US experts fly in as living standards in Britain ‘stand at a crossroads’

President Obama’s ‘middle-class tsar’ today flies into the UK for a major summit with British economists on the squeezed middle.  Jared Bernstein, who ran the White House Taskforce on how to reverse the decline of the American middle-class, will speak at the meeting with British and American economists called by independent think tank the Resolution Foundation.

The event comes amid growing concern from British policymakers that the UK economy now stands at a crossroads. New figures released by the Resolution Foundation today show two possible scenarios for future wage growth for ordinary workers in Britain. Using current government assumptions to 2015, but looking beyond to scenarios for 2020, the figures pose a stark choice for the UK between:

• a return to better times, with wages resuming the growth seen in the UK in the 1980s and 1990s
• a US style ‘Nightmare on Main Street’, in which wages return to the stagnation seen in the UK from 2002 to 2008

Even under the better scenario, median wages would only reach their pre-recession levels by the end of the decade. But the nightmare scenario would mean the UK following America’s ‘great stagnation’, with British median wages no higher in 2020 than they were in 2001.

For a generation, the wages of ordinary working Americans have barely risen, despite strong GDP growth. In the 2000s median income for working age US households fell by more than $6,000, a 10% real terms loss.

Jared Bernstein will be joined at the event by British economists including Martin Wolf, Anatole Kaletsky and Jonathan Portes, to debate how the UK can avoid the American fate. The event is part of a series for the Commission on Living Standards, set up by the Resolution Foundation to examine the long term trends in living standards of households on low to middle incomes, due to report next summer.

Bernstein will say: ‘For many US middle class families, the great recession was a problem on top of a problem.  Their income was going nowhere in the 2000s expansion, even before taking a huge hit in the recession. The question for US policy makers is what must be done to address our long-term middle-class squeeze.  The question for UK policy makers is what can be done to avoid it’.

Notes to editors

The event will be held at 9am-noon, on Monday 21 November, at 10-11 Carlton House Terrace, London SW1Y5AH.

Event speakers & panel members: Jared Bernstein  – Senior Fellow at the US Centre on Budget and Policy Priorities and former Chief Economist and Economic Advisor to Vice President Joe Biden; Stephanie Flanders – Economics Editor, BBC; Anatole Kaletsky – Editor-at-Large, The Times; Professor Lane Kenworthy – Professor of Sociology and Political Science at the University of Arizona; Gavin Kelly – Chief Executive, Resolution Foundation; Professor Stephen Machin – Professor of Economics at University College London; Jonathan Portes – Director, National Institute for Economic and Social Research; Martin Wolf – Chief Economics Commentator, Financial Times.

Jared Bernstein was Executive Director of the White House Middle Class Task Force, set up in 2009 and chaired by Vice President of the USA, Joe Biden. http://www.whitehouse.gov/strongmiddleclass

The Commission on Living Standards is an independent and wide ranging investigation into the pressures facing people on low to middle incomes, established earlier this year by the Resolution Foundation think tank www.livingstandards.org