Is your household income high, low, or average?

By Bernadette Meaden
April 22, 2017

When the Labour Party proposed a tax rise for the rich, Shadow Chancellor John McDonnell was asked what he considered to be rich. He replied that people earning over £70,000 would come into this category. Presumably if this proposed higher rate tax was introduced, then people would pay it on what they earned above £70,000.

This sparked a lively public debate. Some people felt that £70,000 was a level of income they could hardly even dream of, whilst others seemed to consider that such an income meant they were one of Theresa May’s JAMs, who were ‘Just About Managing’. Indeed it is very difficult to know what level of income politicians have in mind when they use terms like 'ordinary working families'.

As the election campaign progresses it would be useful for all of us to have a really good sense of what incomes other people live on, as it will give us a better understanding of how they are likely to be affected by proposed policies, and where we sit in relation to them.

According to official figures from the Office for National Statistics, the median weekly earnings for a full-time employee in 2016 were £539 per week, which works out at around £28,000 per year. But this is a median figure, meaning that 50 per cent of people will earn less. This £28,000 figure is often quoted as ‘the average wage’, perhaps giving the impression that most people earn this or more, when in fact half of workers earn less, and some earn very much less. It’s also important to remember that this figure is for full-time employees who pay tax through PAYE. Self-employed people and those who can only get part-time work are not included in this figure. 

A wage of £70,000 puts a person into the top five per cent of earners. However, as Paul Johnson of the Institute for Fiscal Studies pointed out, a single person with no children on an income of £70,000 could be considered very well off, but for someone with children and paying a high rent, it will feel very different. So perhaps it would be good to look at household incomes, see where our own households stand on the scale, and judge policies by that yardstick. The relevant figures from the ONS are here

The bottom ten per cent of non-retired, working-age households have an average disposable income, including all earnings and benefits and after direct taxes, of £9,817. On average this household comprises 2.6 people, with 0.8 children.

The bottom fifty per cent of households have an average disposable income of £21,394 - much lower than that often-quoted 'average wage'. They contain 2.7 people, including 1.0 child.

The top ten per cent of households have an equivalent disposable income of £91,267. These households contain on average 2.4 people, with 0.5 children.

One can also argue that because some at the very top have extremely large incomes, the averages are actually quite skewed. It is interesting to see what happens if we take out the top ten per cent, and calculate the average disposable income of the bottom ninety per cent of households. Doing this, we come up with a figure of £31,899. That is the average disposable income of the bottom ninety per cent of non-retired households in the UK, according to the latest ONS figures.

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© Bernadette Meaden has written about political, religious and social issues for some years, and is strongly influenced by Christian Socialism, liberation theology and the Catholic Worker movement. She is an Ekklesia associate and regular contributor. You can follow her on Twitter: @BernaMeaden 

Ekklesia's General Election theme for 2017 is #Vote4CommonGood. This will be explored by writers and researchers from different petspectives and backgrounds, as well as analysis of the different party manifestos in relation to the principles and policies we have advocated for many years. 

 

 

 

 

 

 

 

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