Changing Fortunes: Income Mobility and Poverty Dynamics in Britain

October 27, 2011

If society is a metaphorical building and income levels determine which floor people get to live on, then who inhabits the basement, who lives in the penthouse, who lives in between, and how much movement up and down the elevators is there? Here, Stephen Jenkins offers perhaps the most authoritative answer to this question yet published, drawing on the rich data provided by the British Household Panel Survey conducted annually from 1991 to 2008. His analysis covers the period from John Major's Conservative administrations through the end of Tony Blair's third period as prime minister.

Until the financial crisis of 2008-09, and the subsequent Great Recession, many considered the mid- to late 1990s and early 2000s something of a golden era for UK society. We now know - if we didn't already - that the house of British prosperity was built on sand: over-reliance on financial services, a consumer credit bubble, an over-valued currency, a bullish Gordon Brown during his time as chancellor of the Exchequer. These and other things lulled us into a false sense of economic security.

Jenkins' contribution is to detail the occupancy of this shaky edifice, and the movements within it, during the years of strong economic growth and high government spending that got New Labour into office three times. It is directed, as the preface declares, at a "broad audience". This is appropriate, given the relevance of Changing Fortunes to anyone concerned about poverty, inequality and social mobility in contemporary Britain.

The virtue of the British Household Panel Survey is that the data are longitudinal: the economic fortunes of more than 10,000 individuals from more than 5,000 households were tracked over time, thus improving on the "snapshot" data provided by cross-sectional surveys of income levels and poverty.

Jenkins, a professor of social and economic policy at the London School of Economics, has been analysing longitudinal data for years. Rather than considering only wages or the income of paid employees, he focuses on total household income. This is a more encompassing measure of material well-being, although (as with all measures of prosperity) it has certain limits.

His findings are interesting. There is already a lot of evidence to show that levels of income inequality increased sharply in the UK during the Thatcher and Major years. To continue the architectural metaphor (which is Jenkins', by the way), the house of British society got taller and had more floors by the time Blair took office in 1997. What happened thereafter? One of Jenkins' key findings is that there was substantial movement between the floors year on year. But was the movement primarily up or down, and how far did people travel?

If New Labour had realised its aspirations to increase equality of opportunity and to reduce poverty levels, then two trends would have been evident by the late 2000s. The first would have been greater upward mobility among individuals in the lowest income tiers of society. The second, related to this, would have been a reduction in the numbers of people classified as "poor".

Jenkins shows that few people travelled very far up the income elevator, and that considerable churning between the basement and ground floor means that a lot of people in the UK have been touched by poverty.

Although Jenkins is studiously non-political, his results confirm what Left-leaning critics of New Labour have said for years. Even the supposed "good times" were chimerical for many in the UK.

Authoritative as it is, Changing Fortunes is likely to be too dry and data-focused for the broad readership that Jenkins is targeting and that the subject deserves. It should, however, command the attention of his academic peers.

Changing Fortunes: Income Mobility and Poverty Dynamics in Britain

By Stephen P. Jenkins. Oxford University Press. 432pp, £30.00. ISBN 9780199226436. Published 28 July 2011

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