Advisory Council, responded with a graph of his own (below) commenting:

‘Current trends are surely more informative? Ireland has had the fastest real wage growth in the EU15 for nearly 18 months.’

I threw in my two cents. I tweeted a graph (below) of the CSO’s average weekly earnings for three employee types: managers & professionals; clerical, sales and service workers; and manual workers (production, transport, craft and other manual). My comment:

‘But we have to look at who’s benefiting. Weekly earnings increases are taken up by the higher income groups with white and blue-collar workers trailing.’

Managers and professionals have experienced a 22 percent increase in weekly earnings over the last eight years; white and blue-collar workers received a 14 and 8 percent increase respectively.

With inflation running at nearly 6 percent over this eight-year period, most of the gains for manual workers have been wiped out with white-collar workers seeing nearly half of their gains eaten away. Managers and professionals are still well ahead of the game.

And ahead of everyone else.

Unsurprisingly, the group that received the highest increases is the highest income group. Managers and professionals earn more than twice as much as other employees.

What does all this tell us? First, it’s good that people swap graphs on social media rather than insults. Second, data tells you what it tells you. It is the framing and interpretation that fuels the debates.

For instance, Tom Healy is right to point out that wages have barely exceeded inflation over the last 10 years. Seamus Coffey is right to show that in the recent past (18 months) wages are starting to rise, faster than other EU-15 countries (though if you go back a few years the story changes).

I hope that I have shown that the gains over the last eight years (that’s as far back as that CSO dataset goes) have gone to the highest income groups.

Of course, all the data in these graphs beg questions. And the answers can slightly alter the conclusion. For instance, when looking at the data for types of employee, we should remember that the numbers could change – not because of actual pay increases or working hours increase – but because the composition of the group has changed.

However, the main point I would draw from all three graphs – growth in real wages, relationship to other countries and the distribution of those earnings – is that we’re heading into greater inequality if we rely on ‘market forces’.

We need a wage market that is negotiated between employers and employees. Such negotiation has a tendency to favour low and average income earners whereas market forces tend to favour higher income groups who have stronger bargaining leverage.

In short, we need a negotiated economy.

Michael Taft is a researcher for SIPTU and author of the political economy blog, Notes on the Front.

Rollingnews

18 thoughts on “Michael Taft: Negotiating Data and The Economy

    1. Fact Checker

      I think it’s only fair to point out that these refer to GROSS earnings, not NET.

      While all workers pay a higher % of their earnings in tax in 2018 compared to 2008, higher earners have seen a greater increase in their average tax rate than lower earners.

      That’s before wages increases. Add in those, and you’ll see that the median white-collar worker has seen a much bigger increase in her average tax rate then the median blue-collar one.

      1. Cian

        A manager earning €70,408.00 is paying 33% tax
        A Clerk earning €29,084 is paying 15% tax
        A manual worker earning €25,835 is paying 13% tax

        Someone on the high rate of tax needs 1.5 times the increase of someone on the low rate of tax to achieve the same after-tax increase.

    1. Clampers Outside!

      I don’t think anyone has issue with that.
      What is at issue is that lower/manual workers are not seeing any great increase.

  1. Jake38

    Michael. Your graph does not suggest that higher paid are gaining at a higher rate than lower paid. The slope of the curves look similar such that the separation has not changed over the last 3 years.. What they do suggest is that the lower paid took a greater hit between 2011 and 2015 such that they are starting from a lower point but now rising at the same rate.

  2. Eoin

    Given the CSO produces wage figures from 2008, does anyone think it’s suspicious Michael has used 2010 as a base reference point?

    Could it be because lower-paid workers saw their pay INCREASE by 3% in 2009 when general inflation DECREASED by 5%? Could it?

    Jog on there, Michael!

    1. Michael Taft

      Eoin – as I stated in the post, 2010 Q2 is the start of this dataset. I went back as far as the information provided.

      There is another dataset that provides sector breakdown by type of employee but it stops at 2010. However, from 2009 Q1 to 2011 Q1, white-collar workers saw a decrease of 5.7 percent while blue-collar workers saw a cut of 5.6 percent in average weekly income. Managers & professionals saw a reduction of 3.1 percent. But I didn’t include this as this is a different dataset with potentially different methodology. But had I included it, the trends would have been starker.

      Where did you get your ‘low-paid workers’ increase of 3 percent?

      1. Hansel

        An obvious other point is that there were large numbers of job losses across 2009 throwing the figures everywhere.

        In much the same way as Mr Taft points out that “the composition of the groups change”. It’s obviously not your motivation whatsoever but it would also be interesting to see what the volumes of workers are in each group.

    1. Fact Checker

      That table doesn’t break down into white collar/blue collar after 2009 due to a change in the methdology.

      It really is misleading to assume that all workers in the manufacturing sector are blue collar. A typical pharma plant will have lots of people with degrees doing quality assurance, process development and even research.

      Much of the service sector (eg, retail, transport) involves people with low levels of formal education lifting and carrying things.

      1. anne

        Besides the lifting & carrying comment…

        A formal education does not guarantee you won’t end up lifting & carrying poo either as you put it.

Comments are closed.