Is the pay squeeze being driven by changes in the hours worked by men?
The Resolution Foundation recently published a national piece of research (January 2018) which explores linkages between the pay squeeze and the hours worked by men. Based on the report findings, Warwickshire County Council economist Natalie Maposa explores the extent to which this is taking place in Warwickshire.
Since the 2008 recession, there has been a long-lasting pay squeeze hitting workers across the country, causing a long-term drag on productivity growth. Positive income shifts for the highest-paid earners and lowest paid-earners (due to impacts of National Living Wage) have resulted in the “hollowing out” of the middle income distribution over time. Many believe the reason for this change is the fall in middle-skilled employment while low and high-skilled jobs have increased significantly in the labour market. However, the Resolution Foundation states that there is “little evidence that this is having an impact on the pay distribution.”
Nationally, the study argues that the pay squeeze has been driven largely in part by changes in hours worked by men rather than changes in occupational employment. This is believed to be because of the higher growth in male part-time employment relative to females. Another factor is a continued decline in the number of hours worked by males working in lower-paid jobs.
Figure 10 compares the proportion of male part-time employment in Warwickshire and England over the last ten years. While male part-time employment has been relatively stable at a national level, Warwickshire bucks the trend with a lower than average proportion of men working part-time (6.7%). The county recently met pre-recession levels at approximately 7%, but has also seen a unique sharp decrease in male part-time employment of nearly 5% during 2014-16. This could suggest that the higher-than-average job growth (as highlighted in Table 6) means a greater number of men have switched from part-time to full-time employment which remains positive for productivity locally. Further analysis suggests that this could be driven by a post-recession expansion in automotive employment, which is a traditionally male-dominated industry with a large share of full-time jobs. Overall, a movement from part-time to full-time employment indicates greater mobility within the labour market.
Figure 11 compares post-recession growth in male part-time employment to female part-time employment. The graph supports the report’s findings with male part-time employment increasing by 1.4% nationally since the recession whereas there are now relatively fewer females working part-time (-0.7%). In Warwickshire, there has been a considerable decrease in men and women working part-time, although the proportion of females is declining ten times faster than males. This evidence shows that Warwickshire is experiencing higher growth in male part-time employment relative to females, though at a slower rate of change than in England as a whole. Long-term growth in men working part-time is likely to increase pay squeezes at the bottom end of the income distribution.
Note: the Resolution Foundation covers the period 1997-2017 for the trend in weekly wages. However for the purpose of this article, changes during 2008-17 will be analysed to show post-recession impacts.
Figure 12 illustrates that there has been a greater pay squeeze for middle income male earners in Warwickshire, with the highest and lowest earners seeing bigger pay rises since the recession. During 2008-17, there was a 16% boost in median male weekly incomes compared to 11% nationally. At the same time, the top 25% of male earners have seen weekly wages double the rate of growth at national level; a 22% upward shift in Warwickshire compared to 11% nationally. Across England, the bottom 25% of male earners experienced the fastest wage growth, which supports the expansion in male part-time employment.
Source: Annual Survey of Hours and Earnings
Figure 13 explores whether the county has seen changes in hours worked by men since the 2008 recession. The graph suggests that compared to England as a whole, Warwickshire has seen a reduction in the hours worked between full-time and part-time males. The average full-time male living in the county now works 21 extra hours a week compared to a part-time male. This has fallen from about 24 hours worked during the recession. This overall suggests that in Warwickshire, men employed part-time are increasingly working more hours relative to men employed full-time. The average part-time male now works about 18 hours a week in Warwickshire; nearly doubling the hours worked nationally (9.8). This could be because pay is relatively better locally. If the percentage of male part-time employment continues to grow together with more hours worked, this could threaten future productivity, depending on GVA performance.
In summary, the analysis shows that there is some emergence of hollowing out within the pay distribution; as the median wage of males has seen the slowest growth since the 2008 recession. This supports the report’s findings. However, the increase in hours worked amongst part-time males in Warwickshire seems to buck the national trend and could impact productivity if continued over the long term.
The Resolution Foundation report can be downloaded here: http://www.resolutionfoundation.org/publications/counting-the-hours-two-decades-of-changes-in-earnings-and-hours-worked/
Warwickshire County Council will continue to monitor changes in part-time employment and earnings in future research. We ensure that the economic growth agenda continues to be at the forefront of priorities.