A good job, a roof over your head, a happy marriage – and plenty of chips and candles Top of the Charts 6 December 2024 Mike Brewer Afternoon all, This week saw some good news for the children of Scotland. The SNP-led Government in Holyrood announced on Wednesday that they have proposed scrapping the two-child limit on benefits north of the border. It’s a decision that will lift 28,000 children in Scotland out of poverty by the end of the decade. We hope the rest of the country will follow their example before too long. Meanwhile, we’re pondering one of the PM’s economic milestones in Chart of the Week, and your lifetime milestones in the reads – from getting a good job to finding a wealthy perfect partner. Have a great weekend, Mike Interim Chief Executive Resolution Foundation Dark drudgery. Our friends at the Living Wage Foundation have put a new spin on the question of decent work – what does a night shift mean for workers? Well, it makes things a hell of a lot harder. London is lauded for its nightlife, but the first surprise is that people working evenings or nights are more likely to be in health and social care, or transport or warehouses, than in hospitality. Workers up late face challenges not experienced by their 9-5 peers. Evening and night-time workers are 40 per cent more likely to receive low pay and twice as likely to experience insecure work. Nearly half report that night shifts negatively impact their sleep, and roughly 30 per cent cite worse physical and mental health. It’s no wonder then that nearly seven-in-ten would choose to work during the day if it didn’t mean losing out on earnings. With a quarter of London’s workers regularly working in the evening or night, fair compensation and improved protections for night-time workers are essential to a thriving capital. Pondering processors. Remember the global semi-conductor shortages of 2021, when car industries in the US and Germany had to temporarily shut down? This paper examines the industrial policy issues surrounding chip production. Why so important? Well, semi-conductors are ubiquitous and – although they are now as cheap as, well, chips – have astronomical start-up costs: a new factory costs around $20 billion. Producing semi-conductors can also have spillovers to other high-tech industries. These all give governments good reasons to use industrial policy to support the industry. The researchers show how, after early American dominance in production, competitors emerged first in Japan, and then in Taiwan, Korea, and (thanks to massive government support) China. Just *two companies* in East Asia now account for the entirety of global production of the smallest and fastest chips (TSMC in Taiwan produced 92 percent, and Samsung in Korea produced 8 percent). Geographic concentration of this vital technology has made policymakers uneasy, which is why the US CHIPS Act is providing $52.7 billion for building or expanding American manufacturing facilities. But even within the US, chip production largely ground to a halt temporarily in 2021 after a single freak storm in Texas in 2021, showing the tension between dispersing production (to improve resilience) or concentrating it (to reap the efficiency gains). I suspect we’re going to hear more about chips under President Trump… Blocked building. Sorry (not sorry) for TOTC being a broken record about needing to build some houses. Our friends at Centre for Cities have only gone and digitised housebuilding data back to 1946 to demonstrate how far we are from where we want to be. And I’ve got to say – yikes. Incremental changes over the last 70 years have made it harder and harder to build new homes, radically disconnecting supply from demand throughout England. The authors don’t hold back, saying that the changes announced by the Government simply don’t touch the sides. Even if they repealed all the incremental changes since the 1960s, we’d still be nearly 400,000 homes short of the current target (and as much as *60 per cent below target* in London). So how can we get there? Well there’s the nuclear option of ABOLISHING THE GREENBELT, or the planning system could be radically overhauled. If we replaced our current case-by-case approach with a flexible zoning system with straightforward rules which removed the uncertainty, we’d be able to build a lot more homes, the report argues, and be able to make sure they were going where we needed them. Wealth weds wealth. Economists like to use the phrase “assortative mating” when they mean “opposites don’t attract”. Or, put another way, people tend to marry people with similar educational and cultural backgrounds to themselves. This research shows that this is extra bad news for social mobility, because privileged people are combining forces to amass wealth and then passing large sums on to their kids. Among high-educated couples born in the mid to late 1970s, around 1 in 5 have both mothers and fathers with a degree. For low-educated couples, the equivalent statistic is less than 1 in 10 for the fathers, and 1 in 20 for the mothers. This is why, as regular readers will know, wealth is very unequally distributed, even within people of the same age: by their late 60s, university-educated boomer couples typically had £2.5 million in wealth – seven-times more than less educated couples. We should worry about these patterns repeating down generations: although inheritances do mean that some wealth goes to those who have little, in general they increase wealth gaps. Counting candles. This paper is catnip for TOTC – history, originality AND a great chart. The authors examine household consumption, starting all the way back in 1260 and going up until 1869, and set themselves the task of calculating household budgets for ordinary families, starting with the family of Robert le Kyng, who lived in the Bishop of Worcester’s manor in 1299. Now, you simply don’t see enough keys with the label “beans” in economic papers these days, but you will if you give your attention to Figure 1. My main takeaway? For most of the last millennium, people were spending much more on beer than they were on rent. And candles! Where did it all go wrong? Chart of the Week For us, the most exciting part of the PM’sPlan for Changeyesterday was the new economic milestone of “raising living standards in every part of the United Kingdom”. As we’ve noted, hitting this milestone isn’t much of a stretch – Real Household Disposable Income (RHDI) has risen in every parliament since 1955 (although it was touch and go in the most recent one) and GDP per capita has risen in all apart from two (2005-10 and 2017-19) over the same period. But, as Chart of the Week shows, raising GDP per capita throughout the UK is likely to prove more of a challenge – this has only been achieved in three out of the past six parliaments. Two things stick out for me. First, we only have data going to up to 2022. The huge time-lag on regional economic data is going to make it hard (unless the ONS can work some magic) to assess the Government’s progress on hitting this living standards milestone. Second, two of the most striking examples of ‘regional recession’ have taken place in the devolved nations (Northern Ireland 2005-10 and Wales 2019-22). The PM’s Plan for Change may have been designed to focus minds in Whitehall, but its success could depend on the actions of policy makers outside the capital too.
